Cutting Costs, Losing Coverage? The New Republicans Medicaid Proposal Explained

President Donald Trump’s plan to extend and expand tax cuts is making waves in Texas, this time through Republican efforts to curb a tax loophole that Texas and other states have used to draw extra Medicaid dollars for hospitals and medical providers. These proposed cuts come amid broader moves by House Republicans to reduce federal spending.

The latest proposal includes adding work requirements for Medicaid recipients, along with stricter protocols for patients to verify their eligibility. Rep. Brett Guthrie, R-Ky., chairman of the House Energy and Commerce Committee, defended the measure, saying it strengthens Medicaid for “children, mothers, people with disabilities and the elderly, for whom the program was designed,” as first reported by the Houston Chronicle.

Democrats, however, strongly opposed the changes. They warned the proposal would lead to 8.6 million Americans losing their Medicaid coverage. “These would be devastating cuts, especially in a tough economy that’s shrinking,” said U.S. Rep. Joaquin Castro, D-San Antonio.

Even within Republican efforts, the cuts did not go as far as some would like. U.S. Rep. Chip Roy, R-San Antonio, criticized the proposal on Monday, arguing it subsidizes “healthy, able-bodied adults, corrupt blue states, and monopoly hospital CEOs.” 

Texas and several other states that opted not to expand Medicaid under President Barack Obama’s Affordable Care Act (ACA) have grown particularly reliant on local provider taxes to support financially strained hospitals, many of which are required by law to treat all patients regardless of their ability to pay. In Texas, healthcare providers have effectively taxed themselves in order to qualify for federal matching funds, which often return twice the amount they contribute.

Since the pandemic, enrollments under the Affordable Care Act (ACA), also known as Obamacare, have surged, but more than 2 million eligible Texans remain uninsured. This gap is largely driven by a lack of awareness about available subsidies and persistent confusion over eligibility. Texas continues to have the highest uninsured rate in the nation, due in part to the state’s Republican leadership repeatedly rejecting Medicaid expansion and turning down billions in federal funding.

The debate over Medicaid funding and eligibility requirements highlights the deep divisions in Congress over how to manage healthcare costs and federal spending. With millions of Americans at risk of losing coverage, the outcome of this legislation will have lasting implications not only for patients and providers, but also for the broader debate on the future of Medicaid and healthcare policy in the United States.