New Byrd Violations Threaten Trump's Beautiful Bill

[Passages]

The parliamentarian kicked out a key Medicaid provision, part of a $587 billion rollback in spending cuts. Republicans don’t have good options to deal with that.



by Whitney Curry Wimbish, David Dayen June 27, 2025

Senators have a problem they may not be able to escape.

Parliamentarian Elizabeth MacDonough, the chamber’s referee, dealt a major blow to the Republican spending bill yesterday when she kicked out a key provision that would have generated hundreds of billions of dollars in service of tax cuts for the wealthy.

The proposal to strip federal money from states’ Medicaid programs by attacking their ability to tax hospitals and clinics violated the Byrd rule, MacDonough determined. This means it cannot be included in a budget reconciliation bill, where everything must primarily have a budgetary purpose. All states but Alaska finance part of their Medicaid programs with taxes on hospitals and clinics. States tax the provider, which then recoups the money from increased Medicaid reimbursement from the Federal government, allowing the provider to break even and the state to get more money for their Medicaid program.

The House version to crush that mechanism would have frozen the rates of existing provider taxes and forbidden states from creating new ones. But the Senate version would have taken it further, by cutting existing provider taxes for states that have taken the Medicaid expansion. Currently, the federal government and states may make providers whole for net patient revenue up to 6 percent. But under the Senate Finance Committee plan, starting in 2027, that number would reduce by 0.5 percent annually until the maximum threshold hits 3.5 percent in 2031.

It’s unclear how much money that would have generated to enrich the wealthy, as the bill has not been scored by the Congressional Budget Office. But private scores distributed by Republicans put it in the hundreds of billions of dollars. House moderates and many Senators had balked at the cut to existing provider taxes, asking for a separate fund to protect rural hospitals from closure as a result. But the parliamentarian threw out the entire provider tax proposal, including the freeze that the House had. That’s a huge loss to the budget savings that deficit hawks have demanded from the bill, to cover (at least in part) the enormous tax cuts.

https://prospect.org/politics/2025-06-27-beautiful-bill-medicaid-senate-byrd-budget/