House GOP eyes $880B in healthcare cuts

Modern Healthcare – Wednesday, February 12, 2025
By Michael McAuliff

House Republicans released a budget blueprint on Wednesday that orders the primary healthcare committee to slash spending by $880 billion.

The Budget Committee draft is the first step in an expedited process known as budget reconciliation that Republicans are using to extend tax cuts from President Donald Trump’s first term, as well as to fund border security, energy and defense initiatives.

The budget resolution does not spell out how the Energy and Commerce Committee must find $880 billion in spending cuts over the next decade. But Medicare and Medicaid are by far the largest programs under its jurisdiction — and Trump has repeatedly vowed not to touch Medicare as he seeks to renew tax cuts for corporations and wealthy households that are due to expire at the end of the year.

“If Medicare cuts are off the table, as President Trump and Republican leaders have said, the math is inescapable that these enormous cuts would primarily target Medicaid,” said Larry Levitt, executive vice president of the health policy research organization KFF.

The instructions to Energy and Commerce and other committees are derived from a larger menu of proposals to reduce federal spending that House Republicans assembled last month, which included more than $3 trillion in cuts to healthcare programs, such as more than $2 trillion to Medicaid, which is jointly financed and managed by the states.
‘The chopping block’

House Speaker Mike Johnson (R-La.) sought to characterize Medicaid cuts as something other than Medicaid cuts during a news conference Tuesday.

“Medicaid has never been on the chopping block,” Johnson said. “It’s non-benefit related reforms to the program. Medicaid is infamous for fraud, waste and abuse.”

Yet Johnson confirmed that the House GOP wants to tighten Medicaid eligibility standards and impose work requirements on beneficiaries, two policies designed to decrease federal spending by reducing the number of people enrolled in the program.

“Work is good for you. You know, you find dignity in work, and the people that are not doing that, we’re going to try to get their attention,” Johnson said. “So everyone needs to take a deep sigh of relief and understand that we’re not going to harm any Americans with this. What we’re doing is the right thing by the people, and we’re excited to be a part of it.”

As Arkansas and a number of other states demonstrated when they attempted to implement Medicaid work requirements during Trump’s first term, the policy led to lower enrollment and a rise in the uninsured and had no positive effect on employment. Arkansas Gov. Sarah Huckabee Sanders (R) said last month the state intends to do it again.
Medicaid politics

House Democrats were quick to hammer the GOP plan.

“Republicans have now made clear they will try to take healthcare away from millions of hardworking Americans to give massive tax breaks to their ultra-rich friends,” Energy and Commerce Committee ranking member Frank Pallone (D-N.J.) said in a news release. “Millions of Americans will lose their coverage, hospitals will be forced to close and community health centers will be forced to lay off doctors and nurses. This is a heartless and cruel proposal that will ruin people’s lives so the rich can get richer.”

Republicans may prove gun shy about taking too much out of Medicaid after suffering at the polls in 2018, partly due to a backlash against the huge cuts to Medicaid that were included in their failed effort to repeal the Affordable Care Act of 2010 in 2017, Levitt said.

“It only adds up if there are massive cuts to Medicaid, which will be met with massive opposition from patient groups, hospitals, nursing homes, insurers and states,” Levitt said. “That seems very hard to pass with such slim margins.” Republicans hold a slim, 218-215 majority in the House, which has two vacant seats formerly held by Republicans who joined the Trump administration.

The American Hospital Association swiftly spoke out against large Medicaid cuts.

“The American Hospital Association urges Congress to take seriously the impact of reductions in healthcare programs, particularly Medicaid,” AHA President and CEO Rick Pollack said in a news release Wednesday. “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 healthcare to many of our most vulnerable populations, including pregnant women, children, the elderly, disabled and many of our working class.”
Budget matters

The Budget Committee will hold a session to mark up the budget resolution on Thursday, Chair Jodey Arrington (R-Texas) announced Wednesday.

Majority parties in Congress often employ the budget reconciliation process to enact changes to federal spending and taxes, largely because these bills cannot be filibustered in the Senate and can pass on simple majority votes. Republicans have a 53-47 edge over Democrats in the upper chamber.

The House Ways and Means Committee, which shares jurisdiction over Medicare with the Energy and Commerce Committee, is responsible for writing the core tax portions of the budget reconciliation bill.

As such, the Budget Committee draft instructs the panel to produce legislation that would increase the federal budget deficit by $4.5 trillion, or about $100 billion less than the Congressional Budget Office’s estimates as the cost to extend Trump’s tax cuts. Altogether, the budget resolution calls for $1.7 trillion in spending reductions through fiscal 2034, far lower than the price tag on the tax cuts.

The budget resolution includes another potential route for additional savings, setting a goal of saving $2 trillion from mandatory programs. Medicare, Medicaid and Social Security account for nearly all mandatory federal spending. If the combined cuts to mandatory programs emerging from other committees don’t reach that threshold, the Ways and Means Committee is charged with making up the difference.

While the budget resolution seems to lean heavily on Medicaid, that is not set in stone. Committees can find their own ways forward, and the broader budget cuts list circulated last month includes a number of alternatives, such as implementing site-neutral payments for outpatient care under Medicare, that could allow for fewer cuts to Medicaid.

Further complicating the budget math for GOP leaders is that Republican lawmakers have legislative priorities of their own, some of which cost money, such as raising Medicare reimbursements to physicians. With only a three-vote advantage over Democrats, Johnson must keep his conference unified to advance the taxes and spending cuts package.

Rep. Dr. Greg Murphy (R-N.C.), for example, said he would not support a budget reconciliation bill that doesn’t address doctor payments. “It is an absolute red line. And I’ve made that known to the speaker’s staff,” Murphy said Tuesday.

The Senate Budget Committee released its draft budget resolution last week, although it does not include healthcare provisions. Unlike in the lower chamber — and contrary to Trump’s preference — Senate Republican leaders plan to draft two reconciliation bills. The committee began marking up the first one, focused on defense, the border and energy, on Wednesday. A later bill would extend the Trump tax cuts and call for spending reductions.

Senate Budget Committee Chair Lindsey Graham (R-S.C.) said Tuesday that he aims to blend his budget reconciliation measures with the single bill planned in the House.

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