In yet another setback for Senate Republicans, the Senate Parliamentarian has ruled that several key Medicaid provisions in the GOP’s sweeping budget reconciliation bill violate the Byrd Rule, effectively stripping them from the legislation.
The Byrd Rule, a procedural safeguard named after the late Senator Robert Byrd, restricts what can be included in budget reconciliation bills. It prohibits provisions that are considered “extraneous” to the federal budget, meaning they must primarily affect government spending or revenue and not merely serve policy goals.
Among the provisions deemed to be in violation of the Byrd Rule are restrictions on pharmacy benefit managers and ACA subsidies for certain immigrants as well as, perhaps most importantly, limits on Medicaid provider taxes, which are state-imposed taxes on healthcare providers that are then used to draw down more federal Medicaid funding.
The Senate Finance Committee, which has jurisdiction over Medicaid, proposed lowering the provider tax cap to 3.5% of net patient revenue over the next 6 years in Medicaid-expansion states, and barring non-expansion states from raising provider taxes beyond their current levels.
According to the Congressional Budget Office, this proposal would save the government hundreds of billions of dollars over the next 10 years. Hospitals around the country, however, warned that this could devastate rural and underserved hospitals that rely heavily on Medicaid funding. The potential impacts of Medicaid cuts were a point of contention within the Senate GOP, with members such as Josh Hawley (R-MO) and Susan Collins (R-ME) voicing concerns over the cuts.
Republicans will now have to work to rewrite these provisions to be Byrd Rule compliant if they wish to keep them in the bill. While they do have the option to overrule the Parliamentarian, this move is controversial, and Majority Leader John Thune has said that it is not on the table.
With the self-imposed July 4th deadline for sending the “Big, Beautiful Bill” to President Trump’s desk looming, Senate Republicans will be scrambling over the weekend to make crucial decisions on the future of the Medicaid portion of this bill. If it does manage to pass the Senate, its chances of success are still wary in the House, where many members are unhappy with Senate changes.
The Federal Relations Office will keep you updated with changes as the process unfolds.