House Passes Budget Bill, with Huge Medicaid Cuts and Potential Medicare Fallout

In an all-night session that was finally gaveled down just before 7 a.m. on Thursday morning, May 22, the House of Representatives passed a comprehensive FY2026 federal budget bill, with only Republican votes, and all House Democrats voting against it. The bill, H.R. 119, whose H.R. 119, whose official name is the “One Big Beautiful Bill Act,” in deference to President Donald Trump, who had personally lobbied for its passage through the House, involves a massive tax cut for the wealthiest Americans, partly offset by hundreds of billions of dollars in cuts to Medicaid, with the Congressional Budget Office (CBO) estimating that $625 billion in savings would be achieved by effectively removing at least 7.6 million Americans from the program. In addition, the CBO announced late on Tuesday, May 20, that the increase in the national debt of $2.3 trillion over the next 10 years, will trigger as much as $500 billion in Medicare cuts, beginning in 2026.

The CBO’s sequestration estimate came in response to a request from Rep. Brendan Boyle (D-Pa.), Ranking Member of the House Budget Committee. In a sharp break with legislative protocol, the House Republicans, led by House Speaker Mike Johnson, pushed the bill through the House Budget Committee late Sunday night, and then through the House Rules Committee on Wednesday evening, without a single hearing or any debate. What debate took place, took place on the House floor in the early-morning hours of Thursday, as Democrats, led by House Minority leader Hakeem Jeffries (D-N.Y.) assailed the bill for its anticipated removal of Medicaid benefits from several million Americans.

As The Hill’s Mychael Schnell and Emily Brooks reported in a breaking-news report published at the moment that the bill’s vote had been completed, “House Republicans on Thursday morning passed a sweeping bill full of President Trump’s legislative priorities, marking a major win for Speaker Mike Johnson (R-La.) but kicking off what’s expected to be a bitter battle with the Senate over achieving key parts of the White House’s policy agenda. The chamber cleared the sprawling package in a 215-214 early-morning vote after days of marathon meetings, intense negotiations that spanned both ends of Pennsylvania Avenue, and a series of last-minute changes to the bill that were crucial in coalescing Republicans around the measure.”

Further, they wrote, “In the end, just two Republicans — Reps. Thomas Massie (Ky.) and Warren Davidson (Ohio) — opposed the legislation. House Freedom Caucus Chair Andy Harris (R-Md.) voted ‘present.’ Republicans on the House floor erupted in cheers and applause when Johnson slammed the gavel just before 7 a.m. EDT to close the successful vote. The bill — titled the “One Big Beautiful Bill Act,’ adopting Trump’s slogan for the measure — extends the tax cuts enacted by the president during his first term in 2017; boosts funding for border, deportation, and national defense priorities; imposes reforms, like beefed-up work requirements, on Medicaid that are projected to result in millions of low-income individuals losing health insurance; rolls back green energy tax incentives; and, among many other provisions, increases the debt limit by $4 trillion. Its passage marks a massive victory for Johnson, who successfully cajoled scores of Republican holdouts — from hardline conservatives to vulnerable moderates — to support the bill before his self-imposed Memorial Day deadline, muscling it through his razor-thin majority.”

And, as the Washington Post’s Jacob Bogage, Marianna Sotomayor, Matthew Choi, and Paul Kane, wrote on Thursday morning that “[T]he legislation, which passed 215-214-1 after marathon talks, carries a hefty price tag. The latest projection from the Congressional Budget Office, lawmakers’ nonpartisan bookkeeper, showed it will add $2.4 trillion over 10 years to the national debt, which already exceeds $36 trillion. To offset the cost, the measure would slash spending on social safety net programs by more than $1 trillion over 10 years. Even then, the mammoth legislation could also force nearly $500 billion in cuts to Medicare over the next decade to keep the national deficit within legal limits, unless Congress later adjusts the limits. The legislation could strip Medicaid coverage from 8.7 million people and lead to 7.6 million more uninsured people over 10 years, the CBO projected.”

