Dive Brief:
House Republicans unveiled a budget resolution on Wednesday that asks the Energy and Commerce Committee, which oversees Medicare and Medicaid, to find $880 billion in savings.
The Trump administration has said it won’t cut Medicare, so the brunt of cuts would likely be in the safety-net Medicaid program, which provides health insurance to almost 80 million low-income Americans.
Democrats, hospitals and patient advocates quickly slammed the budget, noting any cuts to public insurance programs would disproportionately impact the neediest Americans. Still, the resolution is a starting point for congressional negotiations, and all of the cuts won’t necessarily be healthcare-related, given there’s a lot else under E&C’s purview.
Dive Insight:
The goal of the budget is to reduce mandatory spending by a minimum of $1.5 trillion over the next decade to help pay for an extension of President Donald Trump’s tax cuts, which have disproportionately benefited the wealthy, according to the Center on Budget and Policy Priorities.
Still, the reductions outlined in Wednesday’s budget won’t cover the full size of the president’s tax plan, which is expected to cost $5 trillion to $11.2 trillion over the next 10 years.
Massive healthcare programs, especially Medicaid, have long been viewed to be the most at risk from Republicans hunting for savings. However, the resolution from House Republicans gives a sense of the size of cuts that could be coming for the sector.
The $880 billion goal makes it less likely that per-capita caps to Medicaid funding are on the table, as that policy would reduce spending by more than $900 billion over a decade, according to estimates from the Congressional Budget Office. (Though, the wording of the resolution, that E&C find ways to tweak laws within its jurisdiction to reduce the deficit by “not less than” $880 billion, leaves open the possibility that eventual cuts could be steeper.)
More likely is that Republicans will seek to pass a work requirement policy forcing Medicaid beneficiaries to log work, volunteer or education hours to qualify for the coverage. Such a plan would reduce federal spending by $109 billion and lead to 1.5 million people losing Medicaid, the CBO estimated in 2023, though eventual savings (and how many people are impacted) depends on how draconian of a work requirement plan is enacted.
Republicans could also look to reduce the rate at which the federal government matches states’ Medicaid spending. Removing the 50% floor for the government’s match rate could yield $530 billion in savings over the next decade, according to the CBO.
E&C could also consider limiting supplemental payment programs in Medicaid, which are financing strategies that allow states to increase the federal funds they receive for Medicaid without actually spending more money themselves. Restricting these could save $175 billion over 10 years, according to the House Budget Committee.
If Medicaid cuts go through, they would have an outsized impact on insurers that contract with states in managed Medicaid programs, especially Centene and Molina, and on hospital operators that get significant revenue through Medicaid, including HCA, Tenet and Universal Health Services.
Changes like work requirements that would lower enrollment in Medicaid would increase the nation’s uninsured rate, resulting in more uncompensated care — i.e. more losses — for providers.
National hospital groups decried the budget, with Rick Pollack, the CEO of the powerful American Hospital Association, asking Congress to “take seriously” the impact that shrinking healthcare programs, particularly Medicaid, would have.
“While some have suggested dramatic reductions in the Medicaid program as part of a reconciliation vehicle, we would urge Congress to reject that approach. Medicaid provides health care to many of our most vulnerable populations, including pregnant women, children, the elderly, disabled and many of our working class,” Pollack said in a statement.
Similarly, America’s Essential Hospitals, which represents safety-net providers, said it “stoutly opposes and categorically condemns any cuts to Medicaid and Medicare that would result from this blueprint.”
“We don’t need to know the mechanisms of how Medicaid would be cut to know the impact would be catastrophic,” added Anthony Wright, executive director of patient advocacy group Families USA, in a statement.
“The sheer size of the proposed cuts means millions of Americans losing coverage, hospitals and clinics plunged into budget shortfalls, and health care services we all depend on being eliminated,” Wright said.
Democrats also panned the budget plan, with House Democratic leader Hakeem Jeffries slamming it as a handout to “billionaire donors and wealthy corporations” in a press conference Wednesday.
Yet cutting Medicaid is politically tricky, given the program is popular with a broad swath of Americans. Similarly, efforts to curb the ACA — mainly by nixing higher federal subsidies for ACA plans, a move that would save an estimated $604 billion — could also blow back on Republicans, as the brunt of higher subsidies have flowed to voters in red states.
Still, the budget is a “key step to start the process in delivering President Trump’s America First agenda,” House Speaker Mike Johnson, R-La., said in a statement on X.
Other cuts include $230 billion from the Agriculture Commitee, which oversees the SNAP food stamp program, and $330 billion from the Education and Workforce Committee, which could come from student loan programs.
The House Budget Committee is set to review the budget on Thursday. If approved, it will head to the House of Representatives — where Republicans have a razor-thin majority — for consideration.
The Senate Budget Committee advanced a narrower budget plan on Wednesday as well that does not include an extension of Trump’s tax cuts.
