Communications Director, Connecticut Hospital Association
110 Barnes Road, Wallingford, CT
rall@chime.org, 203-265-7611
Modern Healthcare – Friday, January 17, 2025
By Michael McAuliff
Republicans who hope to cut spending and extend expiring tax cuts are considering a lengthy list of budgetary offsets that includes more than $3 trillion in healthcare cuts.
Most, if not all, of these policies outlined in a document circulating among lawmakers are not new to the GOP. They include eliminating nonprofit status for hospitals, banning hospital facility and telehealth fees, instituting “site-neutral” Medicare payments for outpatient services, boosting Medicare physician reimbursements, cutting graduate medical education funding, repealing a staffing mandate on nursing homes, tightening access to health insurance exchange subsidies, and slashing Medicaid by about $1.4 trillion.
House Majority Leader Steve Scalise (R-La.) said a number of such lists exists, and they serve as tools to kick off the new Republican Congress’s efforts to carry out President-elect Donald Trump’s agenda, which starts with extending tax policies from Tax Cuts and Jobs Act of 2017 that will expire at the end of the year.
“We haven’t gotten into any detail from the committees yet,” Scalise said Tuesday. “I just started this process yesterday, meeting with the chairman so that, number one, they can start thinking about what is doable in their committee. They’ve got to meet with their own members and then determine what can pass out of their committee.”
The 50-page document, which three Capitol Hill sources confirmed as authentic, may be more of a wish list than a plan at this stage, but it provides healthcare interests with key insights into the lobbying fights that will define 2025. Renewing the Trump tax cuts will necessitate finding budgetary savings to make up for the lost revenue, and healthcare is the federal government’s largest expenditure.
Although most of these proposals are designed to reduce federal spending, some cost money, such as increasing Medicare reimbursements to doctors. That underscores the complexity and uncertainty of the upcoming budget negotiations and the GOP plan to draft at least one large bill using a special process called “budget reconciliation” that precludes Senate filibusters.
House Speaker Mike Johnson (R-La.) directed committee leaders to assemble their components of this package by the end of February and wants the House to vote by Easter, he said Tuesday. The House is scheduled to recess for the holiday April 10.
The overarching theme of the policy outline is to significantly scale back federal spending, including on Medicare, Medicaid and Affordable Care Act of 2010 programs such as the exchanges and the Medicaid expansion. The list includes items healthcare interests support, such as scrapping the nursing home staffing rule and conceiving a new Medicare physician payment system, and plenty they don’t, starting with $260 billion in taxes on nonprofit hospitals and Medicaid and ACA policies that will lead to a higher uninsured rate.
Medicaid would undergo a dramatic transformation if every item on the GOP agenda were to become law. Among the proposals summarized in the Republican document are:
- Converting Medicaid from open-ended entitlement financing to “per capita” funding, which would reduce federal support by $900 billion over 10 years.
- Eliminating enhanced federal payments to states that expanded Medicaid under the ACA, which would cut the program by $561 billion.
- Establishing work requirements for Medicaid, which would reduce spending by $100 billion.
- Restricting states from using provider taxes and state-directed payments to coax higher federal Medicaid funding, which would save about $200 billion.
On Medicare, one of the largest items is enacting site-neutral payments to forbid hospitals from getting paid more than other providers for performing the same outpatient services, which would save $146 billion. The GOP also is considering ending Medicare funding for hospital bad debt, cutting uncompensated care funding by $229 billion, expanding the disproportionate share hospital program to other providers that treat large numbers of uninsured and underinsured patients, and prohibiting hospitals from receiving extra reimbursements under more than one special classification, such as Critical Access Hospital or Medicare-dependent Hospital.
Also on the menu are health insurance exchange subsidies. The Republican document contemplates reinstating the “family glitch” policy that prevented dependents from accessing tax credits if the head of household is offered health benefits at work, even if they don’t include family members. The list also includes a plan to claw back subsidy overpayments from enrollees, regardless of income, and make unspecified other changes to the subsidies and regulations governing insurance benefits. The list does not address the enhanced exchange subsidies set to expire this year.
Republicans also are looking at expanding access to alternative forms of coverage, such as association health plans, health savings accounts and individual coverage health reimbursement arrangements, or ICHRAs, that enable employers to offer tax-free vouchers workers can use to buy exchange plans.
Trump’s planned crackdown on immigration is evident throughout the list of policies, which includes measures that would impact healthcare programs, such as taking away exchange subsidies from people eligible for Deferred Action for Childhood Arrivals and reinforcing existing prohibitions against undocumented immigrants receiving federal benefits such as Medicaid and exchange subsidies.