Nelson Talks Healthcare in State Affairs' Weekly Newsletter

04.10.2025

TPG Deputy Director of Health Policy Tre Nelson was recently featured in State Affairs' weekly newsletter, Beltway Beat, discussing the effects of the budget reconciliation process on healthcare.

Guest Column: Budget debates in Congress will have health care ripple effects

With 2025 underway, the Republican majority in Congress is focused on using the budget reconciliation process to fast-track major legislative proposals.

Since reconciliation requires only a simple majority in the Senate, it has become the preferred vehicle for advancing health care reforms that might otherwise stall under regular order. While the process allows for streamlined passage, it also comes with strict rules and deadlines.

The House is expected to move first, with committee markups anticipated this summer. Then the Senate will apply its own rules, including the Byrd Rule, which limits non-budgetary provisions.

Lawmakers hope to wrap negotiations by fall in order to include a debt limit increase which will likely need to occur by September. Given the timelines, rapid developments and narrow windows for input are expected.

As part of this process, the House Energy and Commerce Committee has been instructed to identify up to $880 billion in potential savings. The ambitious target that has reignited discussions around structural reforms to entitlement programs, particularly Medicaid.

While the House and Senate are engaged in early budget negotiations, both chambers have taken differing approaches to what should be included in the package. While cost cutting is a top priority, they must also create fiscal space for the reauthorization of the 2017 Trump tax cuts, which are set to expire at the end of 2025.

Lawmakers are directing various committees to find cost savings. With the E&C Committee being directed to cut as much as $880 billion, Medicaid accounts for approximately 93 percent of its health-related budget, making it a primary focus in the search for savings.

As a result, Medicaid has taken center stage out of fiscal necessity rather than policy preference. Any change to the federal Medicaid funding model will have ripple effects, requiring states to evaluate how reforms may affect their own budgets, particularly where Medicaid is central to health care delivery.

Lawmakers are weighing a range of Medicaid reforms that could reshape how the program is funded and administered. These include:

— Per-capita caps

— Work requirements

— Changes to the Federal Medical Assistance Percentage

— Targeting improper payments

— Site neutrality for outpatient services

As discussions evolve, the healthcare community in Louisiana will be watching closely to understand how structural Medicaid changes could impact the state. Reforms could affect everything from provider reimbursement rates to eligibility requirements and the overall delivery of care, especially in rural and underserved areas.

With Medicaid playing a critical role in Louisiana’s healthcare infrastructure, any shifts could carry significant effects for hospitals, providers, and patients across the state. Understanding the potential impacts of these policies, and ensuring that congressional offices are aware of local implications, will remain a key consideration for healthcare stakeholders as reconciliation discussions continue.