Key decisions as Congress continues to carry out major settlement bills

House Republicans returned from a two-week recess and took concrete measures this week to create a settlement bill. The Chamber of Commerce hopes to clear the legislation this month, send it to the Senate, and pass the final pass by July 4.

To this end, the House Committee has begun writing and holding hearings on the bill. This process exposed some of the divisions in the caucus, and many major decisions, including cuts in health care, have been outstanding.

The Energy and Commerce Commission, which has jurisdiction over Medicaid and Medicare, will target its markup next week. While the timing may smooth, the hearing asked them to list the specific Medicaid cuts they planned to pursue to achieve $880 billion in savings. The alleged policy options on the table include several options to transfer costs to the state and in other cases harm the program, as shown below.

Restrict federal funds to Medicaid expansion populations

The Medicaid expansion of the Affordable Care Act allows states to cover adults with incomes up to 138% of federal poverty levels ($21,597 for individuals in 2025). The federal government bears 90% of these costs; the state is responsible for the remaining 10%.

This is higher in the federal match rate, and the Medicaid rate is close to 70%. Reduction is a way to save the federal government. Other approaches are also being discussed, such as payment to the state based on the number of participants. But this change is not without cost. As the new KFF report explains, Medicaid expansion is associated with positive health and economic experiences – “The vast amount of literature shows that it is associated with reduced uninsurance rates, increased affordability of health care, progressive, health and outcomes improvements, and economic interests for state and providers.”

These gains can be threatened by reducing federal matching rates, limiting reimbursement levels or otherwise cutting Medicaid expansion funds. It will shift billions of dollars in costs and will cover and care at millions of risks. The KFF warned that as many as 20 million people could deprive their Medicaid coverage and the number of uninsured people would soar if all states eventually waive Medicaid coverage due to federal funding losses.

Limit national financing flexibility

House Republicans are said to be discussing states’ ability to use provider taxes to help with changes to their Medicaid program.

As mentioned above, Medicaid is jointly funded by the federal government and states, which pays most of the costs. States seek various sources to cover their share: state general funds are nearly 70%, while mechanisms such as local government funds and healthcare-related taxes (“Provider Tax”) fill the rest.

Currently, every state except Alaska uses provider taxes to help pay Medicaid. Another recent introduction by KFF explains that these assessments “can be used as a percentage of provider income or as an assessment imposed using an alternative formula such as a uniform tax.” According to the latest data, the Georgetown Center for Children and Family found that “provider taxes account for approximately 17% of the share of Medicaid costs,” although “that is the average; many states have higher risks.” As a result, limiting the use of these funds by the state will “significantly cut state funding for Medicaid” and reduce access to care because “states will be forced to further reduce the payment rates of eligibility, services and providers, undermining the stability of the health care system.”

Improving work requirements

Republicans are considering another possible approach. A Federal Foundation report today will make previous attempts to such policies and reiterate the conclusion that job requirements are unnecessary and ineffective, can help people find jobs and undermine their ability to maintain coverage and access to health care. The evidence is obvious:

• Most adults with Medicaid already work or are not subject to such requirements. In 2023, the majority of Medicaid-covered adults (92%) may have the potential to qualify them for exemptions such as taking care of their responsibilities, illness or disability, and attending school.
• Many people lost Medicaid coverage after job requirements were imposed. Often, this is due to heavy administrative obstacles. “For example, one study found that only lack of internet access makes it easier for people to lose their benefits because of the difficulties posed by the obligation to fulfill the compliance reporting.”
• “There is little gain from any employment or income income. This is because job requirements cannot address the root causes of unemployment, such as lack of proper vocational training, reliable transportation or parenting support, or because there is too little work provided in their area.” The non-partisan Congressional Budget Office (CBO) found that Medicaid job requirements “has a minor impact on the employment status or hours of working for those who comply with job requirements.”

The analysis also captures the impact of Medicaid cuts on state and local economies, finding “severe economic, fiscal and employment impacts.” These harms will “extend to businesses, such as hospitals, clinics and pharmacies, and providers… gradually lower supply chains and ultimately to workers and consumers in states.” The authors point out that the available evidence suggests “the paradox of Medicaid job requirements policy: rather than strengthening employment and people’s income, as proponents say.”

Medicare rights to oppose Medicaid cuts

Medicare rights strongly oppose reducing Medicaid coverage, including through reducing federal funding and job requirements. The health consequences of Medicaid for patients who lose Medicaid can be particularly severe, with systemic and personal financial consequences potentially devastating.

Take action to protect Medicaid

Advocacy during this period is crucial! The House is working to quickly introduce a settlement bill. The Senate process may be conducted in different ways and has less public scope, so heavy trade-offs are important. Send a clear message to Congress: Don't cut Medicaid! Learn more and take action now.