Per that, The Hill’s Nathaniel Weixel wrote on Tuesday evening that “The House GOP’s “big, beautiful bill” will add so much money to the debt it will force across-the-board spending cuts to Medicare, according to the nonpartisan Congressional Budget Office (CBO). CBO late Tuesday said the legislation will increase the debt by $2.3 trillion over 10 years. That will trigger as much as $500 billion in Medicare cuts starting as soon as 2026. The congressional scorekeeper was responding to a request from Rep. Brendan Boyle (D-Pa.), ranking member of the House Budget Committee. Current law requires the White House to “sequester” certain mandatory spending programs. Reductions in Medicare spending would be limited to 4 percent annually — or an estimated $45 billion for fiscal 2026. The cuts would total roughly $490 billion over the 2027-2034 period.” Per that, they wrote, “Sequestration isn’t a given. Congress can ignore the rules requiring mandatory offsets or pass legislation later that will cut the deficit. President Trump campaigned on not cutting Medicare and promised his signature policy legislation would not touch the program.”

Per the estimates that the CBO had released earlier this week, MSNBC analyst Michael A. Cohen wrote on Wednesday morning that in fact, “According to an analysis published Tuesday by the Congressional Budget Office, the numbers in the GOP’s draft legislation are brutal. The bill would increase the federal deficit by $3.8 trillion — a rise that is spooking bond markets already worried about the president’s tariff increases. The bill would slash $267 billion in federal spending for SNAP, which more than 42 million low-income people rely on to put food on the table for their families. And it would cut nearly $700 billion from federal funding for Medicaid. The CBO estimated Tuesday that the Medicaid cuts could cause roughly 8 million people to lose their health insurance coverage, and that number could rise to 15 million thanks to other provisions in the legislation. The amendments revealed Wednesday, writes Larry Levitt, executive vice president for health policy at KFF, surely ‘would lead to more people losing health insurance.’ But Republicans scrambled to vote Thursday before the CBO could update its totals.”

Indeed, KFF posted five days ago to Instagram that “The proposed federal cuts could force states to make tough choices: maintain current spending on Medicaid by raising taxes or reducing spending on other programs; or cut Medicaid spending by covering fewer people, offering fewer benefits, or paying providers less. Our analysis estimates that the proposed cuts could reduce state Medicaid spending by an average of 20 percent per resident. Additionally, states like Washington, Virginia, and Montana could see enrollment drop by 15-32 percent.”

Consumer advocates angered

Shortly after the House passed the bill, the Washington, D.C.-based consumer-advocate organization Families USA released a statement condemning the legislation. “The House Republicans rushed through their budget bill overnight, but that vote and this package will only get more toxic as Americans figure out how much harm it does to our health coverage, our health care, and our health costs,” Anthony Wright, Families USA’s executive director said in the statement. “No one campaigned on the biggest reduction of health coverage in history, nor on massive Medicaid cuts, nor on cuts to the ACA or Medicare, nor on higher health premiums and co-payments – but that's what House Republicans voted for in this budget.”

Wright went on to say that “They admit this is one of the most consequential pieces of legislation in a generation, but they voted without getting a full analysis of the proposal or a single hearing on the impacts of the biggest cut to Medicaid ever. Even without a full accounting yet, we know enough to know that the consequences will be devastating, from millions more uninsured, to increased premiums and co-pays and more bureaucratic barriers to get on and stay on both public and private coverage, to reduced benefits and scaled back services resulting from cuts to the hospitals, clinics and other providers on which we all rely. The Senate has millions of reasons to reject this approach to a budget bill. The House Republicans jammed through a vote on this bill just 10 days after the text was released, and less than 10 hours after significant changes were made,” Wright noted.

“Instead of listening to the Americans clogging their phone lines and townhalls, House Republicans today took a bad bill and made it even worse, putting in place more paperwork that will kick people off coverage more quickly, and spiking premiums for those who buy private coverage individually through the marketplaces. They tried to hide their work with backroom deals and middle-of-the-night hearing markups, but voters won't be able to miss the giant wrecking ball headed at the health care system that we all need and use every day.” Wright called the legislation an issue of “life and death for low-income working families, people with disabilities, pregnant women and their babies, children, veterans, and people who rely on rural hospitals across the country – all of whom will pay the price of this disastrous bill for generations, while the billionaires reap the benefits.”

In a similar vein, Jocelyn Frye, president of the Washington, D.C.-based Partnership for Women and Families, which also advocates for the needs of families, said in a statement on Wednesday morning that “President Donald Trump and his House allies have desperately and deceptively sought to justify these actions by claiming they are strengthening Medicaid. Yet their rhetoric fools no one, least of all the people whom they are supposed to be representing and protecting. People turn to Medicaid for affordable health coverage during periods of need. They are looking for a safety net, not an attack on their character. Many Medicaid recipients already hold down jobs, while many others are older women who left the workforce to stay home and care for family. The unprecedented cuts to Medicaid contained in this package are not initiatives to eliminate waste, fraud or abuse. Instead, they would create miles of red tape designed to facilitate the termination of care for nearly 8 million women and families.”

