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The Energy and Commerce and Ways and Means committees held marathon markups and voted along party lines this week to advance Republican legislation containing a number of healthcare provisions, including sweeping cuts to Medicaid.
The bill is likely to be tweaked in the full House or Senate. Still, GOP members cheered the advance of the “big, beautiful bill,” which marries an extension of tax cuts from President Donald Trump’s first term with other conservative priorities, like cracking down on illegal immigration and canceling clean energy initiatives.
But to pay for the package, Republicans had to pen significant funding reductions, including in healthcare. The most drastic reforms are targeted at the safety-net Medicaid program: Provisions out of E&C total $625 billion in savings but would cause roughly 8 million Americans to become uninsured, according to a preliminary estimate from the Congressional Budget Office.
Patient advocacy groups and healthcare providers condemned the legislation for gutting federal support for health insurance programs, which will have a disproportionate impact on low-income Americans, women, immigrants and people with disabilities.
Democrats also slammed the bill as cutting services for the poor to fund tax breaks for the rich — the largest portion of the tax reductions would go to the highest-earning American households — but ultimately failed to water down the legislation before it left the committees.
E&C passed on its text in a 30-24 vote after more than 26 hours in a markup meeting, while Ways and Means advanced its own provisions on a 26-19 vote after 17 hours. The legislation now heads to the House Budget Committee, which will combine it into one package. Republicans have set a deadline of Memorial Day for passage by the House and early July for passage by the Senate, where Republicans are more cautious about cutting health and social benefit programs and could moderate the bill.
Here are the legislation’s major healthcare provisions.
E&C approved the biggest overhaul to Medicaid in the program’s six-decade history. If the legislation passes as currently drafted, it would significantly alter eligibility and funding for Medicaid, which, along with its sister program for children, covers almost 80 million low-income Americans.
Republicans cleared what would be the first-ever federal work requirements for Medicaid beneficiaries. The policy requires able-bodied adults to work, volunteer or attend school for at least 80 hours each month to continue using Medicaid coverage.
The goal is to reduce freeloading in Medicaid and refocus the program around the truly needy, Republicans said.
“We make no apologies for prioritizing Americans in need over illegal immigrants and those who are capable but choose not to work,” E&C Chairman Brett Guthrie, R-Ky., said Tuesday during the committee’s markup.
However, the large majority of Medicaid members already work or would qualify for exemptions, according to research. Many people would likely instead lose coverage due to difficulties reporting their eligibility with their states. Work requirements, in the small handful of cases when they’ve actually been enacted, have also been pricey for states to implement and oversee, and haven’t increased employment.
The work requirements wouldn’t kick in until 2029. The delay is a source of friction for some GOP hardliners, who’d like the policy to begin earlier. However, it pushes back the requirements until after Trump has left office and incumbents in Congress have already run for reelection, insulating Republicans from voter pushback — a trend with other unpopular policies of the legislation.
The bill also requires Medicaid beneficiaries with incomes at or above the federal poverty line to pay more fees to receive certain care, an about-face for a program that doesn’t typically include cost-sharing.
It would also raise paperwork burden for enrollees by increasing eligibility verification requirements and requiring states to check the eligibility of their Medicaid expansion population twice a year, instead of just once. States would also have to more frequently check beneficiaries’ addresses and whether or not they’re dead.
The legislation would also limit retroactive coverage in Medicaid to one month, instead of three, after an individual applies.
Notably, E&C also moved to curb taxes that states charge medical providers that allow states to draw down more Medicaid funding from the federal government. The taxes are popular with states and providers, given they increase low Medicaid rates, but critics argue they’re a financial maneuver that unfairly inflates Washington’s responsibility to fund Medicaid.
The bill freezes the provider taxes at current rates and prevents states from creating any new ones. It also limits additional payments that states can direct to specific providers to what Medicare would pay — a substantial decrease from the status quo, where payments are capped at commercial rates.
The legislation also cuts a 5% increase to the federal Medicaid match rate for expansion states put in place during the coronavirus pandemic.
“We’re being asked to sit in this room today and pretend that gutting Medicaid is somehow a necessary evil and a tough decision made in the name of fiscal responsibility. But it’s not. It’s a political choice that my colleagues on the other side of the aisle are choosing to make,” Rep. Yvette Clarke, D-N.Y., said Tuesday during E&C’s markup.
The package has a light touch regarding the Affordable Care Act, perhaps indicating a reluctance on the part of Republicans to once again take on the popular Obama-era law. Republican lawmakers have tried to repeal the regulation multiple times without success since it passed in 2010.
Most notably, Republicans’ legislation doesn’t include an extension of more generous subsidies for ACA coverage that are credited for snowballing enrollment in marketplace plans. Allowing the subsidies to expire at the end of 2025 is predicted to save the government about $340 billion, but around four million people will lose health insurance, according to the CBO.
There’s still time for Congress to act before the end-of-year deadline. But “this is the opportunity. There are a lot of packed provisions in the budget reconciliation. This ought to be one of them,” said Sen. Tammy Baldwin, D-Wis., during an Axios event on Wednesday.
“We think there remains a possibility that the Senate could write [enhanced premium tax credits] into the text,” Jefferies analyst Brian Tanquilut wrote in a note on the draft legislation.
E&C’s bill would solidify certain eligibility and income verification requirements for enrollees that were proposed by the Trump administration earlier this year, including tightening enrollment periods and eligibility verification for subsidies and restricting automatic renewals.
The Ways and Means text also prevents people who are automatically reenrolled from claiming subsidies for their coverage. And, it would prevent low-income people who enroll in ACA plans during a special enrollment period tied to their income from receiving the tax credits.
