Republican lawmakers are resisting efforts to overhaul Medicaid, a program that now insures one-in-five Americans and involves billions of dollars in waste, fraud, and abuse.
House Republicans dropped their “One, Big, Beautiful Bill” on May 12, a reconciliation bill that doesn’t require the Senate’s 60 vote threshold to pass.
Instead of per-capita cuts or a major overhaul, the section on Medicaid calls for work requirements for able-bodied enrollees, better oversight of improper eligibility, a ban on reimbursement for gender transition procedures, and penalties on states that provide benefits to noncitizens. The bill would also limit states’ ability to tax and then reimburse providers, a move supplemented by a proposed rule by the Centers for Medicare and Medicaid Services.
Budget Scrutiny
The House Energy and Commerce Committee advanced the health care portion of the bill on May 14 to the House Budget Committee, which reviews all portions of the bill before it moves to the full House.
“This proposed rule stops the shell game and ensures federal Medicaid dollars go where they’re needed most—to pay for health care for vulnerable Americans who rely on this program, not to plug state budget holes or bankroll benefits for noncitizens,” CMS Administrator Mehmet Oz, M.D. said in a May 12 news release.
The Congressional Budget Office says the Medicaid portion of the bill would reduce the federal deficit by $625 billion over the next decade.
Political Hazards
Reforming Medicaid is a high-stakes proposition for members of Congress. House members are up for reelection in 2026, and nine states have “trigger” laws requiring them to pull back Medicaid expansion if the reimbursement rates drop. Missouri, Oklahoma, and South Dakota have Medicaid coverage embedded in their constitutions, meaning any cuts to federal Medicaid expansion could mean huge state bills.
“The New York Times identified 25 Republican members of the House who are from districts where 30 percent or more of the population is in Medicaid,” said John C. Goodman, president of the Goodman Institute for Public Policy and co-publisher of Health Care News. “There are MAGA members in Medicaid, so Republicans cannot afford to slash Medicaid benefits.
The best way to save Medicaid is to make it better.”
Rep. Chip Roy (R-TX) told Health Care News he is one of several Republicans frustrated by the reluctance to get Medicaid under control, and it will come down to a battle over spending v. tax cuts.
“Republicans are drunk on both spending and tax cuts, and that is a dangerous combination which is yielding massive deficits,” said Roy. “It’s not all Republicans, but they are deathly afraid of cutting Medicaid. I get that some Republicans are in razor-thin ‘D’ districts, but at some point you have to lead and decide what is right.”
President Donald Trump floated the idea of raising the highest tax rate to 39.6 percent to spare Medicaid from spending cuts. The rate would apply to single filers earning more than $2.5 million.
Massive Expansion
Medicaid is no longer the safety-net health care program it was intended to be, says Roy.
“The fact that the able-bodied are getting more in federal funding than the vulnerable population for whom Medicaid was originally designed, the fact that you can get more from Medicaid than you can in Medicare, the fact that you have this money-laundering scam in which blue states like California can get $3,400 per recipient and Texas gets $1,800 per recipient, the fact that you have one trillion dollars in improper payments, that Medicaid has gone from $400 billion to $600 billion from 2019 to 2025 and it will get to over one trillion by 2030, these are things that should have people concerned, particularly if you go around calling yourself a fiscal conservative, which every Republican does but few are.”
On May 9, Roy and Rep. Scott Fitzgerald (R-WI) introduced the “Ending Medicaid Discrimination Against the Most Vulnerable Act.” The bill would end the higher subsidy given to able-bodied enrollees under Medicaid expansion in the Affordable Care Act.
Real Reform Plan
The Republican majorities in Congress can avoid major political damage for Medicaid cuts if they emphasize that their reforms will improve service to the truly needy, says Goodman.
“The best way to save Medicaid is to make it better,” said Goodman. “If Republicans got half the Medicaid vote, they’d never lose an election for the next ten years. They must make the program better at the same time they save money.”
Goodman has listed 12 ideas, including Roth HSAs, personal spending accounts like food stamps, and liberalizing licensing laws.
“Give enrollees spending accounts,” said Goodman. “Let them shop out primary care. Most people who are in emergency rooms do not need to be there. Waits can be six hours or more. They lose wages during those waits.”
Roy says lawmakers are about to receive a rude awakening for failing to keep their promises about balancing the federal budget.
“It is going to be the force of tax cuts hitting the wall of those of us who believe we need to restrain government spending,” said Roy. “Republicans are very good at running on tax cuts and then talking about ‘a balanced budget.’ I believe in cutting taxes for economic growth and stimulus from a moral standpoint, but we’ve been promising a whole bunch of programs for decades.”
AnneMarie Schieber ([email protected]) is the managing editor of Health Care News.
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland’s monthly newspaper for health care reform.
