House Republicans are pushing forward a controversial new proposal to cap Medicaid spending as they work to offset the mounting costs of former President Donald Trump’s renewed agenda. The plan, discussed in a closed-door meeting on Monday night among GOP members of the Energy and Commerce Committee, focuses on reshaping how federal Medicaid dollars are distributed to states—particularly those that expanded coverage under the Affordable Care Act.
Contents
Per Capita Caps and Rainy Day Funds
At the heart of the new proposal is the introduction of per capita caps on federal Medicaid funding. Instead of the current open-ended system, where the federal government matches a percentage of state Medicaid costs, each enrollee would have a fixed federal funding limit. Lawmakers backing the plan argue it would help control federal spending while still allowing states flexibility in managing their Medicaid programs.
The proposal also includes the creation of “rainy day funds,” allowing states to save any Medicaid budget surpluses. However, under the draft plan, the federal government could reclaim a portion of those state savings, raising concerns among state leaders about losing future resources. Energy and Commerce Chair Brett Guthrie (R-Ky.) confirmed Tuesday that the new plan was a topic of serious discussion during Monday’s meeting. “We are discussing that,” Guthrie said, noting that the idea of per capita caps had strong support among some Republican lawmakers as a more politically viable alternative to deeper Medicaid cuts.
Internal GOP Divisions
Capping Medicaid payments has sparked sharp debate within the party. Some moderate Republicans, especially those representing Medicaid expansion states, have voiced strong concerns about any move that could reduce health coverage or financial support for low-income residents. Several members, including GOP representatives from Virginia, have privately warned leadership that there is insufficient support for proposals that would decrease the federal share of Medicaid costs—an approach that could trigger automatic cuts or even full program withdrawals in some states.
Speaker Mike Johnson sought to reassure moderates on Monday, telling reporters he did not expect the federal match percentage to be changed in the final bill. “Not so far as I know,” Johnson said.
Potential Impacts and Public Reaction
The push for Medicaid changes is part of a broader Republican effort to pay for a sweeping package of legislation designed to enact Trump’s 2025 policy agenda. Analysts estimate that continuing Trump’s 2017 tax cuts and other priorities could add approximately $4.6 trillion to the national debt over the next decade if no offsetting spending cuts are made. Lawmakers are under growing pressure to find savings elsewhere in the budget.
While the proposed per capita cap model could avoid the immediate coverage losses that would accompany slashing the federal share of Medicaid costs, health policy experts warn it still risks significant consequences. States could be left financially responsible for any increase in enrollment or health care costs beyond their allotted federal funding. This could force states to limit services, tighten eligibility rules, or cut provider payments to stay within budget.
Some conservatives in Congress support even deeper Medicaid changes, viewing the current structure as fiscally unsustainable. Others, like Representative Don Bacon (R-Neb.), have drawn red lines, saying they will not back cuts exceeding $500 billion and favor more targeted reforms like work requirements.
Public opinion could also play a role in the negotiations. Polls consistently show strong support for Medicaid across both Democratic and Republican-leaning states, making significant changes politically sensitive ahead of the 2026 midterm elections.
What Comes Next
With divisions within the GOP conference and strong opposition expected from Democrats, the future of the Medicaid proposal remains uncertain. Republican leaders must navigate a delicate balance between achieving needed budget savings and avoiding backlash from voters and moderate lawmakers.
Negotiations are expected to continue in the coming days as House Republicans finalize the details of their broader spending package, which they hope to pass along party lines later this year.
For more information about potential changes to Medicaid coming this year: Proposed Medicaid Changes Could Impact Millions
