Medicaid Cuts, Matching Rate Sticking Points in Reconciliation Bill

Whether the Senate passes the massive tax and spending bill will likely hinge on the provisions affecting Medicaid spending, financing and eligibility, according to multiple media reports.

Moderate Republicans have expressed concerns about reduced federal support for the Medicaid program, often with an eye toward how those cuts will affect rural hospitals whose finances depend on patient populations disproportionately covered by Medicaid programs. According to Politico, the Senate Republican leadership has bumped up a stabilization fund for rural hospitals to assuage those concerns and won over Sen. Josh Hawley of Missouri and other holdouts.

Sen. Rick Scott

Meanwhile, senators concerned that the spending and tax bill, officially named the One Big Beautiful Bill Act, will increase the federal deficit are pushing for changes that will further reduce federal Medicaid spending. Sen. Rick Scott of Florida is expected to offer an amendment today that would slash the 90% federal matching rate for people enrolled under the Affordable Care Act expansion part of the program to approximately 50% starting in 2031. The Hill reported yesterday that Scott’s proposal would slice another $313 billion from federal Medicaid spending.

The Senate bill in its current form would extend the Medicaid work requirements in the House version of the bill to parents with children age 15 and older. But the Senate version also gives the HHS secretary leeway to grant exemptions to states making progress on implementing the work requirements through 2028.

The provider taxes that states use to fund their portion of the Medicaid program have also been a bone of contention. Conservative lawmakers argue the provider taxes boost state Medicaid spending and therefore federal spending because of matching obligations. The House version of the reconciliation bill froze provider taxes at their current level. The provider tax provisions of the current Senate version of the bill are more complicated but, effectively, phase in limitations on the state levies.

So far, all the Senate Democrats have voted against the Senate version of the bill, but the Medicaid provisions of the bill and their spending implications have driven a wedge among the Republicans. “It is inescapable this bill will betray the promise that Donald Trump made,” Sen. Thom Tillis of North Carolina said in a speech on the Senate floor on Sunday, referring to Medicaid cuts. Tillis had announced hours before the Senate speech that he would not seek re-election, an announcement that came as Trump attacked him on Truth Social for not backing the bill.

Meanwhile, Scott posted on X that his proposal to rake back the matching rate for the ACA expansion population “will make the Big Beautiful Bill even more aligned with President Trump’s goal to balance the budget, grow the economy and put Americans first.”

By a 51-49 vote, the Senate voted late Saturday weekend to advance the 940-page bill. Today it is considering numerous amendments, most of which will be voted down, in what is commonly called a “vote-a-rama.” The Senate and the House have to come to an agreement on what is in the bill before it gets sent to President Trump for signing. The Republicans and Trump have set July 4 as a self-imposed deadline for that to happen.