On January 13, the House Republican Study Committee (RSC) unveiled its plan for a second budget reconciliation bill for this Congress, in addition to H.R. 1 (the “One Big Beautiful Bill Act” or P.L. 119-21) which was enacted on July 4, 2025. The plan includes a number of proposals to cut Medicaid, on top of H.R. 1’s draconian Medicaid cuts which already cut federal Medicaid spending by nearly $1 trillion over ten years and increase the number of uninsured by 7.5 million by 2034.
In general, while these RSC proposals to further cut Medicaid are described only in brief bullet points and lack any policy detail, they appear to be similar to (1) proposals that were included in the original House-passed version of H.R. 1 in May 2025 but were dropped from the final legislation and (2) proposals that were floated by the House Budget Committee as budget reconciliation policy options in January 2025 but were not included in either the original House-passed bill or the final legislation (or would go beyond the provisions of the final legislation). These highly damaging proposals would further increase the number of uninsured people, reduce access to needed care, shift costs to states, and cause further financial stress for hospitals and other providers.
Three RSC proposals largely resemble provisions stripped from the original House-passed version of H.R. 1 in the Senate due to violations of the so-called “Byrd Rule,” a Senate rule that applies to budget reconciliation legislation. (These proposals would likely still be found to violate the Byrd Rule if included in any second reconciliation bill.) These proposals appear to include the following:
- Cutting the federal Medicaid matching rate for states that use their own funding to cover certain undocumented immigrants and lawfully present immigrants to force states to drop such coverage. Some states use their own state funds to provide coverage to undocumented children, as well as some pregnant women and other adults, who are otherwise income-eligible. This RSC proposal is likely similar to a provision (section 44111) in the original House-passed version of H.R. 1 that would have cut the current federal matching rate for the Medicaid expansion from 90 percent to 80 percent for any expansion states that provide comprehensive health coverage or financial assistance to purchase health insurance to undocumented immigrants, even though the coverage is financed solely by state funds. That provision would have also penalized states using their own funds to provide coverage to lawfully present immigrants who are not otherwise eligible for Medicaid. In contrast, under the RSC plan, this penalty would appear to be equal to 20 percentage points so the Medicaid expansion matching rate would be reduced to 70 percent. (The RSC plan states there would be a “20 percent” matching rate penalty but it is likely referring to a 20 percent point reduction.) Moreover, because H.R. 1 would eliminate Medicaid and CHIP eligibility for many lawfully present immigrants starting on October 1, 2026 as explained below — including refugees, asylees, and victims of domestic violence and human trafficking — this matching rate reduction would also cut federal Medicaid funding for any expansion states using their own funds to preserve coverage for those immigrants who are scheduled to lose their federally funded Medicaid coverage this fall. As a result, this proposal would triple the cost of expansion coverage for a number of expansion states. To avoid this penalty, many such states would likely have no choice but to eliminate state-only coverage for low-income immigrant children and other immigrants, and they would also be deterred from newly providing state-only coverage to those lawfully present individuals and families losing Medicaid eligibility under H.R. 1. (The RSC plan does not clearly indicate that this penalty would apply only to expansion states so it is possible that a penalty — perhaps a reduction in the regular matching rate — could also apply to any non-expansion states providing state-only coverage to undocumented and/or lawfully present immigrants.)
