Graeme Sloan/Sipa USA
Dayen-Murkowski-062925
Lisa Murkowski's deal is getting smaller and smaller.
The pork-barrel deal with Sen. Lisa Murkowski (R-AK) was enough to get her to vote for the motion to proceed to the One Big Beautiful Bill Act (OBBBA) late last night, which passed by a count of 51-49. But the deal lost a lot of its luster this morning, when the Senate parliamentarian ruled several provisions out of order.
That gives Murkowski, whose state could see more rollbacks when the parliamentarian rules on various food assistance provisions, a choice to make. She could honor a deal that is evaporating by the minute, or she could turn against the bill, which as written would devastate millions of Americans, including those in her home state. And by the time amendments are voted upon, Alaska could see dramatically worse federal payments for Medicaid in particular.
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The parliamentarian ruled that the boost to the federal share of Medicaid for certain “high-poverty” states, which happened to be Alaska and Hawaii, did not comport with the Byrd rule, which requires everything to have a primarily budgetary purpose. That would have increased Alaska’s federal share by 25 percent. In addition, a boost to health care reimbursement payments for Alaska and Hawaii for hospital outpatient services was also tossed. Hawaii, the other noncontiguous state, was added to these so Senate Republicans could make the case that they were not singling out Alaska; that gambit did not work.
This potentially interacts with an upcoming amendment vote to completely reverse Alaska’s Medicaid situation. In addition to Murkowski, deficit hawk Sens. Mike Lee (R-UT), Rick Scott (R-FL), Ron Johnson (R-WI) and Cynthia Lummis (R-WY) were holdouts on the motion to proceed last night. As a condition of their support, they got a guarantee for an amendment in the “vote-a-rama” phase that would phase out the Medicaid expansion, a key part of Obamacare.
Currently the government pays 90 percent of the costs of the expansion population, which earns between 100 and 138 percent of the federal poverty line. Forty states and the District of Columbia have adopted the Medicaid expansion. Phasing this out, by moving the 90 percent share back to the current share for the rest of the Medicaid population, would be a huge change. The Kaiser Family Foundation assessed that eliminating the Medicaid expansion would reduce Medicaid spending by a whopping $1.9 trillion over the next decade, with 20 million enrollees (over one-quarter of the entire program) losing coverage. Even a gradual phase-out would have huge consequences.
That seems way too big a cut, even for Republicans. It would close to double the $930 billion of cuts already in the bill. But Johnson expressed “confidence” that they could get 50 votes for it.
I’ll believe it when I see it. I see no way that Murkowski or Sen. Susan Collins (R-ME), who both voted against Obamacare repeal back in 2017, would agree to this partial repeal if it were in the bill. Combined with Sen. Thom Tillis (R-NC), that would be three pro-Medicaid no votes, and Sen. Rand Paul (R-KY) seems to not want to vote for a debt limit increase, though with such a savage cut to Medicaid maybe he would change his mind. Still, it doesn’t feel like destroying the Medicaid program can get 50 votes, and the House is already balking at another $150 billion in Medicaid cuts from their original plan, let alone $2 trillion.
The question is whether the Lee-Scott-Johnson-Lummis bloc will be satisfied with just getting a failed amendment. If not, their votes could be tough to wrangle for final passage. A new Congressional Budget Office estimate shows that the Senate version of the bill costs $3.3 trillion, without factoring in added interest costs or likely extensions of temporary new taxes. That violates the budget hawk directive that would make the bill budget-neutral, even with the “current policy baseline” that wipes away the extension of the Trump tax cuts.
And Collins has said that she wants changes and is “leaning no” on final passage, even after giving her vote to proceed to the bill. She will also be introducing amendments during the vote-a-rama, whereby any Senator can offer an amendment for an up-or-down vote. They are technically nonbinding, as Senate Majority Leader John Thune (R-SD) can nullify them in the end with a “wraparound” amendment. But amendments that are critical to getting a particular vote aren’t likely to be nullified.
Collins has said she has wanted more protections for rural hospitals in the bill, and she has floated a millionaire tax bracket. Republicans are unlikely to agree to either, leaving her and Murkowski facing serious deficiencies for their Medicaid populations and hospitals in their rural states.
So you have the Lee-Scott-Johnson-Lummis bloc on one side, and the Collins-Murkowski-Tillis block on the other. Assuming Paul is a firm no, each of those blocs could kill the bill outright.
Currently, the bill is being read in its entirety on the Senate floor, something forced by Democrats. After that there will be at least ten house of debate, followed by a vote-a-rama. That vote-a-rama isn’t going to start until at least midnight ET today.
POSTSCRIPT: A Big Pharma-backed provision that was snuck into the bill at the last minute that would have excluded numerous “orphan drugs” from Medicare price negotiation was also knocked out by the parliamentarian today. That was added back in at the request of House Republicans. The Senate’s more draconian Medicaid provider tax cuts were allowed to stay in the bill, after tweaks that mainly just delayed the start date of the cuts by a year, to 2028.
