The House passed a budget resolution Tuesday night after the speaker, Mike Johnson, persuaded several Republican lawmakers, including those who have expressed reservations about possible Medicaid cuts, to support the bill.
In theory, the budget, which kicks off the process of passing an extension of tax cuts enacted in 2017 and up to $2 trillion in spending cuts meant to partly offset them, could become law without significant cuts to Medicaid. But it won’t be easy.
That process has a few more steps: For one, the Senate has to adopt this budget resolution. Then both houses of Congress will also need to write and pass legislation that follows its instructions.
The budget resolution itself is silent on whether Congress cuts Medicaid, which provides health coverage to 72 million poor and disabled Americans. But it instructs the House Energy and Commerce Committee, which has jurisdiction over the program, to cut spending by $880 billion over the next decade. If the committee can’t save at least that much, the entire effort could be imperiled because of the special process Congress is using to avoid a Senate filibuster. Ten other committees have their own instructions to follow, too, though none have been tasked with cutting nearly as much.
It’s not so simple as finding the cuts elsewhere. The special process, known as budget reconciliation, means Republicans will have to find all $880 billion from within the committee’s jurisdiction. That leaves them with fewer options than one might think.
Below, a list of those options. (These numbers are not exact; they are informal or outdated estimates. Before a reconciliation bill passes, they would all get an official evaluation from the Congressional Budget Office, Congress’s scorekeeper.)
Option 1: Cut Medicare instead
If Republicans want to avoid major cuts to Medicaid, the largest pot of available money is in the other big government health insurance program: Medicare.
But Republicans face an even tighter political bind when it comes to Medicare than they do with Medicaid. President Trump has said repeatedly that he does not wish to cut Medicare. And most House Republicans have made a similar pledge. “Social Security and Medicare is off the books now,” President Joseph R. Biden Jr. said during last year’s State of the Union address, drawing a standing ovation from nearly every Republican present.
Mr. Trump said last week in a Fox News interview that Medicaid wouldn’t be “touched” either. But his record shows he has been much more open to Medicaid cuts than to Medicare reductions.
Option 2: Cut everything else the committee oversees
Even if the committee cuts everything that’s not health care to $0, it will still be more than $600 billion short.
The committee could also save around $200 billion by eliminating the Children’s Health Insurance Program, but that option has not been raised by the budget committee or anyone in House leadership.
Option 3: Consider options that aren’t exactly cuts, even if they don’t add up to $880 billion
There are some creative options that would allow the committee to find budget savings without having to cut spending it oversees. A document circulated earlier this year by the budget committee included a few such ideas.
-
Overturn regulations that require carmakers to raise fuel efficiency standards and reduce automobile emissions (~$110 billion). Repealing this rule would save the government money without making direct budget cuts by reducing spending on tax credits for people who buy electric cars and increasing gas tax revenue.
-
Auction portions of the airwaves to telecommunications companies (~$70 billion). The committee periodically passes legislation to sell the rights to transmit signals over specific bands of the electromagnetic spectrum, but the Defense Department tends to object to selling too much.
-
Speed up permitting for energy extraction (~$7 billion).
Some of these options might run afoul of the special budget process rules. A staff member for the Senate, known as the parliamentarian, would have to rule on their suitability if the final legislation comes up for a vote there.
Option 4: Cut Medicaid after all
Even if all of these cuts, revenues and rule cancellations from outside health care can pass muster, the committee will still be left with hundreds of billions of dollars to cut to hit its goal. Mathematically, the budget committee’s instructions mean the committee would need to make major cuts to either Medicare, Medicaid or both.
Congressional leadership has been signaling that Medicaid has been the main focus.
“$880 billion is a lot of money, and even if only $600 billion is coming from health care, you have to go beyond tiny tinkering on the margins,” said Marc Goldwein, a senior policy director at the Committee for a Responsible Federal Budget, a group that supports deficit reduction.
And several experts advising the committee say Medicaid policy changes are wise. “There’s more than enough in wasteful, inappropriate spending to get meaningful savings from the program,” said Brian Blase, the president of the right-leaning Paragon Health Institute, who was a White House economics official in the first Trump administration.
Some leading options for Medicaid cuts are below. The first few may be less politically fraught for vulnerable lawmakers, but would save less money. The last two would save more, but would have a much larger impact on the program as a result.
(Because of the way various Medicaid policies intersect with one another, it’s best not to add them together. Adopting all of them will reduce spending by less than the sum of each pursued alone.)
-
Establish a national work requirement for adults without disabilities and without young children (~$100 billion). Many Republicans, even the ones who are worried about the politics of Medicaid cuts, are comfortable with this approach. But that change is estimated to save only around $100 billion.
-
Reverse a Biden-era policy that limits how often states can check the eligibility of beneficiaries (~$160 billion). The change would allow states to check people’s incomes more often and require them to fill out more paperwork to stay enrolled.
-
Limit the ability of states to tax hospitals to help pay their share of Medicaid bills (~$175 billion). This would squeeze state budgets, and has been often described as reducing abuse of the program. Because of the formulas used to fund Medicaid, these taxes result in higher medical bills to the state — and thus more funding from the federal government.
-
Squeeze the share of government spending on working-class adults who were part of the program’s expansion under the Affordable Care Act (~$560 billion). This would save hundreds of billions by paying less in the 41 states that have expanded Medicaid under Obamacare but would do so by abruptly reducing federal funding for the program. Some states would probably immediately eliminate their Medicaid expansions, leading to large increases in the number of working-class adults who lack health insurance. Other states would have to find funding by other means — like cutting education or raising taxes.
-
Fundamentally change the structure of Medicaid (~$900 billion), from one in which the federal government pays a percentage of beneficiaries’ medical bills to one where it gives states a flat fee per person each year.
Conclusion: Health care is where the dollars are
The committee just doesn’t have enough other places to find the money. If the budget resolution is going to become public policy, it will require legislation that cuts health programs. Almost a trillion dollars is a lot of money, even in federal budget terms, and health care is where the money is.
If the committee can’t find $880 billion, the entire reconciliation process — including the extension of tax cuts — will collapse.
“The instructions they have given necessitate huge cuts to health care — full stop,” said Bobby Kogan, a senior director of federal budget policy at the Center for American Progress, and a former Senate and White House budget official. “There is a mathematical requirement.”
