Budget Reconciliation Opens Door for Medicaid Cuts and Other Health Care Reform

The “Concurrent Resolution On The Budget For The Fiscal Year 2025” (or, “Resolution”) passed the House last Tuesday (February 25th) with only one Republican voting ‘nay.’ The passing of the of the Resolution kicks off the budget reconciliation process which allows Congress to enact tax, spending, and debt limit legislation with a simple majority (51 votes in the Senate, or 50 if the vice president breaks a tie) without the threat of a filibuster, which requires 60 votes. Because Republicans control the Senate with 53 seats (as well as the vice presidency), reconciliation enables them to pass a final bill with no Democratic support.

A concurrent resolution can only assign numerical targets to committees and instruct them to draft legislation to meet the fiscal goal; it can’t include substantive instructions. Of particular note is the mandate given to the Committee on Energy & Commerce to reduce the national deficit by $880 billion for fiscal years 2025 through 2034. The Committee on Energy & Commerce holds the broadest authority over the federal Medicaid program, and also issues legislation regarding health care, including mental health and substance use disorder care.

While no official proposals have been issued, a copy of a 50-page document of health spending and tax proposals for budget reconciliation legislation, reportedly distributed by the House Budget Committee to the House Republican Caucus, was circulated in the news in January and appears to now be posted on the Senate Committee on Finance’s website here.  The January list includes, but is not limited to:

• Per capita Medicaid caps.
• Eliminating the enhanced matching rate for the Medicaid expansion.
• Restricting state use of provider taxes to finance state Medicaid costs.
• Eliminating the additional incentive for States to take up the Medicaid expansion.
• Imposing Medicaid work reporting requirements.
• Reducing Medicaid and CHIP eligibility by modifying how the Federal Poverty Level (FPL) is set annually.

Other health-related legislative proposals include:

• Eliminating Inflation Reduction Act prescription drug price controls.
• Reforming ACA market plan design and eligibility rules (e.g., actuarial value calculations, open enrollment periods).
• Repealing the ACA Exchange subsidy “Family Glitch” Final Rule.
• Increasing penalties for Transparency Act non-compliance.
• Facilitating access to rural emergency care services.
• Improving Senior Access to telehealth.
• Eliminating credit for child and dependent care.

It’s worth noting that many of legislative proposals on the January list include items from the Republican Study Committee FY 2025 Budget Proposal issued by the Republican Study Committee in March 2024, which can be found here. The Republican Study Committee is the Congressional caucus of conservative members of the Republican Party – the largest caucus in Congress - and their FY 2025 Budget Proposal also included a cap on the employer and employee pre-tax treatment for all health insurance spending.