Senate Proposes Major Medicaid Reforms
Senate Republicans have put forward significant changes to Medicaid as part of President Trump’s much-discussed legislation. This moves away from some skeptics who had suggested the Senate would align more closely with certain conservative voices advocating less drastic measures after the House’s version of the bill was passed.
The Senate Finance Committee introduced the tax and Medicaid components of the president’s bill recently. Following weeks of speculation, there’s now a clearer picture of how the Senate intends to alter the House’s proposal. The suggested reforms to Medicaid in the Senate aim for more profound changes to the eligibility program compared to what the House initially proposed. This includes strengthening eligibility and work requirements, along with restricting states from utilizing healthcare provider taxes to supplement Medicaid funding.
These proposed reforms are expected to lead to a greater reduction in federal Medicaid spending—estimated at $700 billion—compared to what was outlined in the House bill. Congressional Republicans are vocal about their intention to highlight these Medicaid savings as part of the largest budget cuts in U.S. history.
The Senate’s ambitious approach indicates that they are keen to maintain or even intensify the Medicaid reforms suggested by the House, a sentiment backed by Senate majority leader John Thune during a recent interview. Thune and fellow Republican senators have defended these proposals, dismissing criticism from both Democrats and some within their party, describing it as necessary to deliver additional savings for Americans, particularly those the programs were designed to assist.
Medicaid spending has notably surged since the Covid-19 pandemic, increasing by approximately 60% from 2019 to 2025. The expansion of the program post-2010 has broadened its reach to a larger segment of the U.S. population, now including individuals with incomes of up to 138% of federal poverty levels.
According to Thune, “This is a reform-rich program.” He expressed, during a segment on Fox News, that the goal is to enhance Medicaid, making it better suited for those who truly need it.
Thune is clear that benefits should not extend to illegal immigrants, noting that those who can work—especially healthy individuals—should have job requirements associated with receiving benefits. He emphasizes that these reforms are crucial and overdue.
The current Medicaid proposal retains work requirements for healthy adults without children, mandating at least 20 hours of work, study, or volunteer activities per week. The Senate’s language broadens the working requirements to include adults with older children, while the House’s earlier proposal had specifically exempted those with dependents.
There’s a phased approach to provider taxes in the Senate’s plan, gradually introducing caps on how states can tax certain healthcare providers to obtain additional federal funds starting in 2027. This provision could affect 35 states that must expand Medicaid under the Affordable Care Act, reducing limits to 3.5% by 2031.
The Senate proposal also stipulates that illegal immigrants won’t gain access to state-funded Medicaid, suggesting that federal payments to states will be curtailed if they expand their Medicaid populations to cover them.
Some Senate Democrats have already criticized the president’s expansive bill, describing it in stark terms. The Senate Finance Committee’s Medicaid proposal may face backlash from both populists and moderate Republicans.
Republican Senator Josh Hawley has voiced his concerns over the language regarding provider taxes, claiming it may threaten rural hospitals’ sustainability. He acknowledged that discussing these reforms back home in Missouri would be challenging.
The Senate’s approach to the overall policy seems to be more tempered, especially regarding the green energy tax credits established during Biden’s presidency.
The proposal also modifies the House’s mandate to make Trump’s 2017 tax cuts permanent, aiming to lower federal income tax rates and temporarily lift taxes on wages for specific groups of Americans.
Thune and the Senate GOP leaders plan to advocate that their Medicaid reforms will curb the extensive growth of the program, a direct response to Democratic expansions that have taken place. They justify that, even with these changes, Medicaid spending is still projected to rise significantly over the next decade. The Senate summary mentions that, paradoxically, in Washington, what are deemed cuts often come with minimal increases in funding.
Thune assured that the core Medicaid population would remain unaffected by these adjustments. The GOP leadership is pushing for support for work requirements for able-bodied adults and reiterating that illegal immigrants will not be eligible for taxpayer-funded health insurance.
An internal poll suggests that Medicaid job requirements have only a 32% favorability rating, with a significant portion of Americans opposing them based on recent polling data.
Thune concluded by expressing hope that these proposed changes will resonate positively with the public, potentially shifting the narrative in their favor.
