House Republicans, in a 216-214 vote, have approved the Senate’s fiscal 2025 budget blueprint, paving the way for key portions of President Donald Trump’s domestic policy agenda — including potential sweeping changes to Medicaid.
The budget resolution’s passage marks a crucial milestone for Republican lawmakers, who are advancing a legislative path to enact deep spending cuts without Democratic input, according to The Hill. The measure triggers the next phase of budget reconciliation, which enables the Senate to bypass Democratic buy-in by working around the 60-vote filibuster threshold.
Although the resolution is nonbinding, it serves as an instruction manual for drafting a final legislative package — and all signs point to Medicaid being in the crosshairs.
$880B in targeted cuts
The adopted resolution preserves a controversial directive: The House Energy and Commerce Committee must identify at least $880 billion in federal healthcare spending cuts, a figure many healthcare stakeholders expect will fall disproportionately on Medicaid.
“It’s hard to see how they reach that level of savings without touching Medicaid,” Nicole Stallings, president and CEO of the Hospital and Healthsystem Association of Pennsylvania, told Becker’s. “From a healthcare provider perspective, how deep do these cuts go before they hit the bone? And what does that really mean for hospitals and patients?”
While members of Congress may claim their fiscal 2025 budget blueprint does not explicitly single out Medicaid, the implications are unmistakable.
“To leave Medicare unscathed, as members of Congress vow, the House budget plan’s $880 billion cut to federal health spending almost certainly must come from Medicaid — there’s nowhere else to find it,” Bruce Siegel, MD, president and CEO of America’s Essential Hospitals, said. “Just as certain: A cut that deep would be disastrous for working families and children in small-town America, where Medicaid means health, productivity and financial stability. It also would devastate our safety net and the essential hospitals at its core.”
The stakes are enormous. Medicaid plays a central role in sustaining care for low-income populations and underpinning financial stability for essential hospitals, many of which are the largest employers in rural and underserved communities.
Potential fallout for hospitals, rural communities
Cuts to Medicaid could create a ripple effect throughout the healthcare system, with particularly acute consequences for safety-net providers and the communities they serve.
“The hospitals these communities depend on will have fewer resources to give them the safety net they’ll need,” Dr. Siegel said. “Essential hospitals rely heavily on Medicaid; it’s about half their payer mix. Even then, Medicaid payments fall well short of essential hospitals’ costs. So they rely on a patchwork of other federal, state and local support to fill the gap. But there is no patch for an $880 billion funding cut.”
States such as Arkansas, Louisiana and West Virginia — where more than one-fifth of non-elderly adults in rural communities rely on Medicaid — would face particularly harsh consequences. In several Southern and Southwestern states, more than 50% of children in rural areas depend on Medicaid or the Children’s Health Insurance Program.
Work requirement debates
Among the GOP’s proposed changes are Medicaid work requirements, which are projected to achieve an estimated $130 billion in federal savings over 10 years, Brett Tande, CFO of San Diego-based Scripps Health, said during an episode of the “Becker’s CFO and Revenue Cycle Podcast.”
The Medicaid debate comes amid other financial pressures hospitals face — from site-neutral payment proposals to rising denials to ongoing workforce shortages — making further Medicaid cuts even more challenging.
“My sense of the direction is they are trying to get Medicaid — some of the expansion that we’ve seen over the years — back under control,” Mr. Tande said.
Critics argue that work requirements risk harming vulnerable populations and overlook the reality that most adult Medicaid beneficiaries already work. In 2023, only 39% of small firms (three to nine employees) offered health coverage, meaning Medicaid often fills a gap in communities dominated by small businesses.
Some lawmakers are also eyeing cuts to the enhanced Federal Medical Assistance Percentage to curb federal spending. Under the ACA, expansion states receive up to a 90% federal match — far above the standard 50%.
“That seems to be a primary target, too,” Mr. Tande said. Reducing FMAP, even slightly, could trigger automatic rollbacks in some states due to “trigger laws,” potentially ending Medicaid expansion overnight for hundreds of thousands of people.
Hospital leaders’ push to protect Medicaid
The proposed cuts have drawn fierce opposition from hospital leaders and advocacy groups. Chip Kahn, president and CEO of the Federation of American Hospitals, issued a stark warning following the House vote: “It’s now decision time. The message is crystal clear from a majority of Trump voters and two-thirds of swing voters — an overwhelming majority of the electorate: now is not the time to cut Medicaid.”
He called on lawmakers to listen to constituents and extend enhanced marketplace tax credits, warning that “these decisions have consequences for patients across the nation.”
Dr. Siegel echoed this sentiment, stressing the devastating impact on rural America.
“Cutting federal Medicaid funding leaves states holding the bag,” he said, forcing difficult decisions on eligibility and benefits that may lead to coverage losses, medical debt and broader economic distress.
What’s next?
The path forward will be politically fraught. While moderate Republicans have expressed unease over the magnitude of proposed Medicaid cuts, conservative hardliners are pushing for deeper reductions, according to Politico. The GOP now faces the difficult task of bridging these internal divisions while advancing President Trump’s broader policy agenda — including extending tax cuts and revisiting the state and local tax deduction cap.
While the resolution sets a target date of May 9 for committees to report their legislation, this deadline is advisory, not binding.
Hospital executives should brace for a turbulent legislative stretch, with Medicaid’s fate — and the financial stability of essential hospitals — hanging in the balance. As lawmakers hammer out the specifics of the budget package, healthcare leaders are urging vigilance, proactive advocacy and a unified voice to protect the country’s most vulnerable patients and to ensure the survival of the hospitals that serve them.
