Senate passes tax bill with $1 trillion in Medicaid cuts despite concerns

The Senate voted, 51-50 — with Vice President J.D. Vance breaking the tie — to pass a tax and spending reduction bill on July 1 that includes more than $1 trillion in 10-year Medicaid cuts.

The final Medicaid savings, according to the latest Congressional Budget Office (CBO) projection, were derived from provisions that included:

• $191 billion in provider taxes
• $149 billion in state-directed payments
• $325 billion in work requirements

Republicans downplayed the Medicaid cuts by noting Medicaid spending would still increase over the coming decade but just at a lower rate.

“Only in Washington is a smaller increase in spending considered a cut,” Sen. Mike Crapo (R-Idaho) said before the final vote.

Amendments adopted

The One Big Beautiful Bill Act was amended multiple times in recent days in an attempt to corral unsupportive Republicans.

Those amendments included a final “wraparound amendment” creating a $50 billion fund for rural hospitals to offset the Medicaid cuts targeting hospitals in general.

“This is a joke,” Sen. Richard Durbin (D-Ill.) said about the size of the fund compared to overall hospital cuts. “It’s like trying to put out a forest fire with a garden hose.”

Durbin said the cuts would cause “massive layoffs” at hospitals, nationwide.

Other provisions of that amendment included:

• Allowing SDPs submitted by the bill’s enactment that include rates higher than Medicare to be grandfathered
• Dropping a higher Federal Medical Assistance Percentage for high-poverty states
• Dropping the FMAP penalty for states that use their own funds to pay for insurance coverage of some categories of immigrants
• Dropping a ban on gender transition services in Medicaid or CHIP

Those changes followed the Senate parliamentarian ruling the dropped provisions would have violated Senate rules that allowed a simple majority vote on the underlying budget bill.

A separate amendment would accelerate the start of new Medicaid eligibility verification rules to 2027 from 2028.

The latest CBO estimate also said the bill would increase the number of uninsured by 11.8 million by 2034. That includes 1.4 million undocumented immigrants.

The bill also cut $134 billion over 10 years from the Affordable Care Act marketplaces. Overall, the changes would have the effect of lowering gross benchmark premiums, on average, by 0.5% by 2034, according to CBO.

The bill now moves to the House of Representatives for consideration. President Trump said he wants Congress to provide a bill for him to sign by July 4.