Senate Parliamentarian Blocks Key Medicaid Tax Overhaul in GOP Bill

The Senate parliamentarian has advised that a Medicaid provider tax overhaul, which is a key component of President Donald Trump’s tax cut and spending bill, does not comply with the chamber’s procedural rules. This guidance is a significant setback for Republicans who are rushing to finalize the package this week. The parliamentarian, who serves as the Senate’s chief arbiter of its complex rules, also advised against various GOP provisions that would bar certain immigrants from accessing health care programs.

Republicans are now faced with difficult decisions as they scramble to respond to the parliamentarian's guidance. Some have suggested challenging or even firing the nonpartisan parliamentarian, who has held the position since 2012. However, GOP leaders have dismissed these views and are instead working to revise the various proposals. Majority Leader John Thune of South Dakota stated, “We have contingency plans,” and insisted that “we’re plowing forward” despite the expected votes on Friday appearing to slip.

Democrats, who are united against the package, view the procedural decisions as a potential devastation for the GOP bill. Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, highlighted that the Republican proposals would have resulted in $250 billion less for the health care program, describing them as “massive Medicaid cuts that hurt kids, seniors, Americans with disabilities and working families.”

Trump is eager for action on the bill, with the Senate Republicans racing toward a weekend session to pass it and send it back to the House for another vote before Trump’s Fourth of July deadline. Trump hosted House Speaker Mike Johnson and other GOP lawmakers at the White House, emphasizing the benefits the bill would bring to various groups, including truck drivers, firefighters, and ranchers. He also urged against “grandstanders” within the GOP who might hold up the process.

The bill, which has already passed the House and is now being revised in the Senate, includes $3.8 trillion in tax breaks that were approved during Trump’s first term but are set to expire in December. To offset the lost revenues, Republicans are relying on steep cuts to health care and food stamps, as well as imposing new fees on immigrants. The nonpartisan Congressional Budget Office has estimated that more than 10.9 million more people would not have health care under the House-passed bill, with Senate Republicans proposing even deeper cuts.

After the parliamentarian advised against the Medicaid provider tax change, Republicans are now trying to revise the provision to make it acceptable. They are rushing to come up with similar adjustments to other proposals that have run into violations, including changes to the Supplemental Nutrition Assistance Program, or food stamps. These delays are complicating the passage of the bill, but Republican leaders have little choice as they rely on the health care restrictions to save billions of dollars and offset the cost of trillions of dollars in tax cuts.

Sen. Lindsey Graham, the Budget Committee chairman, rejected calls to fire the parliamentarian and stated that he was working with the office to “find a pathway forward.” The Medicaid provider tax, imposed by states on hospitals and other entities, is a contentious issue. The House-passed bill would freeze the tax, while the Senate version would cut the tax that some states are allowed to impose. Several GOP senators have opposed cutting the Medicaid provider tax, citing concerns that it would hurt rural hospitals that depend on the money. Hospital organizations have warned that it could lead to hospital closures.

Sen. Josh Hawley, among those fighting the change, reported that he had spoken to Trump late Wednesday and the president told him to revert to the earlier proposal from the House. Sen. Thom Tillis also expressed concerns about the provider tax cuts, stating, “I think it just confirms that we weren’t ready for a vote yet.” More than 80 million people in the United States use the Medicaid program, alongside the Obama-era Affordable Care Act. Republicans aim to scale Medicaid back to what they say is its original mission, providing care mainly to women and children, rather than a much larger group of people.

To help defray lost revenues to the hospitals, one plan Republicans had been considering would have created a rural hospital fund with $15 billion as backup. Some GOP senators said that was too much; others, including Sen. Susan Collins of Maine, wanted at least $100 billion. The parliamentarian has been working around the clock to assess the legislation and ensure it complies with the so-called Byrd Rule, which essentially bars policy matters in budget reconciliation bills. If leaders moved ahead without altering the provisions, the measures could be challenged, requiring a 60-vote threshold to overcome objections. That would be a tall order in a Senate divided 53-47 and with Democrats unified against Trump’s bill.

Sen. Rick Scott expressed frustration with the situation, stating, “It’s pretty frustrating.” Overnight Wednesday, the parliamentarian advised against GOP student loan repayment plans, and on Thursday, the parliamentarian cited those that would have blocked access to Medicaid and other health care programs from immigrants who are not citizens. Earlier, plans to gut the Consumer Financial Protection Bureau were also found to violate the rules. Sen. Kevin Cramer stated that there’s no desire to challenge the parliamentarian’s advice, emphasizing the importance of institutional integrity. At the same time, Republicans lost another potential revenue source after agreeing to a request from Treasury Secretary Scott Bessent to remove the so-called revenge tax provision, which would have allowed the government to impose taxes on companies with foreign owners and investors from certain countries. Bessent said he has reached a separate agreement with such countries.