Contact The Editor
Articles By This Author
Republican-sponsored changes in Medicaid will lower hospital prices and Americans' health insurance premiums, the White House contends in a new report aimed at an issue that could be central to this year's midterm elections.
The report, which has not yet been released, was authored by senior officials in the Department of Health and Human Services and shared with The Washington Post. It examines the potential impact of two significant changes in how Medicaid is financed that were included in last year's Republican budget bill. The changes could affect tens of billions of dollars in annual federal spending.
Last year's legislation, the One Big Beautiful Bill, put new restrictions on two financing mechanisms used by states - known as provider taxes and state-directed payments - to help pay for their safety-net health care programs. Administration officials and GOP lawmakers say the bill closed loopholes that allowed states and health care providers to draw down additional federal funds with too few guardrails, inflate their spending and wrongly pass costs along to consumers.
The administration's report projects that the restrictions could reduce government health care spending by as much as 5 percent and help tamp down cost growth, including for people who have private health insurance.
The Republican budget bill, which passed using a process known as reconciliation, cut about $1 trillion from Medicaid and other health care programs. Health care advocates and Democrats have said that the Medicaid financing structures the bill curtailed provide critical funding for states and health care providers. They warn that Trump's new limits could lead to declining Medicaid enrollment, closure of rural hospitals and other adverse effects.
"I don't think that there's any merit to the cuts that they have been making," said Jessica Schubel, who served as a senior health official in the Biden White House. "This idea that provider taxes or state-directed payments are somehow skirting the objectives of Medicaid and are being used improperly, in my opinion, is false."
Trump's cuts to Medicaid have also become a major issue in Democrats' congressional campaigns. Protect Our Care, a left-leaning advocacy group, last month launched a new national health care campaign dubbed "Sick Of It!," which calls for electing Democrats who will reverse the GOP's Medicaid changes.
Some Democrats, however, said that provider taxes and state-directed payments, while well-intentioned, have become problematic and contributed to health care cost inflation.
"It has been a disaster for the federal budget, and it's been a disaster in terms of a misdirection of Medicaid dollars to hospitals," said Ann Kempski, a longtime health care consultant and Democrat. "These had to be reined in."
White House officials, too, have characterized their new limits on Medicaid financing as a necessary reform.
Health care advocates and Democrats are "coming from a perspective of every dollar spent on Medicaid is a good thing," said a White House official. "We want to make sure that the resources are being targeted in a way that they're actually reaching what they're supposed to be doing, which is providing better care for beneficiaries."
Forty-nine states and the District of Columbia have provider taxes, which they levy on health care providers. Medicaid is financed jointly by states and the federal government, and the provider taxes trigger a flow of additional federal funds, with the money going back to providers and also being used for unrelated state priorities.
State-directed payments have been used to direct additional funds to health care providers through Medicaid-managed care programs.
The new limits on provider taxes and state-directed payments were overshadowed last year by some other Medicaid changes in the GOP bill, such as efforts to impose new work requirements on people who get Medicaid coverage.
"I think the most impactful change of all the Medicaid and ACA changes in the reconciliation bill was the limits on SDPs," said Brian Blase, a conservative health policy expert who served in the first Trump administration. Blase's think tank, the Paragon Health Institute, last year urged congressional Republicans to impose new limits on provider taxes and SDPs.
The administration's report on its Medicaid changes relies on projections of their impact and does not draw on empirical evidence. It is authored by senior Health and Human Services officials, including Casey Mulligan, the agency's chief economist, and Ge Bai, who President Donald Trump has nominated to serve as the agency's assistant secretary for planning and evaluation.
(COMMENT, BELOW)
Previously:
• Trump reflecting on his own mortality