Senate Republicans Face Setback as Medicaid Cuts Violate Rules

Republicans in the Senate are in a state of disarray after learning that their proposed cuts to Medicaid, which were intended to offset trillions of dollars in tax breaks, violate the chamber's procedural rules. This development comes as a significant setback for the party, which has been rushing to finalize the tax cut and spending bill before the end of the week.

The Senate parliamentarian, the chamber's chief arbiter of its often complex rules, advised that the Medicaid provider tax overhaul does not adhere to the Senate's procedural guidelines. This guidance is rarely ignored, and Republican leaders are now faced with difficult decisions. The proposed cuts to Medicaid and other programs were crucial for offsetting the trillions of dollars in tax breaks that are a top priority for President Donald Trump.

Earlier, the parliamentarian had also advised against some GOP provisions that would have barred certain immigrants from accessing health care programs. Republicans are now scrambling to respond, with some calling for challenging or firing the nonpartisan parliamentarian, who has been in the role since 2012. Democrats, on the other hand, have stated that these decisions would devastate the GOP's plans.

Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, criticized the Republican proposals, stating that they would have resulted in $250 billion less for the health care program. He described the cuts as "massive Medicaid cuts that hurt kids, seniors, Americans with disabilities and working families."

The outcome of the parliamentarian's ruling is a significant setback for Senate Republicans, who had hoped to begin voting on the bill by the end of the week to meet Trump's Fourth of July deadline for passage. Trump is expected to host an event at the White House later in the day with Americans who the administration says would benefit from the bill, in an effort to energize Congress to finalize the legislation.

GOP leaders have been struggling to rally support for Medicaid changes that some senators believe go too far and would leave millions without coverage. 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, and Senate Republicans were proposing even deeper cuts.

Republican leaders had been relying on the Medicaid provider tax change, along with other health care restrictions, to save billions of dollars and offset the cost of trillions of dollars in tax cuts. These tax breaks from Trump’s first term would expire at the end of the year if Congress fails to act, resulting in a tax increase for Americans.

Several GOP senators have expressed concern that cutting the Medicaid provider tax change would particularly hurt rural hospitals that depend on the money. Hospital organizations have warned that such a move could lead to hospital closures.

Sen. Josh Hawley of Missouri, who has been fighting the change, stated that he had spoken to Trump late Wednesday and that the president told him to revert back to an earlier proposal from the House. States impose these taxes as a way to help fund Medicaid, largely by boosting the reimbursements they receive from the federal government. Critics argue that the system is a type of "laundering," but almost every state except one uses it to help provide health care coverage.

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.

The House-passed bill would freeze the provider taxes at current levels. The Senate proposal goes deeper by reducing the tax that some states are able to impose. Senate GOP leaders can strip or revise the provisions that are in violation of the chamber’s rules. However, if they move ahead, those measures could be challenged in a floor vote, requiring a 60-vote threshold to overcome objections. This would be a challenging task in a Senate divided 53-47, with Democrats unified against Trump’s bill.

One plan Republicans had been considering would have created a rural hospital fund with $15 billion to help defray any lost revenue to the hospitals and providers. Some GOP senators believed that amount was too much, while others, including Sen. Susan Collins of Maine, wanted at least $100 billion.

The parliamentarian has been working around the clock since late last week to assess the legislation before votes that were expected as soon as Friday. Overnight Wednesday and Thursday, the parliamentarian advised against several provisions that would have blocked access for immigrants who are not citizens to Medicaid, Medicare, and other health care programs, including one that would have cut money to states that allow some migrants into Medicaid.

Earlier, proposals to cut food stamps were ruled in violation of Senate rules, as was a plan to gut the Consumer Financial Protection Bureau. The parliamentarian's decisions have left Republicans scrambling to find alternative ways to offset the cost of the tax cuts, with the future of the bill hanging in the balance.