May 12, 2025

States would be forced to revamp Medicaid funding under House proposal

States would be forced to either revamp how they finance their Medicaid programs or cut benefits under a House Energy and Commerce Committee proposal announced Sunday night.

The bill would make millions of dollars in Medicaid spending reductions through policies such as stricter eligibility verification, citizenship checks, tougher screenings on providers who get reimbursements and federal Medicaid funding cuts to states that offer coverage to residents living in the U.S. illegally.

Work requirements included in propsal

The health provisions also include new work requirements that are expected to lead many people to lose coverage, as well as a new cost-sharing requirement for some beneficiaries in the program, not to exceed 5% of a patient’s income.

The bill seeks to impose work requirements on able-bodied adults aged 19 to 64 without dependents, demanding they work at least 80 hours — or perform 80 hours of community service or other programs — per month. It includes exceptions for pregnant women and short-term hardship waivers in limited cases.

Medicaid is a joint federal-state program covering 80 million Americans.

The proposed bill does not contain some of the more controversial ideas for cutting federal Medicaid spending – imposing per-capita caps on federal payments to states and rolling back the federal share of covering the Medicaid expansion population under the Affordable Care Act. But it does propose to cut federal funding for groups like Planned Parenthood and ban the use of Medicaid dollars for gender-affirming care for youth.

Other details of the proposed bill would:

Lower the federal share of payments to states that have expanded Medicaid under the Affordable Care Act if the state allows undocumented immigrants to get Medicaid coverage.
Roll back Biden-era rules limiting Medicaid eligibility checks to once annually, allowing them to be made twice a year.
Overhaul of the Medicare and Medicaid’s pharmacy benefit manager business practices. Pharmaceutical companies argue these have driven up the cost of prescription drugs. PBMs have argued they help negotiate lower drug prices and the reforms would limit their ability to do so.

Meanwhile, the Congressional Budget Office predicted as many a 8 million people could lose Medicaid coverage as a result.

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