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Senate Passes Budget Bill with Severe Medicaid Cuts

The Senate on Tuesday narrowly passed H.R. 1, the One Big Beautiful Bill Act, which would cut Medicaid by nearly $1 trillion – a deeper cut than the House bill’s already controversial $800 billion cut to the federal healthcare program.
 
The Senate passed the measure in a 51-50 vote, with Vice President Vance breaking a tie. Republican Sens. Susan Collins (Maine), Rand Paul (Ky.) and Thom Tillis (N.C.) joined Democrats in voting no.
 
The House must now accept the Senate changes to the bill or amend the legislation, which would force a Conference Committee between the two chambers — a move that congressional leaders are trying to avoid.
 
The bill did not change the provisions establishing a national Medicaid work requirement; however, exclusions for individuals with substance use disorder (SUD), a disabling mental disorder, or a serious or complex medical condition remain. The bill also includes more frequent Medicaid eligibility checks, and cost-sharing requirements for certain expansion populations, although exclusions for mental healthcare services and SUD services are included.
 
The Senate changed several other important provisions from the original House bill, including:

  • Reducing the current 6% provider tax limit to 3.5% for states that expanded Medicaid under the Affordable Care Act (40 states and Washington, D.C.). This change would be phased in by lowering the limit by 0.5% each year between 2027 and 2031. And it makes a technical correction that ensures eligible tax programs include local “units of government.” 
  • Beginning a phase down of state-directed payments to Medicare rates (110% in non-expansion states) in 2028. The bill expands “grandfathered” SDP programs to include those that have not been approved to date but where a “pre-print” has been submitted to the Secretary by date of enactment. It also gives the HHS secretary discretion in defining equivalent “Medicare” rates based on current or future regulations.  
  • Creating a Rural Health Transformation Program (FY 2028–32) to support rural providers. The fund would allocate $10 billion annually from 2028 to 2032. The rural health facility definitions include community mental health centers and opioid treatment programs located in a rural census tract of a metropolitan statistical area. The bill’s use of funds includes definitions supporting access to opioid use disorder treatment services, other SUD treatment services, and mental health services.
  • Permanently allowing high-deductible health plan members to get telehealth visits for free, even if they haven’t hit their minimum out of pocket spend and still qualify for tax-advantaged health savings plans.
  • Updating the Physician Fee Schedule with a 2.5% bump for 2026 only.

NABH will continue to apprise members about the status of this legislation.

Please email NABH Vice President of Government Relations Andy Dodson if you have questions.