The Senate parliamentarian removed key Medicaid provisions from the Republican tax and budget package, forcing the GOP to either remove or rewrite them. The parliamentarian said that the provider tax, Medicaid spread pricing and eligibility restrictions based on immigration status all need to be subject to a 60-vote threshold.
“This is a setback. I mean, I’m not going to play act. I didn’t see this one coming,” Sen. John Kennedy, R-La., told reporters.
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Why did the parliamentarian remove these provisions?
The parliamentarian determined that the provisions do not meet the Byrd rule guidelines. They dictate what can and cannot be included in a budget reconciliation package. The most significant change, financially, is the removal of the provider tax reduction.
The provider tax is levied by states on health care providers, such as hospitals and nursing homes. The federal government matches the revenue generated by the provider tax. It’s a key way for states to raise funds for their share of Medicaid expenses.
The budget package originally reduced the tax from 6% to 3.5% by 2031.
“I think the whole provider tax is the biggest scam I’ve ever seen since I’ve been up here, and that’s saying a lot,” Sen. Lindsey Graham, R-S.C., told reporters.
“We’ll make another run at it, I’m sure,” Sen. Eric Schmitt, R-Mo., said. “Just like with the ruling on the SNAP benefits for illegal immigrants, that’s now back in, so my guess is that they’ll continue to work that and make sure that that’s in.”
According to Politico, the parliamentarian is also requiring a rewrite of a provision that prohibits states from enforcing their own AI regulations to get access to a $500 million AI infrastructure fund.
What is the Byrd rule?
Republicans are trying to pass this bill through budget reconciliation. It’s a process that allows Congress to make changes to spending and budgetary measures that have already been enacted. The reconciliation package can get approval with a simple majority in both chambers, avoiding the Senate’s 60-vote filibuster. The Byrd rule requires that all provisions within the bill be directly related to the budget and spending. The Senate parliamentarian, the non-partisan gatekeeper of the chamber’s rules and procedures, goes through each section to ensure it is budget related. If the parliamentarian determines that it is not, the provision is removed or needs a rewrite to fit the guidelines.
Democrats have been petitioning the parliamentarian to remove the provisions they believe are not directly budget related.
“Democrats are continuing to make the case against every provision in this Big, Beautiful Betrayal of a bill that violates Senate rules and hurts families and workers,” Sen. Jeff Merkley, D-Ore., said in a statement.
“Democrats are fighting back against Republicans’ plans to gut Medicaid, dismantle the Affordable Care Act and kick kids, veterans, seniors and folks with disabilities off of their health insurance – all to fund tax breaks for billionaires.”
What can Republicans do about the parliamentarian’s rulings?
Republicans now have three options. They could move forward without the provisions that were removed. They could also try to rewrite them in a way that the parliamentarian approves. Republicans say the third option is off the table — to overrule the parliamentarian. If they did that, the majority party in the Senate would make that the standard practice, effectively ending the filibuster.
Republicans want to better understand the reasoning behind the parliamentarian’s decisions.
“Some of the stuff that she’s striking, I have some real concerns about,” Sen. Markwayne Mullin, R-Okla., said. “I want an explanation by her on where this doesn’t fit in the Byrd rule because it’s not okay just to make it your opinion. You’re going to have to tell me line by line where this doesn’t fit in the Byrd rule.”
What’s the timeline for approving the bill?
President Trump wants the bill approved by the Fourth of July. The Senate will stay in Washington through the weekend to make that happen.
Senate Republicans can lose only three votes and still pass the package. They are trying to find the balance between fiscal hawks who don’t think the spending reductions go far enough and also members who want to moderate cuts out of concern that it could reduce benefits and services.
Even if Republicans can figure out how to get the bill through the Senate, it will fail in the House in its current form. Rep. Marjorie Taylor Greene, R-Ga., said she is a “no” over the artificial intelligence provisions. The blue state Republicans fighting to increase the state and local tax deduction are also “no’s.” One even called the current negotiations on the matter “faux.” Others have also expressed their disapproval over various provisions. Like the Senate, House Republicans can only lose three votes to get it over the finish line.
