Speaker Johnson Dismisses Proposal to Cut Medicaid Spending
Republicans have struggled to reach a consensus on cutting federal expenditures for the program, leading the speaker to indicate a shift in focus.
House Speaker Mike Johnson (R-La.) has dismissed a suggested amendment to reduce Medicaid spending as part of an extensive policy initiative aimed at enacting President Donald Trump’s agenda, following a series of discussions among Republican lawmakers in the past two weeks.
On May 6, the speaker informed reporters that decreasing the federal reimbursement rate for states’ Medicaid costs was no longer being considered.
Johnson also expressed a reluctance to support a cut that would cap federal Medicaid payments to states that expanded the program under the Affordable Care Act.
“I believe we’re ruling that out as well,” Johnson stated. “But stay tuned.”
This situation is beneficial for Republicans in contested states and swing districts, who have consistently opposed alterations to the program favored by many constituents. However, it leaves the party grappling with the challenge of achieving $1.5 trillion in federal spending reductions over the next decade.
In pursuit of this goal, Republicans have scrutinized Medicaid, the $914 billion healthcare program catering to low-income Americans, which some believe is plagued by inefficiencies, inequities, and misuse by certain states. Nevertheless, many GOP members are hesitant to propose spending cuts that might lead to reduced benefits or loss of coverage for constituents.
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To pass legislation, Republicans need nearly unanimous support, which has proven elusive as fiscal conservatives and moderates have struggled to reach a compromise.
Meanwhile, time is running short with the fiscal year approaching and Johnson’s self-imposed May 26 deadline for the bill, which encompasses appropriations for the upcoming fiscal year and lays the groundwork for Trump’s agenda.
Johnson’s remarks suggest he is likely to proceed with the bill without including the two proposals aimed at reducing federal Medicaid expenditures.
Debated Changes
The proposed changes would not directly cut Medicaid but would transfer more financial responsibility for the program to the states.
Currently, the federal government covers about 70 percent of Medicaid costs. States enroll beneficiaries and establish coverages and reimbursement rates according to federal guidelines.
In turn, states reimburse providers and receive a partial reimbursement from the federal government, with rates varying from 50 percent to 76.9 percent based on state income levels.
States obtain a 90 percent reimbursement for expenses related to individuals who enrolled in Medicaid under the expansion allowed by the Affordable Care Act.
Approximately 21 million out of nearly 80 million recipients are enrolled in expanded Medicaid, which, unlike traditional Medicaid, does not stipulate that adult enrollees must be elderly, disabled, or caregivers.
According to data from the Congressional Budget Office, a 5 percent reduction in the Federal Medicaid Assistance Percentage (FMAP) for all beneficiary categories would yield a cumulative spending reduction of about 7 percent on the projected $7.5 trillion in federal Medicaid spending through 2034.
Bringing down the reimbursement for the Medicaid expansion group to match the FMAP for other Medicaid recipients in the state could result in cumulative savings of around 8 percent to 12 percent over that timeframe, depending on how the cap is structured.
Nonetheless, most of these individuals would remain insured since they would qualify for Medicare. The Budget Office predicts that the number of uninsured people could rise by between 600,000 and 3.9 million over the next decade.
Some Republicans, including Rep. Chip Roy (R-Texas), perceive the proposed changes as both a matter of fiscal responsibility and equity.
In 2024, approximately $600 million in federal payments were allocated to providers who were not enrolled in Medicaid, and over $10 billion was disbursed for services lacking adequate beneficiary eligibility information.
The Energy and Finance Committee is anticipated to review the reconciliation bill during the week of May 12, although no specific date has been established.
