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.
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.
