Overview
On May 11, House Republicans introduced a 160-page (Subtitle D Health Ae3638d840 | PDF | Medicaid | Federal Government Of The United States) bill aiming to implement nationwide Medicaid work requirements and stricter eligibility standards. The legislation, part of a broader budget reconciliation package, seeks to cut federal spending by hundreds of billions of dollars over the next decade, with significant reductions targeting Medicaid and ACA programs. The House and Energy and Commerce Committee reconciliation package is available here: 05 13 2025 FCMU Memorandum UPDATED 55a74a132a | PDF | Medicaid | Clean Air Act (United States)
Key Provisions
- Work Requirements: Mandates able-bodied adults aged 19 to 64 without dependents to work at least 80 hours per month or engage in community activities to retain Medicaid coverage, with exemptions for pregnant individuals and specific scenarios.
- Eligibility Checks: Introduces frequent eligibility redeterminations and stricter address verification processes to avoid duplicate enrollment across states.
- Citizenship Verification: States failing to verify citizenship or immigration status for enrollees risk losing federal funding for those individuals’ benefits.
- Gender Transition Funding: Prohibits Medicaid and CHIP funding for gender transition procedures for individuals under 18.
- Financial Penalties: Penalizes states providing Medicaid benefits to noncitizen residents by reducing their ACA expansion matching rates.
- Retroactive Coverage: Reduces Medicaid retroactive coverage from three months to one.
- Federal Reimbursement: Eliminates reimbursement during the “reasonable opportunity” period for citizenship/immigration verification unless completed.
Impact
The legislation proposes substantial changes to Medicaid operations, targeting cost reductions while intensifying monitoring and eligibility procedures. Critics may argue it could limit access for vulnerable populations, while supporters may view it as a necessary step for fiscal responsibility.
The legislation would also limit states’ ability to levy taxes on providers (bed taxes) to finance Medicaid programs. These “bed taxes” are typically imposed on hospitals and nursing homes/facilities. Provider taxes can also apply to physicians as well but are less common, falling as a tax on gross receipts or certain specific services.
The bill requires state contracts with pharmacy benefit managers (PBMs) to use a transparent pricing model, limiting drug payments to ingredient costs and dispensing fees. Payments to PBMs must be fully passed through to pharmacies or providers. It also bans spread pricing in Medicaid programs.
What Wasn’t Included
The Republican Medicaid proposal from the House Energy and Commerce Committee, as finalized in May 2025, does not reduce the Federal Medical Assistance Percentage (FMAP) for Medicaid, including for the Affordable Care Act (ACA) expansion population. Initially, proposals to lower the FMAP, particularly the enhanced 90% rate for ACA expansion enrollees, were considered to achieve the mandated $880 billion in savings over a decade.
However, due to pushback from moderate Republicans, such as Rep. Mike Lawler (R-N.Y.) and Rep. Nicole Malliotakis (R-N.Y.), who opposed changes that would shift costs to states and risk coverage losses, the final compromise plan explicitly avoids altering the FMAP. Instead, it focuses on other measures like strengthening eligibility requirements, imposing work requirements for certain beneficiaries, and targeting state financing practices to achieve savings.
Total federal Medicaid spending, largely driven by FMAP, was approximately $557 billion in fiscal year 2024, covering about 62% of the program’s total costs across states, according to Congressional Budget Office (CBO) estimates. For 2025, projections suggest federal costs could rise to around $580-$600 billion due to enrollment trends and healthcare inflation, though exact figures depend on state claims and economic factors. Specific FMAP-driven costs aren’t isolated in public data, as they’re embedded in overall Medicaid outlays.
In March, I did a three-part series on potential Medicaid reform/cuts legislation. All three posts are available below.