Congressional Budget Update JUNE

Congressional Budget Update

On Tuesday, July 1, the U.S. Senate passed H.R. 1, the tax and reconciliation package by a vote of 51-50 (Vice President Vance breaking the tie), so now the legislation moves back over to the U.S. House for its review of the revised bill. The Senate version includes additional changes to Medicaid, which will drive deeper funding reductions, alongside some last-minute changes that help lessen some of the likely negative impact. While these last-minute changes are welcomed, they fall far short of mitigating the expected negative impacts. Please see an updated summary of key provisions included in the Senate-passed bill, as well as the National Council’s press statement. The revised bill goes back to the House, where members must approve and pass it before it can be sent to President Trump for his signature. A vote on the revised bill in the House is expected this week.

As we’ve previously shared, the U.S. House of Representatives passed H.R. 1, the One Big Beautiful Bill Act, by a vote of 215-214-1 in late May. Notably, the House did not vote to reduce the federal FMAP, impose per capita caps or block grants on Medicaid expansion states. The U.S. House also included a provision that would “grandfather” provider taxes in certain states that already have such Medicaid financing mechanisms in place.

Our partners at The National Council for Mental Wellbeing provided a summary of key changes related to Medicaid below, which included:

Creating exemptions for individuals with mental health and/or substance use disorder conditions to the cost-sharing requirements for Medicaid enrollees. Such individuals will not be required to participate in cost-sharing, nor will they be required to comply with the bill’s work/community engagement provisions, though many of the details concerning both exemptions will be determined at the state level.
Moving up the start date for work/community engagement requirements, from the originally planned Jan. 1, 2029, to Dec. 31, 2026 (or earlier, if individual states elect to accelerate their own timeline).
Reducing the Federal Medicaid Assistance Percentage from 90% to 80% for the expansion population in states that provide Medicaid or Children’s Health Insurance Program coverage to certain lawfully residing children and pregnant women (current estimates suggest this will impact 33 states and Washington, D.C.).
Increasing the cap on state-directed payments for non-expansion states to 110% of the Medicare rate for a given service, while grandfathering in existing payments above that rate in those states. The 100% cap for new state-directed payments in expansion states remains unchanged.

Unfortunately, the U.S. Senate has taken a more aggressive approach to addressing spending cuts to the Medicaid program during its deliberation of H.R. 1 – putting in jeopardy, many states, including Ohio’s, “provider tax” financing mechanism. Ohio Council, working with our National Council partners, have communicated our preference for the House version over the Senate version. While the Senate-passed version includes major federal funding cuts to Medicaid that were opposed by hospitals and doctors and would sharply boost the number of people without health insurance – it importantly, does not reduce the FMAP for Medicaid expansion states, thus not triggering Ohio’s immediate termination of the Group VIII expansion program.