- Delaying Medicaid and CHIP coverage and access where real-time verification of citizenship or immigration status is not initially available. States must verify citizenship or immigration status upon an individual’s initial application for Medicaid and CHIP. This is done through automated real-time systems operated by the Social Security Administration (SSA) and the Department of Homeland Security (DHS). In a limited number of cases, the systems may be unable to provide immediate verification and individuals must submit documentation for additional review. To ensure that individuals have access to care while this extended process is completed, Medicaid and CHIP coverage is available during a temporary “reasonable opportunity” period of 90 days. This is especially important for hospitals and other providers that are furnishing needed services while the application is pending and verification issues are being resolved. This RSC proposal is likely similar to a provision (section 44110) in the original House-passed version of H.R. 1 that would no longer require states to provide Medicaid and CHIP coverage during the reasonable opportunity period. If states opt to continue to provide such coverage, federal Medicaid and CHIP matching funds would no longer be available, unless the individual’s citizenship or immigration status is eventually confirmed within the 90 days. To avoid the risk of being potentially responsible for all Medicaid and CHIP coverage costs during a reasonable opportunity period and to reduce costs generally, many states would likely no longer provide such coverage. That means that individuals who face a delay because SSA and DHS systems are unable to immediately provide verification will go without Medicaid and CHIP coverage for several months or more. They would forego care or incur higher out-of-pocket costs and health care providers would see their uncompensated care costs rise. Older U.S. citizens born abroad may be especially at risk. In addition, unlike the provision in the original House-passed version of H.R. 1, the RSC proposal also would somehow restrict Hospital Presumptive Eligibility, under which hospitals can enroll individuals into temporary Medicaid coverage whom hospitals determine to meet eligibility criteria like income based on an interview with the individuals (before individuals’ formal applications are submitted and processed). States, at their option, can require that individuals also have to attest to their citizenship or immigration status. Similar to federal funding restrictions during a reasonable opportunity period, the RSC proposal may involve federal Medicaid and CHIP matching funds no longer being available during a Hospital Presumptive Eligibility period unless an individual’s citizenship or immigration status is confirmed as part of a regular eligibility determination. This would risk a cost shift to states, as Hospital Presumptive Eligibility is currently mandatory for states. It is also possible that this provision instead involves effectively eliminating Hospital Presumptive Eligibility entirely or making it a state option. This would mean fewer eligible people enrolled and higher uncompensated care costs for hospitals, if no Hospital Presumptive Eligibility is available at all or if many states drop it as an option (because they would bear financial risk for costs associated with any individuals whose citizenship or immigration status is not ultimately confirmed).
- Prohibiting Medicaid coverage of gender affirming care. According to KFF, most state Medicaid programs cover some gender affirming services for adults but there is significant variation among the types of services they cover like hormone therapy, surgery, voice and communication therapy, fertility services and mental health care. In addition, under the comprehensive Early Periodic Screening Diagnostic and Treatment (EPSDT) benefit, states must provide all medically necessary services to children and youth under age 21, even if they are not otherwise covered by the state’s Medicaid program. The RSC proposal appears similar to a provision in the original House-passed version of H.R. 1 (section 44125) which would prohibit federal Medicaid and CHIP matching funds for gender affirming care for all transgender beneficiaries. States would either have to cover gender affirming care with only their own funds or no longer cover such services, taking away access to needed care from transgender people who already face stark health disparities. The Trump Administration has recently issued proposed rules that would similarly prohibit federal Medicaid and CHIP funding for gender affirming care for children and youth and also amend the conditions of Medicare and Medicaid participation to bar hospitals from providing gender affirming care to children and youth.
Several RSC proposals resemble Medicaid cut proposals included in a policy options menu prepared by the House Budget Committee in January 2025 (at the beginning of last year’s budget reconciliation process) that were either not incorporated at all into the original House-passed version of H.R. 1 or the final version enacted into law, or that go beyond what was enacted in H.R. 1:
- Lowering the Medicaid matching rate for the District of Columbia. Under federal law, the regular federal Medicaid matching rate (also known as the FMAP) for the District of Columbia is set at 70 percent. (If the District’s regular matching rate was set based under the regular matching rate formula, it would instead receive the minimum matching rate of 50 percent.) This RSC proposal appears similar to a House Budget Committee proposal that would have cut the District’s regular matching rate down to 50 percent from the current 70 percent (which was put in place to take into account the high levels of need for Medicaid coverage among the District’s low-income residents and in recognition of the unique constraints on the District’s ability to raise revenues). This would shift large costs to the District government and require the District to make further damaging cuts to its Medicaid program, including cutting eligibility, benefits and provider payment rates, beyond the cuts it already needs to make due to the many cost-shifts under H.R. 1.
