Senate Passes Tax-and-Spend Bill, Sans PBM Provisions, ACA Matching Rate Cut

After Republican leaders agreed to double the funding for rural healthcare to help offset the downstream effects of Medicaid cuts on rural hospitals, the Senate narrowly passed a massive tax and spending bill today. Now the House the One Big Beautiful Bill Act goes to the House, which must approve it for the bill to reach President Donald Trump’s desk by a self-imposed deadline of July 4.

Three Republican senators—Susan Collins of Maine, Thom Tillis of North Carolina and Rand Paul of Kentucky — joined Democrats in voting against the legislation. Vice President J.D. Vance broke the tie, resulting in a 51-50 vote.

The provisions that would have imposed transparency and other rules on pharmacy benefit managers (PBMs) were left out of the massive taxation and spending bill, but proponents of those measures say they are not discouraged, pointing to bipartisan support and what they see as support from the White House. “We remain optimistic and hopeful,” said Joseph Shields, J.D., president of Transparency-Rx, a trade for smaller PBMs.

“I think there are a lot of data points indicating that you are going to see reform,” Shields added.

The bill also does not include an amendment proposed by Sen. Rich Scott that would have ended the 90% federal match for people enrolled in Medicaid under the Affordable Care Act expansion starting in 2031. Scott and others wanted the change to further cut federal spending on Medicaid and the federal government overall. Collins and Tillis said the Medicaid spending cuts were the main reason they voted against the bill.

A wide variety of health insurance and provider groups decried the Medicaid spending cuts, which the Congressional Budget Office estimates will total just over $1 trillion over years.

“The bill will, by design, strip millions of working Americans and their families of the health care coverage and access they rely on,” Margaret A. Murray, CEO of the Association for Community Affiliated Plans, said in a prepared statement. Murray is a member of the Managed Healthcare Executive editorial advisory board.

“The Senate’s passage of this bill brings us one step closer to a devastating reality: nearly $1 trillion in cuts to Medicaid that would take health coverage and access to care away from millions of Americans,” said the prepared statement of Modern Medicaid Alliance, a coalition of provider and insurance groups that includes AHIP and the Alliance of Community Health Plans.

With Medicare and Social Security cuts off the table for political reasons, Medicaid became a prime target for the spending reductions needed to at least partially offset the tax cuts in the bill and increase in spending for defense and the Trump administration’s immigrant enforcement efforts. The White House and Republican congressional leaders have framed the cuts as preserving Medicaid funding for people more deserving of coverage, children and mothers, and eliminating it for able-bodied adults who don’t work and immigrants who are not legally in the country. Opponents, such as Murray, say adding work requirements to Medicaid, which has been tried in several states under waiver programs, hasn’t worked to boost employment. “Most Medicaid enrollees who can work already do,” Murray said in her prepared statement

A Politico story noted that the Senate confounded expectations by making steeper Medicaid cuts than what are in the tax-and-spend bill the House passed in May. According to Politico, House Speaker Mike Johnson assured members in his caucus that the Senate would soften the Medicaid cuts.