June 16, 2025
| Good afternoon, It is unclear whether the Webinar (described directly below) will include a review of as yet unreleased details from the Senate Finance Committee’s budget reconciliation proposals (Senate leaders are briefing members of the Senate at 6pm tonight) as they relate specifically to the federal Medicaid Program but I wanted to share this opportunity with you: |
| Hello Lauri, The Senate Finance Committee has released their text for the health provisions of the Senate reconciliation package. Please join Community Catalyst, Center on Budget and Policy Priorities (CBPP), Families USA, and NHeLP on Tuesday, June 17 at 4:00 p.m. ET to walk through the bill text, its impact, and discuss next steps in the fight to preserve health coverage. |
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One of the most controversial provisions in the House mega bill would restrict a state’s ability to use ‘provider taxes’ to generate additional federal funds often used (by states) to fund (in part) state Medicaid programs. The House took what many see as an aggressive stance on limiting use of provider taxes however the Senate wants to go further and in doing so, credit the savings associated with narrowing use of this scheme, to pay for tax cuts coveted by the Trump Admin.
Apparently moderate House Republicans are concerned about the impact of a more aggressive cap on how much states can draw down using provider taxes citing concerns that this would decimate rural hospitals and other entities that rely on these funds.
(Politico, 6/16)
“The Senate Finance Committee’s forthcoming portion of the party-line tax and spending package would lower the Medicaid provider tax to 3.5%,” splitting from the House version, which “put a moratorium on states’ ability to raise their provider tax beyond the current 6%.”
Senate Republicans are seeking to ratchet up savings from a politically explosive policy within Medicaid to pay for their megabill, and it’s already setting off shockwaves through Capitol Hill.
The Senate Finance Committee’s newly released draft would incrementally lower the allowable provider tax in Medicaid expansion states starting in 2027 from the current 6 percent until it hits 3.5 percent in 2031. The dial-down would not apply to nursing or intermediate care facilities.
That would be a huge departure from the House-passed bill, which would put a moratorium on states’ ability to raise their provider tax beyond the current 6 percent. It’s also likely to spark fierce pushback from a coalition of GOP senators who were already worried that the freeze would negatively impact rural hospitals in their states.
Republicans are expecting the Medicaid language will be further negotiated.
“Hell no,” said one moderate House Republican who was granted anonymity to react candidly to the Senate proposal. That lawmaker is part of a group warning that deeper changes to the provider tax would be viewed as cuts to the program and are a red line for them.
Still, Senate Republicans are scrambling to notch deeper spending cuts in the filibuster-skirting legislation, and the provider tax is one of the few areas lawmakers can increase savings while not touching Medicare — another entitlement program GOP lawmakers were briefly flirting with overhauling to find offsets.
Limiting provider taxes has been a long-held goal in the conservative health care policy sphere, where they are seen as a driver of ever-expanding federal Medicaid expenditures. Most states use provider taxes to finance their Medicaid programs, putting the burden on health providers who are incentivized to increase their billings which are then paid with up to 90 percent federal dollars.
By capping the level of provider taxes, budget forecasters project states’ Medicaid programs will grow more slowly or outright shrink compared to the status quo, providing tens of millions of dollars of budgetary savings.
Finance Chair Mike Crapo is due to brief senators Monday evening on this and other proposals.We will keep an eye out for details from the Senate Finance Committee re: reconciliation proposals as they relate to Medicaid, Medicare, SNAP, Housing and other critical safety net programs and services. Stand by.