A controversial change to the Medicaid provider tax rate in Senate Republicans’ version of the ‘big, beautiful bill’ has been knocked out by Senate rules.
Senate Budget Committee Democrats announced on Thursday that Senate Parliamentarian Elizabeth MacDonough ruled against a slew of core provisions within President Donald Trump’s colossal bill, including tweaks to Medicaid that divided Republicans in the upper chamber.
Indeed, MacDonough ruled that the harsher Medicaid provider tax rate crackdown in the Senate’s version of the bill did not comport with the Byrd Rule, which provides guardrails for the budget reconciliation process.
That ruling and the stripping out of other provisions that included denying states Medicaid funding for having illegal immigrants on the benefit rolls, preventing illegal immigrants from participating in Medicaid and the Children’s Health Insurance Program (CHIP), and preventing Medicaid and CHIP funding from going toward gender-affirming care, among others, has gutted many of Republicans’ key cost-saving Medicaid changes and likely set back their plan to put the mammoth bill on Trump’s desk by July 4.
Senate Democrats vowed to inflict as much pain as possible on Republicans through the ‘Byrd Bath,’ where provisions are gone through line-by-line to see whether they comply with the Byrd Rule.
Senate Finance Committee Ranking Member Jeff Merkley, D-Ore., accused Republicans of ‘scrambling to rewrite parts of this bill’ as more and more provisions are knocked out by the parliamentarian.
‘Democrats are continuing to make the case against every provision in this Big, Beautiful Betrayal of a bill that violates Senate rules and hurts families and workers,’ Merkley said in a statement. ‘Democrats are fighting back against Republicans’ plans to gut Medicaid, dismantle the Affordable Care Act, and kick kids, veterans, seniors, and folks with disabilities off of their health insurance – all to fund tax breaks for billionaires.’
The Senate Finance Committee’s changes to the provider tax rate were a stark departure from the House GOP’s version of the bill. Senate Republicans went further than the House’s freeze of the rate, or the amount that state Medicaid programs pay to healthcare providers on behalf of Medicaid beneficiaries, for non-Affordable Care Act expansion states and included a provision that lowers the rate in expansion states annually until it hits 3.5%.
Those changes angered a handful of Republicans, like Sens. Susan Collins, R-Maine, and Josh Hawley, R-Mo., who have warned not to make revisions to the healthcare program that could shut down rural hospitals and boot working Americans from their benefits.
The parliamentarian argued in her ruling that ‘ending states’ ability to tax healthcare providers would severely limit states’ ability to provide healthcare to millions of Americans who depend upon Medicaid for their care.’
In order for Senate Republicans to ram the president’s agenda through the Senate with a reduced 51-vote threshold, provisions within the bill have to adhere to the Byrd Rule, which requires that policy changes must have a budgetary and spending impact.
News of the provision’s removal comes as lawmakers were floating a possible fix to the crackdown in the form of a stabilization fund for rural hospitals. One proposal floated by the Senate Finance Committee would start a fund that distributes a total of $15 billion over the next five fiscal years to states that apply for the program.
