Reduce Medicaid's injuring hospitals. Here's why their lobbying against them failed: Shot

Doctors, hospitals and health insurance companies have issued disastrous warnings to Republican lawmakers that if millions cut Medicaid funds to help pay President Donald Trump's big tax and spending bills, millions of people will lose their health insurance and hospitals will close.

However, Republicans ignored those pleas, making deeper cuts, sending legislation to the White House on July 3, where Trump signed the following day.

Passing the law marked a rare political loss for some of the health industry's biggest players. When unified, doctors, hospitals and insurance companies stand among Washington's most powerful lobbying forces, with a long track record of changes or enforcement of laws that could hurt them financially.

But health-related lobbyists are taking their breaths and assessing the damage after Trump's massive bill ran through Congress within two months with Republican vote alone.

Several lobbyists have provided a variety of reasons why they can't stop the major cuts to Medicaid, a $900 billion state and federal health insurance program aimed at low-income and disabled people, and a $900 billion state and federal health insurance program that accounts for 19% of hospital care spending. . But almost everyone agreed that GOP lawmakers were more concerned about making Trump angry than face backlash from local hospitals and home state members.

“Members were afraid that Trump would issue key challenges rather than disappoint local voters who might feel the hospital had to close,” said Bob Kochel, a partner at venture capital firm Benlock, referring to the election primary that will take place in the mid-term to come in 2026.

Think about what happened to Senator Tom Tillis (RN.C.). After he took him to the Senators' floor to announce his opposition to the bill for Medicaid cuts, Trump threatened to support Tillis and the challenger running next year. Shortly afterwards, Tillis announced his retirement from politics.

Sour feelings towards ACA

However, other factors were at play.

The health industry warning to lawmakers may have been rejected as hospitals, health centers, and other groups of health providers are considered strong supporters of the Affordable Care Act by Republicans.

The ACA has expanded government health insurance coverage to millions who were previously unqualified. And Republicans didn't vote for it.

“Hospital support wants Republicans and as a result, there are fewer goodwill reservoirs to hospitals than in the past,” Kocher said.

Cese Connolly, CEO of the Community Health Plan Alliance, said her lobbying team spent extra time on Capitol Hill with lawmakers and their staff, raising concerns about how the law would escape healthcare coverage.

“There was a sense of almost effective on the part of Republicans in Congress to bring a big victory for President Trump,” she said. Her group represents a health plan that provides coverage in about 40 states. “It replaced some of their concerns, reluctance and hesitation.”

Connolly said he has repeatedly heard from GOP lawmakers that he is focusing on Trump's campaign promise to extend the 2017 tax cuts.

She said the concerns of some medium-sized members helped lead to one concession. That's $50 billion in funding to support rural hospitals and other healthcare providers.

She said the money could have made it easier for some lawmakers to support a bill that would cut more than $1 trillion from Medicaid over a decade.

Lobbying was successful in several ways

Another twist: Many new lawmakers were clearly still learning about Medicaid, she said.

Republicans were also keen to cut coverage for Medicaid and Affordable Care Act markets after registering for both programs to record levels during the pandemic and the Biden administration, she said. Trump's law requires states to verify Medicaid eligibility at least every six months, ending automatic control of market plans. Step health policy experts say it will reverse some of those benefits.

Charles “Chip” Kern, a longtime health lobbyist and CEO of the American Hospital Federation, which represents the for-profit organization, said the industry's message was heard on Capitol Hill. However, the bill dealt with so many issues, including tax cuts, border security, and energy, and lawmakers had to determine whether potential health compensation losses were more important.

It was very different from 2017 when Republicans tried to abolish Obamacare but failed. He said Trump's 2025 measures were neither a health reform bill nor a health bill.

It “leaved us with a disappointing result.”

But there were some successes, Khan said.

Industry lobbying has prevented the federal government from reducing the proportion of state spending that expanded Medicaid under the ACA. Hospitals and other Medicaid advocates have also convinced Congress not to limit the program's free federal funding to the state. Both measures would have tallied billions more with additional Medicaid funding cuts.

