House Republicans released a highly anticipated plan late Sunday to slash roughly $900 billion in spending over the next decade, including by imposing work requirements on Medicaid, to help pay for President Trump’s “big, beautiful” agenda bill.
The proposal from the Energy and Commerce Committee also calls for eliminating climate change initiatives in former President Joe Biden’s Inflation Reduction Act, rolling back other so-called “green energy” projects and clawing back unspent funds on loans and grants.
The Energy and Commerce panel had been assigned to come up with more than half of the $1.5 trillion in total cuts House Republicans are eyeing for Trump’s marquee legislation.
The committee’s main job was figuring out what to do about Medicaid, which had a roughly $618 billion federal budget in fiscal year 2024 and provides insurance to more than 70 million low-income Americans.
Medicaid is a distinct program from Medicare, which provides health insurance to Americans 65 and older. The GOP plan also makes some reforms to Medicare, but no significant cuts.
The Republican proposal calls for entitlement reform by:
Medicaid proposal
- A mandated 80-hour-per-month work requirement on able-bodied adults ages 19 – 64 enrolled in the program. Volunteer work and school would count toward the requirement.
- States that enrolled in the Affordable Care Act expansion of Medicaid will see federal reimbursement rates drop from 90 to 80% if illegal immigrants are part of the program.
- Medicaid beneficiaries with incomes over the federal poverty line ($15,650) have to pay up to $35 per medical service.
- Requires eligibility checks on expanded Medicaid enrollees every six months. The Biden administration did them annually.
- State Medicaid programs can’t reimburse healthcare providers, such as hospitals, more than Medicare does.
- States are banned from adding or increasing provider taxes to help finance their portion of Medicaid costs.
- Ban on Medicaid and Children’s Health Insurance Program (CHIP) funding for gender affirming care.
- Restrictions on large abortion providers from getting Medicaid funding.
- Bars “middlemen” pharmacy benefit managers from charging higher prices to Medicaid than they actually pay for drugs.
These measures could lead to 8.6 million Americans losing health insurance and $715 billion worth of cuts over a 10-year period, according to an initial Congressional Budget Office estimate requested by Democrats.
“Undoubtedly, Democrats will use this as an opportunity to engage in fear-mongering and misrepresent our bill as an attack on Medicaid,” Energy and Commerce Committee Chairman Brett Guthrie (R-Ky.) wrote in a Wall Street Journal op-ed published Sunday about the plan.
“In reality, it preserves and strengthens Medicaid for children, mothers, people with disabilities and the elderly—for whom the program was designed,” he added. “Washington can’t afford to undermine the program further by subsidizing capable adults who choose not to work.”
Other spending cuts and reforms in the plan
In addition to dramatically overhauling Medicaid to reduce costs, the plan also calls for wide-ranging reforms to Medicare and energy policy.
- Authorizes the federal government to auction wireless spectrum to rake in an estimated $88 billion in revenue.
- Gives Medicare physicians an inflationary pay increase.
- Requires more transparency for pharmacy benefit managers (“middlemen” price negotiators) in Medicare Part D, the component of Medicare that helps retirees pay for prescription drugs.
- Diminishes Medicare’s ability to negotiate drug prices directly under the Inflation Reduction Act.
- Delays the Biden administration’s nursing home staffing standard until 2035. That rule requires nurses to spend 3.48 hours tending to each resident per day.
- Ends the Biden-era electric vehicle mandate for two-thirds of new car sales to be EVS by 2032, which Guthrie believes can save as much as $105 billion.
- Set up a fast-track system for permitting natural gas if applicants pay either 1% of a project’s costs or $10 million, whichever amount is fewer.
‘Morally wrong and politically suicidal’
GOP plans to reform Medicaid have proven be controversial, with moderate Republicans opposing significant reductions and Democrats have accused the GOP of gutting federal health care funding for the poor.
On the Senate side, Josh Hawley (R-Mo.) said the House proposal could be a dealbreaker, calling it “morally wrong and politically suicidal.”
“A noisy contingent of corporatist Republicans — call it the party’s Wall Street wing — is urging Congress to ignore all that and get back to the old-time religion: corporate giveaways, preferences for capital and deep cuts to social insurance,” Hawley wrote in a scathing New York Times op-ed published Monday.
“This wing of the party wants Republicans to build our big, beautiful bill around slashing health insurance for the working poor. But that argument is both morally wrong and politically suicidal.”
At the same time, fiscal hawks have warned that a failure to adequately reduce spending will be a dealbreaker for them. Many see the House goal of $1.5 trillion in cuts as the floor, not the ceiling.
“Medicaid was never meant to be this expansive,” Rep. Chip Roy (R-Texas) wrote in an op-ed published Saturday. “We have a duty to safeguard taxpayers and ensure that Medicaid does not bankrupt us. Cut the waste. Cut the fraud. Cut the abuse.”
House and Senate Republicans have never reached an agreement on the total amount to cut, so the two sides passed a budget resolution last month that gave dueling instructions to both chambers.
That blueprint called for the House to find at least $1.5 trillion in cuts and the Senate to find $4 billion, with the understanding that both chambers will reach consensus while drafting the final bill — though the House is widely seen as taking the lead on spending reductions.
How much will the plan save?
The CBO estimated that the House package will reduce the deficit by up to $880 billion between 2025 and 2034. Privately, Guthrie has suggested it will save over $900 billion during that timeframe.
The House-approved blueprint for the “big, beautiful” bill had instructed the Energy and Commerce Committee to find $880 billion in savings, the Education and Workforce Committee to find $330 billion, the Agriculture Committee $230 billion and the Financial Services Committee $100 billion — all over a decade, for a total of $1.54 trillion in savings.
The final package would come with a $6.9 trillion price tag over a 10-year period, according to an analysis from the Committee for a Responsible Federal Budget.
Republicans are striving to extend Trump’s 2017 tax cuts and eliminate taxes on tips, Social Security and overtime pay while boosting spending on border security, energy exploration and national defense.
House Speaker Mike Johnson (R-La.) was initially hoping to get the measure to Trump’s desk by Memorial Day, but others have suggested the Fourth of July as a more realistic goal.
Besides differences on Medicaid and spending cuts, Republicans are also divided over how to reform the state and local tax deduction (SALT), as well as whether or not to jack up taxes on wealthy Americans.
Republicans on the Energy and Commerce Committee will mark up their portion of the bill on Tuesday.