Per the Medicaid work requirements in the bill, Frye stated that “The bill proposes to mandate federal work requirements for Medicaid recipients, require more frequent eligibility checks, limit retroactive coverage and impose cost-sharing, ‘defund’ Planned Parenthood and ban federal funding for gender-affirming care for both youth and adults, among other harmful cuts to Medicaid. It attacks immigrant families in order to pay for lawless immigration enforcement. Furthermore, the bill’s efforts to upend the Affordable Care Act by making it harder to enroll and afford health coverage would effectively terminate care for an additional 8 million women and families. And it bans ACA marketplace plans from covering abortion care, further eroding access to critical reproductive health care.”

And Margaret A. Murray, CEO of the Washington, D.C.-based Association for Community Affiliated Plans (ACAP), released a statement on Thursday morning that began thus: “The budget package passed here is cause for significant concern. It dresses up the most significant cut to Medicaid funding in U.S. history as an effort to fight fraud and waste. In practice, it generates most of its savings by setting up a series of bureaucratic traps that people who are rightly eligible for the program must navigate in order to keep their coverage and by shifting billions in costs to states. The moratorium on provider taxes—a mechanism used by every state in the Union save one—ties states’ hands should they need to respond to rising Medicaid costs. And the imposition of copayments on Medicaid expansion enrollees will discourage access to needed health care services.”

Further, Murray said, “We are also deeply concerned with the bevy of new paperwork requirements for consumers who wish to access advance premium tax credits to make their coverage more affordable. Again, the health provisions here seem to generate savings by inserting a bureaucracy between working families and health coverage and denying coverage to those that don’t make it through all the red tape. The Congressional Budget Office’s preliminary estimates find this bill will add trillions to the national debt while at the same time taking away Medicaid coverage for nearly 9 million people. How this makes America either healthier or wealthier is hard to see. We hope the Senate can make needed improvements to this bill,” she concluded.

Analysis: hospitals will be hit very hard

Meanwhile, the prospects for the nation’s hospitals could be dire. On Wednesday morning, leaders at the Australia-based Macquarie Equity Research released a report indicating that U.S. hospitals could be hit hard by the impacts of the bill, if it is passed into law. Macquarie analyst Tao Qiu wrote, “Our take: Initial analysis indicates Medicaid cuts are less severe than expected but could significantly impact the healthcare industry by 2026. Key changes include work requirements ($300b), tighter eligibility and enrollment rules ($230b), and spending limits ($98b). The Congressional Budget Office (CBO) estimates total savings at $625b (7.4 percent of projected spending) over 10 years. Of the 79m Medicaid/CHIP enrollees, 10m could lose coverage, and nearly 8m may become uninsured. By our estimate, this is equivalent to ~2 percent of demand destruction across healthcare products and services. We see this potentially reducing demand at durable medical equipment providers (DMEs), impacting both devices and accessories growth for RMD, FPH and COH.”

Qiu wrote that the negative impacts will hit hospitals later rather than sooner. “Freezing provider taxes would keep the $48b supplemental hospital payments at current rates despite potential future cost inflation. Revising the upper payment limit on new state-directed payment (SDP) programs to the Medicare rate would restrict the $110b programs' growth, which funds over 20 percent of managed Medicaid spending. Since existing programs remain, limiting near-term disruptions to hospital revenue,” he wrote. “However, long-term challenges include lower reimbursement growth and higher uncompensated care costs due to declining health insurance coverage.”

Per all that, on May 21, the American Hospital Association’s president, Rick Pollack, stated that “Rick Pollack, president and CEO of the American Hospital Association, stated that the bill’s Medicaid legislative proposals “severely restrict the use of legitimate state funding resources and supplemental payment programs, including provider taxes and direct payments, under the guise of eliminating waste, fraud and abuse.”

The impacts on individual Medicaid recipients actually worsened as the bill’s language was revised on Tuesday. Initially, the Medicaid work requirements for able-bodied people were set to go into effect in 2029, but as the bill moved towards the House floor, its provisions around work requirements were revised so that they will now go into effect no later than Dec. 31, 2026; that change was made in order to demonstrate savings at an earlier date.

This is a developing story. Healthcare Innovation will update readers as new developments emerge.