The new law does not change Medicaid eligibility rules or change its merits. However, the state requires that most Medicaid enrollees who have gained coverage through the ACA expansion be documented that they work 80 hours a month or volunteer.

Provider tax cuts have been delayed

The law also restricts the use of systems that tax states' decades-old healthcare providers and leverages additional federal Medicaid funds. This is another loss for the hospital industry, and I support this practice because of the high payments from Medicaid.

Medicaid generally pays lower fees than private insurance and Medicare, programs for people over the age of 65, and programs for people with disabilities. However, according to the Commonwealth Fund, a nonprofit in medical research, some hospitals are paid under Medicaid rather than Medicare due to provider taxes.

Kahn praises CEO Brian Blaze for pushing the conservative think tank Paragon Health Institute and the debate that provider taxes amounted to legalized “money laundering.” Blase advised Trump on health policy during his first term.

A hospital executive who asked him to withhold his name to avoid retaliation from experts, said the message resonated with GOP lawmakers (some facilities said they used the play to make money. “They thought some hospitals were financially uplifting and didn't want to reward them,” he said.

Still, Khan, who retires at the end of the year, said he is happy that the Senate has delayed postponing the provider's tax cuts until 2028.

In rural northeast Louisiana, Todd Eppler, CEO of Desoto Regional Medical Center, wanted Congress to pass the first House version of the bill that did not include cuts in provider tax financing. However, he said the impact on Mansfield's hospital in the House Speaker Mike Johnson area will be offset by the $50 billion Rural Health Fund.

“I'm happy where we're finished,” Eppler said. “I think they've heard of a rural hospital.”

Millions have spent advertising the bill

For decades, hospitals have argued that cutting federal funds for Medicaid or Medicare can harm patients and lead to reduced services. Since hospitals are usually one of the largest employers in the Congressional district, industry leaders often warn of potential unemployment. Such arguments usually give lawmakers a pause.

However, this time, the message had little traction.

One health industry lobbyist who asked not to be asked to speak openly without risking the influence of experts said he had a sense that hospitals could withstand funding cuts.

However, there is also the belief that trade groups, including the American Hospital Association, the largest hospital industry lobbying organization, could be more effective. “There are a lot of concerns that the AHA statement is too soft, too little, too late,” he said.

Aha helped lead a coalition of hospital organizations that spent millions of dollars on television ads for the GOP bill. President and CEO Rick Pollack said in a statement before the House voted for a law that Medicaid cuts were “a devastating blow to the health and well-being of our country's most vulnerable citizens and communities.”

In a statement to KFF Health News, Pollack said the tax cut appeal had driven Republican lawmakers to pass the law.

“Hospitals and health systems support tireless advocacy to protect compensation and access for millions of people,” he said. “We will continue to raise these important issues to mitigate the impact of these proposals.”

The American Medical Association, the country's largest trading group for physicians, also opposed funding cuts to Medicaid and other federal health programs. That president, Bobby McCamara, said in a statement on July 1, the change would “shift costs to the state, particularly doctors and hospitals, to provide uncompensated care when rural hospitals and doctor practices struggle to keep doors open.”

However, the AMA also focused on increasing Medicare fees for doctors. The law ultimately included a one-off 2.5% Medicare salary for doctors in 2026. This was not a victory as it excluded permanent payment modifications from the House version that linked physician salaries to medical inflation. McCamara focused on the temporary lift, which he described as “are far below what is needed to maintain access to care for seniors in America.”

Joe Dunn, chief policy officer for the National Association of Community Health Centers, said his organization worked with the tranny this year to prevent deeper Medicaid cuts that would financially hurt nonprofit clinics. Health Center administrators visited Washington in February, making thousands of calls and emailing members of Congress.

One payout was that medical centers were exempt from the law's requirement that providers claim a co-payment of up to $35 for services.

But at the end of the day, many GOP House and Senate members simply wanted to complete the bill, Dan said. “They went in a direction that satisfies the president's timeline and goals,” he said.

Julie Robner, Washington correspondent for KFF, contributed to the report.

KFF Health News is a national newsroom that produces detailed journalism on health issues and is one of KFF's core operating programs.