The House has the budget reconciliation pen: Are we there yet?

Authors: Jocelyn Guyer, Patti Boozang
Guest Editor: Michelle Savuto

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tl;dr

• The Senate narrowly passed the budget reconciliation bill, H.R.1, sending the bill to the House of Representatives for consideration. It is unclear whether House Republicans have the votes to send the final bill to the President’s desk by the 4^th of July.

• Updated modeling of key Medicaid provisions in the Senate-passed bill prepared by Manatt Health provides the latest impact estimates for states, hospitals and Congressional Districts (CDs).

• Like the House version of H.R.1, the Senate-passed bill will cause major losses in Medicaid coverage (8.7 million people) and $1.2 trillion in Medicaid cuts over ten years. Expansion states will disproportionately experience these cuts.

• Under the Senate-passed bill, hospitals would see major reductions in Medicaid payments ($665 billion over ten years) – more than the House bill.

• In nearly 300 CDs, more than one in ten Medicaid enrollees will lose coverage and Hospitals in the vast majority of CDs nationwide will experience financial stress under the Senate-passed bill (e.g., 25% or greater cuts in hospital expenditures in 146 CDs across 16 states than the House version of the bill).

The 80 Million Impact

Earlier today, after 27 hours of debate, the Senate passed Republicans’ reconciliation bill, H.R.1, by a vote of 51 to 50, with Vice President Vance breaking the tie. Senators Collins, Tillis, and Paul voted with Senate Democrats against the bill. The bill now heads to the House of Representatives where House leadership will need to shepherd the Senate-passed bill through approval in order to send it directly to President Trump’s desk for signature by Republican’s self-imposed July 4 deadline. Earlier today, a number of House Republican members expressed concerns about the Senate version of the bill but also indicated that the House is aiming to vote on the legislation as soon as tomorrow. If the House makes any changes to the Senate text, the two chambers will have to go to conference to resolve their differences – a process which takes time. And that seems the right course of action at this point.

Manatt Health (Manatt) released earlier this evening updated estimates of the impacts of Senate-passed H.R.1, including state-by-state estimates of Medicaid coverage and expenditure impacts (Table 1), hospital expenditure impacts (Table 2), and new CD-level coverage and hospital expenditure impacts (Table 3). With these new estimates in mind, it seems at least prudent if not crucial for House policymakers to take the time to understand and consider the impacts of legislation that has been developed at breakneck speed and largely in the wee hours of the morning. We share Senator Murkowski’s assessment of the Senate-passed bill vote (she voted yes, to be clear) which she characterized as “agonizing.” She went on to say “Do I like this bill? No…I know that in many parts of the country, there are Americans that are not going to be advantaged by this bill…My hope is that the House is going to look at this and recognize that we’re not there yet.”

We hope so, too. Here are the key takeaways from our new estimates that are most important to consider:

Table 1: Overall State-by-State Medicaid Coverage and Expenditure Impacts

• Like the House version of H.R.1, the Senate-passed bill will cause major losses in Medicaid coverage. Medicaid coverage losses are estimated at 8.7 million people. That translates into one in 10 people currently enrolled in the Medicaid program nationwide losing their coverage.

• Total cuts in Medicaid expenditures–taking into account federal and state funds–will reach more than $1.2 trillion over the 10-year period from fiscal year (FY) 2025 through FY 2034.

• The Senate cuts Medicaid by $100 billion more than the House-passed bill, reflecting new restrictions on the use of provider taxes in expansion states and on state directed payments (SDPs).

• The Senate imposes steeper cuts on the 41 expansion states [including the District of Columbia (D.C.)] than the House.

  • Among expansion states, the Senate-passed bill increases the size of already steep cuts in the House version by 10% largely due to the provision that reduces the size of their allowable provider taxes from
    6% of net patient revenue to 3.5% over time.

  • In contrast, the nine states that have not expanded Medicaid included in Manatt’s model would see the size of their cuts drop by 6%, though non-expansion states will still face unprecedented cuts.

• Ten states experience an increase of 20% or more in the size of their cuts
  under the Senate-passed bill as compared to the House, including Rhode Island (21%), Michigan (22%), Hawaii (24%), Oregon (25%), Missouri (27%), Kentucky (28%), Massachusetts (30%), Virginia (37%), New Hampshire (66%), and Vermont (102%).

Table 2: State-by-State Hospital Expenditure Impacts

• Under the Senate bill, hospitals would see major reductions in Medicaid payments, losing 18% of their Medicaid funding – almost $665 billion in losses over the 10-year period from FY 2025 through FY 2034.

• The Senate bill hospital cuts are even deeper than those in the House bill. The Senate bill cuts Medicaid hospital payments by over $100 billion more than the House bill over the 10-year period from FY 2025 through FY 2034.

• Twenty states would see an increase of 20% or more in the size of their hospital cuts under the Senate-passed bill compared to the House, ranging from 20.5% in Nevada to 188.5% in New Hampshire.

• The Senate imposes steeper cuts on the 41 expansion states (including D.C.) than the House. Hospitals in expansion states would see an average of a 22% increase in Medicaid cuts, whereas hospitals non-expansion states would see an average of a 6% increase in Medicaid cuts in the Senate bill compared to the House bill.

Table 3: Congressional District Level Coverage and Hospital Expenditure Impacts

• In 279 CDs (64%), more than one in ten Medicaid enrollees will lose coverage.

• Hospitals in 80% of CDs nationwide will fare worse under the Senate-passed H.R.1 than under the House version.

• In 146 CDs in 16 states (Hawaii, Kentucky, Massachusetts, Michigan, Missouri, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, Virginia, Washington State, and West Virginia) the cuts to hospital expenditures under the Senate bill are 25% or greater than in the House version of the bill. Those most impacted:

  • New Hampshire CDs are incredibly hard hit under the Senate-passed bill, with estimated hospital payment cuts that are 188% greater compared to the House-passed bill.

  • Missouri CDs rank second on the list of those disproportionately impacted under Senate-passed bill, with estimated hospital payment cuts that are 70% greater compared to the House-passed bill.

  • Ohio CDs would see hospital payment cuts that are 48% greater under the Senate-passed bill compared to the House-passed bill.

  • Kentucky CDs would see hospital payment cuts that are 41% greater under the Senate-passed bill compared to the House version.

The Bottom Line

One thing is clear as the House readies for action tomorrow: the estimated impacts of this evolving legislation over the past weeks and months, across all of its fast twist and turns, tells a consistent story of harm. The harm would play out in both massive coverage losses and catastrophic federal funding cuts to the Medicaid program all over the country.

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