GOP says it can save hundreds of billions on Medicaid

Lawmakers on the House Energy and Commerce committee believe they’ve come up with a plan to save the country $912 billion between 2025 and 2034—overshooting the target of $880 billion dollars assigned to the committee for Trump’s “one big, beautiful bill.”

Rep. Buddy Carter, R-Ga., told me on Thursday it gives him optimism for the rest of the cost-saving efforts Republicans hope to make a part of the bill. Carter chairs the Energy and Commerce subcommittee on health.

“I’m ready,” Carter said when asked about the ongoing effort.

Republicans hope to find up to $3.5 trillion in cuts overall by 2034 to pay for Trump’s legislative priorities from additional border security to tax cuts. As the committee with the broadest jurisdiction, Energy and Commerce has the heaviest lift. Its jurisdiction extends to Medicaid—the joint federal-state partnership that provides healthcare for low-income Americans, seniors, and individuals with disabilities.

Medicaid accounted for 13% of everything the government spent in 2024.

Republicans believe they can shrink that number by rooting out fraud, waste, and abuse from the program. They propose changes to eligibility standards, new reporting requirements, and a freeze on federal matching for funding that states raise on their own.

To lawmakers like Rep. Greg Murphy, R-N.C., the plan is eyebrow-raising but sorely needed.

“Just like anything, we just have to have accountability in all of the systems to make sure they provide the resources for the people that need them,” Murphy said.

Murphy, a urologist, runs his own medical practice in North Carolina and mostly serves Medicaid patients.

Of E&C’s $912 billion in projected savings, the proposed reforms to Medicaid make up $715 billion in estimated cuts over a 10-year period. The nonpartisan Congressional Budget Office estimates the plan would increase the number of people without health insurance by 13.7 million by 2034.

Most of the plan’s recommendations focus on eligibility changes. The package would require states to verify recipient addresses to prevent enrollment in two states at once. It would require a quarterly evaluation of deceased recipients, monthly checks on providers to eliminate fraud, and proof of citizenship, nationality, or immigration status from participants. Moreover, the bill would implement a monthly 80-hour work requirement for able-bodied recipients over the age of 19 or under 64.

Murphy told me recently he’s seen applicants attempt to stretch eligibility.

“A lot of people are gaming the system, getting government assistance who are either in the country illegally, asylees, people have been told to deport and have not deported. We just need to stop with that nonsense. We’re paying for all these people,” Murphy said.

Experts do not have a clear understanding of how much Medicaid funding goes to ineligible recipients.

Separately, a key part of the proposal would prevent states from forcing the federal government to shell out excess Medicaid funding as part of the Federal Medical Assistance Percentage.

Under the existing framework, the federal government has pledged to put up at least as much money for Medicaid as the states raise on their own. By increasing taxes on healthcare facilities, states can force the government to contribute more funding. In West Virginia, the federal government pays $2.88 for every $1 that the state raises, according to research from the Kaiser Family Foundation.

If West Virginia raised taxes by $1,000 dollars, the government would be forced to contribute $2,800 through FMAP. With that extra funding, the state could return the initial $1,000 to its healthcare providers and still retain the $2,800 it got through Medicaid. The E&C bill would freeze the amount that states can tax their healthcare providers. It would also drop funding by 10% for states providing services to illegal aliens.

“It’s a device to abuse the system,” Rep. Cliff Bentz, R-Ore., said of FMAP. “But you’ve got to be really careful because many systems [have] become reliant upon it. So whatever we do, we’ve got to do it with great care.”

FMAP in West Virginia accounts for roughly 74% of the state’s Medicaid funding. In Virginia, it makes up only 50%.

I asked Rep. Riley Moore, R-W.Va., if he expected the FMAP freeze to result in any lapsed coverage in his state. West Virginia is one of the country’s most dependent states on federal matching dollars, and it increased taxes on certain medical providers at the beginning of 2024.

“No—I don’t anticipate any gaps in Medicaid at this point,” Moore said when asked how states would respond to the freeze. He explained that freezing the levels won’t change the funding states already receive.

Rep. Alexandria Ocasio Cortez, D-N.Y., said the freeze would put states in a bind. She believes states won’t have alternative funding ready when they need it.

“What other sources?” she asked. “They’re blowing a hole in state budgets. So, what are the states going to do? They’re going to defund public schools. Because they have tied up all of the revenue that states traditionally turn to in order to fund Medicaid.”

Ocasio Cortez, who also sits on E&C, believes the FMAP freeze will compound resource shortages created by other portions of the bill.

“They’re doing this death by a thousand cuts,” Ocasio Cortez said. “All these paperwork requirements they’re adding are quite costly. You have to hire a bunch of bureaucrats. And they are not having the federal dime pick that up. They’re putting that burden into the states.”

Moore, the lawmaker from West Virginia, agrees that the proposal will create extra work for states. Even so, he believes this is the best answer, given the systems in place.

“This is the way the program is set up,” Moore said. “I think if everybody went back in a time machine and could redo the entitlement program, maybe perhaps they would have done it differently, but this is where we are.”

E&C members poured through the proposal through Tuesday night and into Wednesday morning, ultimately passing the health portion of the plan in a 30-24 party-line vote.

From here, its members must consider the other portions of its proposals. After E&C and the various other committees report their individual recommendations, their combination will make up the budget reconciliation bill that Trump calls the “one big, beautiful bill.” Congressional leaders have said they want a final vote on Trump’s legislative package around July 4.