Buried in pages of tax reform from Ways and Means are a number of provisions codifying the existence of Individual Coverage Health Reimbursement Arrangements, which allow businesses to give employees a monthly allowance to purchase health coverage on the ACA exchanges. The first Trump administration expanded ICHRAs in a 2019 rule.
The policies have grown steadily since, though they remain a small slice of the ACA market. Still, the proposal is a gift to the growing ICHRA industry and the startups and major national insurers that are investing in the plans.
Ways and Means’ legislation, which renames ICHRA plans as “Custom Health Option and Individual Care Expense,” or CHOICE, arrangements, also allows employers to reimburse employees the premiums for their exchange plans through a pre-tax salary reduction. And, it would create a tax credit for small businesses offering CHOICE coverage.
The bill also expands health savings accounts, allowing more Medicare seniors, people in direct primary care arrangements and enrollees in bronze and catastrophic ACA plans to contribute to an HSA and use the accounts for more services.
The legislation doesn’t include a top-down overhaul of pharmacy benefit managers like Congress has pursued in the past. However, it does propose a number of smaller policies that would tweak some of the more controversial business practices of the powerful drug middlemen.
E&C’s bill would ban PBM spread pricing in Medicaid, a policy that has broad bipartisan support. Spread pricing is when PBMs reimburse pharmacies less for dispensing a drug than what the health plan paid them, and pocket the difference as profit.
The policy was included in stopgap funding legislation late last year, but later cut after billionaire Elon Musk, a close advisor to the president, criticized the package.
Republicans’ new bill would also prohibit PBMs from being paid based on a drug’s list price, instead limiting their payment to “fair market bona-fide service fees.” In essence, the policy would require PBMs to pass through any savings they receive in negotiating discounts on drugs with manufacturers through to their payer clients.
Such “100% pass-through” models have been growing in popularity, with major PBMs pledging to increase their use of the arrangements amid criticism that they’re retaining a large slice of rebates as profit. Preventing PBMs from keeping rebates was also in the end-of-year funding legislation but was also scrubbed before the bill made it to then-President Joe Biden’s desk.
E&C’s bill would also force PBMs participating in Medicare’s prescription drug benefit to share more information about their business practices with their payer clients, including on formulary decisions and prescription drug coverage.
E&C’s legislation links annual Medicare payment updates for physicians to a metric of medical cost inflation called the Medicare Economic Index starting in 2026.
It’s a big win for physician groups that argue Medicare reimbursement hasn’t kept pace with the rising costs of doing business. The policy would give doctors more financial stability, a congressional advisory group said late last year.
The GOP bill also delays billions of dollars in Medicaid payment cuts to disproportionate share hospitals, facilities that serve high levels of vulnerable patients, from kicking in until 2029. Hospital groups have criticized the cuts and said they’ll put additional financial pressure on DSH facilities, many of which already operate on tight margins.
In addition, the legislation would delay until 2035 staffing standards for long-term care facilities put in place by the Biden administration meant to ensure quality of care. The staffing mandate was aggressively opposed by nursing homes, which argued they weren’t able to afford payroll to comply.
The standards were previously set to be phased in starting in 2026. However, a judge struck down the mandate earlier this year.
E&C’s bill would ban states from enforcing any laws or regulations related to artificial intelligence for 10 years.
Though not specifically healthcare related, the proposal would affect a number of state laws enacting oversight of AI applications in the industry, including forbidding payers from using algorithms to deny patient care and requiring providers to inform patients when AI is in use.
States have stepped into a gap left by Congress, which has failed to pass any significant AI legislation despite snowballing adoption of the technology and its real implications on patient care.
The ban suggests Congress may be interested in passing nationwide AI legislation. But in the meantime, the moratorium is a gift to tech companies, which have complained about the difficulty of complying with the patchwork of state laws, by removing what was essentially the only external check on the industry.
Earlier this year, Trump vetoed a Biden directive for the HHS to enact oversight of AI applications in healthcare, preferring instead a hands-off approach that’s allowed AI developers to operate essentially unfettered. The administration has, however, turned to AI as an aide in its drastic reshaping of federal programs, with top healthcare regulators touting the technology as a tool to improve health research, access and affordability.
Ways and Means’ legislation would also grant the HHS $25 million to contract with AI firms to track down and recoup overpayments in Medicare.
Through the legislation, the GOP is also slashing healthcare programs and funding for specific communities that are perennial targets of MAGA Republicans, including transgender individuals and immigrants, and specific services like abortion care.
The E&C text would prohibit Medicaid from paying for gender-affirming care for transgender individuals under the age of 18. It also bans gender-affirming care from qualifying as a benefit that ACA insurers have to cover in their plans.
The legislation also prohibits Medicaid from funding nonprofit family planning groups that provide abortion care — in other words, Planned Parenthood. As a result, one million Planned Parenthood patients on Medicaid could lose access to medical care like cancer screenings and wellness visits, according to Rep. Diana DeGette, D-Colo.
The E&C bill would also cut federal funding for states that allow immigrants without proof of citizenship to be on Medicaid. The policy, if enacted, would affect a handful of Democrat-run states like California and New York.
Similarly, Ways and Means’ legislation would make it so a broad swath of immigrants, including those who have been granted asylum or with temporary protected status, can’t join Medicare or receive premium tax credits to purchase ACA coverage.
Non-citizen immigrants, even those in the country legally, with income below the poverty line waiting for Medicaid coverage would also no longer receive the credits.
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