- Eliminating Medicaid and CHIP eligibility for all lawfully present immigrants who remain eligible. Under H.R. 1, many lawfully present immigrants will lose eligibility for Medicaid or CHIP, irrespective of how long they have been in the United States, starting October 1, 2026. This includes refugees and asylees. It also includes victims of human trafficking and domestic violence, “parolees” who have been lawfully admitted for humanitarian reasons including most recently some people from Ukraine, people from Iraq and Afghanistan admitted on special immigrant visas, and Native American tribal members who were born in Canada. The only lawfully present immigrants who will remain eligible are those admitted for lawful permanent residence or “green card holders” (after five years), certain entrants from Cuba and Haiti, citizens of Compact of Free Association (COFA) nations in the South Pacific, and lawfully present children and pregnant women covered by states adopting the “ICHIA” option. The RSC plan includes a proposal to entirely eliminate Medicaid and CHIP eligibility (as well as eligibility for other public programs including SNAP) for any individual who is not a citizen. Similar to a House Budget Committee proposal to broadly eliminate eligibility for lawfully present immigrants, this would eliminate Medicaid and CHIP eligibility for millions of immigrants including low-income children and pregnant women, leaving them uninsured and without access to needed care while driving up uncompensated care costs for hospitals and other providers.
- Codifying the “public charge” rule proposed by the first Trump Administration. The RSC plan includes a proposal that was in the House Budget Committee options menu to codify a radical 2019 rule from the first Trump Administration related to “public charge” — a determination that applies to individuals seeking admission to the United States or adjustment in status to legal permanent residency — that was blocked by the courts, subsequently rescinded and reversed in rules finalized in 2022 by the Biden Administration. Research from the Urban Institute and the Migration Policy Institute showed that the 2019 rule had a large chilling effect on enrollment in Medicaid and CHIP among eligible individuals and families, adversely affecting both legal immigrants and citizens, which began even before it was finalized. It was likely a key factor in driving up the share of children without health coverage between 2017 and 2019. The Trump Administration also recently issued a radical proposed public charge rule, albeit one different from the 2019 rule as it would instead eliminate current public charge rules and policy and just leave unfettered discretion for Department of Homeland Security (DHS) officers to determine if someone should be admitted to the United States or should receive adjusted status for legal permanent residency. The resulting chilling effect from this proposed rule could increase the number of uninsured children by more than 25 percent, most of whom would be citizens.
Finally, the RSC plan includes one proposal that was not in either the original House-passed version of H.R. 1 or in the January 2025 House Budget Committee menu:
- Requiring Medicaid “site-neutral” hospital payments. In recent years, there have been numerous legislative and administrative proposals to equalize Medicare payments for select (or all) services furnished in hospital outpatient settings and the same services furnished in other lower-cost settings like physician offices, in order to reduce Medicare spending and reduce out-of-pocket costs for seniors and people with disabilities enrolled in Medicare. This includes, for example, a recent final rule from the Trump Administration to align Medicare drug administration payments (such as for chemotherapy) across care settings, which would have the effect of lowering hospital reimbursement rates for such services. The RSC plan includes what appears to be a new proposal to institute “site-neutral payment requirements on hospital billing” in all Medicaid programs. It is unclear whether this would apply to all services or only certain services, whether it would apply in both fee-for-service and managed care, and whether this would apply to all hospitals. What is clear is that this proposal would sharply reduce Medicaid hospital payments at the same time hospitals will see lower overall Medicaid reimbursement rates (as states make budget cuts in response to the cost-shifts under H.R. 1 such as restrictions to state use of provider taxes) and greater uncompensated care costs (as millions of Medicaid enrollees lose their coverage due to the H.R. 1 Medicaid cuts including mandatory work reporting requirements). As a result, irrespective of the merits of this approach in isolation, this proposal would likely significantly exacerbate the harmful impact of H.R. 1 on hospitals, especially rural hospitals and other safety net hospitals that disproportionately serve low-income Medicaid patients.