Senate Republicans Propose More Aggressive Medicaid Cuts to Help Pay for Tax Bill

(Bloomberg) -- Senate Republicans are proposing cuts to the Medicaid program for low-income and disabled people that are more aggressive than policies the House passed to help pay for President Donald Trump’s sweeping tax package, according to people familiar with the legislation. Most Read from Bloomberg Advertisement: Switch Auto Insurance and Save Today! Affordable Auto Insurance, Customized for You Learn More Great Rates and Award-Winning Service Learn More The Insurance Savings You Expect Learn More Powered by Money.com - Yahoo may earn commission from the links above. As Part of a $45 Billion Push, ICE Prepares for a Vast Expansion of Detention Space As American Architects Gather in Boston, Retrofits Are All the Rage Notably, the Senate abandoned efforts to cut costs in the Medicare program that provides health insurance to people over age 65 and the disabled. The decision is good news for Humana Inc. and UnitedHealth Group Inc., which are major players in the Medicare Advantage insurance market.

Senator Bill Cassidy of Louisiana had pushed to clamp down on private Medicare Advantage insurers by making it harder to game the federal subsidy system by exaggerating the health challenges their enrollees face. But Cassidy’s proposal faced some opposition among Republicans. The Senate plan — slated to be released on Monday — solidifies congressional Republicans’ decision to cut funding for Medicaid health insurance for the poor to pay for tax cuts, which Democrats are eager to attack them for ahead of next year’s midterm elections. Republicans are eager to portray the cost savings as reductions to “fraud, waste, and abuse” in the programs, though the changes would also lead to millions of people losing health insurance. Senate Finance Committee Republicans did not immediately respond to a request for comment.

The Senate went further than the House’s proposal to limit the options states have to fund their share of Medicaid. The House bill would set a moratorium on new or increased taxes on medical providers, while the draft Senate bill would cut the amount that states that have not expanded Medicaid under the Affordable Care Act can tax health care providers to help fund their programs, said the people, who requested anonymity to discuss a plan that is not yet public. The Senate proposal would gradually limit states to taxing providers at 3.5% of facilities’ net revenues from treating patients from the current level of 6%. In the Senate proposal, non-expansion states, such as Texas and Florida, would be frozen at current tax rates, they said. Some states tax health care providers, such as hospitals, to help raise money for state Medicaid budgets.

Critics say limiting provider tax rates would simultaneously curb states’ ability to pay their higher tab as a result of the reductions to federal matching funds. Story Continues In the House proposal, states would also be limited from seeking new payments for providers that exceed Medicare payment rates. The House allowed higher rates for states that haven’t yet expanded Medicaid under the ACA. The Senate proposal goes further, and reduces all state-directed payments gradually for expansion states to Medicare rates, and to 110% of Medicare rates for non-expansion states. Senate Republicans plan to drop policies that would modestly change how pharmacy middlemen called pharmacy benefit managers do business in Medicare.

They also plan to omit a proposal to boost pay for doctors in the Medicare program that had been included in the House proposal, the people said. The PBM policy change is likely positive for Cigna Group and CVS Health Corp., which own two of the largest PBMs in the country. Because the House and Senate versions of the legislation differ, the legislation would need to pass the House again before it goes to the president’s desk. How much to cut health care programs has been one of the major points of contention in assembling the tax package. Most Read from Bloomberg Businessweek American Mid: Hampton Inn’s Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants US Allies and Adversaries Are Dodging Trump’s Tariff Threats As Companies Abandon Climate Pledges, Is There a Silver Lining? ©2025 Bloomberg L.P.

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