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Senate Finance Committee Releases Reconciliation Legislation with Significant Medicaid Cuts

Strategic Insights

— 2 min read

The Senate Finance Committee released a 549-page reconciliation legislation on June 16, which includes a broad range of the GOP's reconciliation policies, particularly focusing on the Affordable Care Act (ACA) Marketplaces and Medicaid. The committee has jurisdiction over tax policies, including the ACA Marketplaces' tax subsidies and health programs under the Social Security Act, including Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). This draft legislation retains the core elements of the House-passed reconciliation bill but adopts significantly deeper Medicaid cuts. The provisions in the Senate bill have far-reaching implications for millions of Americans, particularly those relying on Medicaid for their healthcare needs.

Key Takeaways:

  • The Senate bill makes a significant change to the provider tax provision by layering on top of the moratorium on new or increased provider taxes a reduction in the 6% cap down to 3.5% for expansion states only.
  • The Senate bill sharply diverges from the House bill with respect to state-directed payments (SDPs) in expansion states, requiring a reduction of 10 percentage points per year beginning in 2027.
  • The Senate version maintains the expedited January 1, 2027 implementation date of the work requirements, allowing states to implement earlier via a section 1115 demonstration.
  • The Senate bill makes additional changes to the compliance and exemptions provisions, including limiting the exemption from work requirements for parents to individuals with dependent children 14 years or younger.
  • The Senate bill ends the availability of federal Medicaid funding for certain groups of lawfully residing noncitizens who have been covered through Medicaid for decades.
  • The Senate bill provides that states will see their federal Medicaid match (FMAP) cut to their regular FMAP for emergency services provided to certain noncitizens who currently qualify for an enhanced rate.
  • The Senate bill retains the geographic area increase adjustment for service areas of non-expansion states that provide second-trimester abortion services.

Statistics:

  • The Senate bill reduces the 6% cap for expansion states to 3.5% by 2027, with skilled nursing facilities and intermediate care facilities exempt from this cap ramp down.
  • The Senate bill requires expansion states to reduce their SDPs by 10 percentage points per year beginning in 2027.
  • The Senate bill maintains the expedited January 1, 2027 implementation date of the work requirements.
  • The Senate bill makes it harder to enroll and re-enroll in coverage, limiting immigrant eligibility for the Premium Tax Credit (PTC) and decreasing the number of individuals receiving PTC and covered by the Marketplace.
  • The Senate bill restricts immigrant eligibility for PTC, significantly decreasing the number of individuals receiving PTC and covered by the Marketplace.

Sources:

  • "Senate Finance Committee Releases Reconciliation Legislation with Significant Medicaid Cuts" (2023)
  • "Manatt Health: Senate Finance Committee Releases Reconciliation Legislation" (2023)

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