House Republicans have unveiled a sweeping plan to cut $880 billion from Medicaid over a decade to support President Trump’s tax reform agenda, setting off a political firestorm within their own party and among Democrats.
At a Glance
- Republicans propose cutting federal Medicaid funding to states providing health coverage to undocumented immigrants
- The plan aims to slash $880 billion over ten years to offset Trump’s proposed $4.5 trillion tax cuts
- States covering undocumented immigrants would see federal Medicaid expansion funding drop from 90% to 80%
- Proposal includes work requirements and more frequent eligibility checks for Medicaid recipients
- Even some Republicans, including Sen. Josh Hawley, have expressed opposition to the Medicaid cuts
Budget-Cutting Strategy Targets Medicaid
The Energy and Commerce Committee has released a comprehensive plan to reduce federal Medicaid spending by $880 billion over the next decade. This proposal represents a significant shift in healthcare funding policy, primarily targeting states that provide Medicaid coverage to undocumented immigrants.
For these states, the federal share for Medicaid expansion under the Affordable Care Act would decrease from the current 90% to 80%, forcing states to either cover the difference or reduce services. The plan strategically avoids deeper cuts like lowering overall federal match rates or capping per-person federal spending, which might have faced even stronger opposition.
With Medicare and Social Security explicitly protected from cuts, Medicaid has become the primary target for budget reduction. The proposal introduces several administrative changes designed to reduce enrollment, including stricter work requirements and more frequent eligibility verifications. Additionally, the plan would prohibit Medicaid or Children’s Health Insurance Program funds from being used for gender transition procedures for minors and would require verification of citizenship, nationality, or immigration status for all Medicaid beneficiaries.
BREAKING: House Republicans propose cuts and other eligibility requirements to Medicaid in their agenda bill, kicking off a contentious fight over health care. https://t.co/BvSJShPk6m
— NBC News (@NBCNews) May 12, 2025
Tax Reform and Deficit Reduction Goals
The Medicaid cuts are directly tied to President Trump’s broader economic agenda, specifically his push for extending and expanding the 2017 tax cuts. Republicans hope to pass approximately $4.5 trillion in tax cuts while offsetting some of the cost through these spending reductions. The Congressional Budget Office has estimated that the proposed Medicaid changes would reduce the federal deficit by more than $880 billion over the next decade, making it a cornerstone of the fiscal strategy behind the tax plan.
House Republicans are working under a tight timeline, aiming to complete the spending package by July 4, with a hard deadline in August due to debt limit concerns. The package will likely include rollbacks of clean energy provisions from the Biden administration while increasing spending on defense and border security. Republicans plan to use the budget reconciliation process to pass the package, which would allow them to bypass the Senate filibuster and pass the legislation with a simple majority.
House Republicans are releasing their plan to cut Medicaid spending, with the program’s defenders in the GOP appearing to win the intraparty clash over how aggressively to change the system https://t.co/D5AVqKt9gg
— Gregory Daco (@GregDaco) May 12, 2025
Growing Republican Division
The proposal has created significant division within Republican ranks. While GOP leadership frames the cuts as necessary fiscal responsibility measures, some Republicans have voiced strong opposition. Senator Josh Hawley has emerged as a prominent critic within the party, arguing that cutting healthcare access was not what Trump voters supported in November. The plan appears designed to appeal to GOP moderates who might balk at more dramatic program overhauls, but this approach risks alienating fiscal conservatives who have pushed for more extensive reforms.
Democrats have launched a coordinated attack against the proposal, with Senate Finance Committee Chairman Ron Wyden characterizing it as “the largest cut to Medicaid in history.” The political battle lines are clearly drawn, with Democrats warning about potential coverage losses for vulnerable populations and Republicans emphasizing fiscal responsibility and the economic benefits of tax reform.
As the July deadline approaches, this debate is likely to intensify with significant implications for both healthcare policy and the broader economic agenda of the Trump administration.
