By now of course all of you know that Congress passed HR1 – the large tax break bill for wealthy people along with some cuts to social and healthcare spending – along with very large deficit spending.
In general, the reductions to revenue (tax cuts for wealthy people and people who put in overtime and collect tips) happen right away while the cuts to social services like Medicaid and SNAP don’t happen for a few years – in most cases not until after the 2026 mid-term elections.
Here’s what the bill does in a nutshell/The Senate passed bill includes:
Medicaid Work Requirements
Require childless adults and parents of children older than 13 to work, volunteer or attend school for 80 hours a month as a condition of enrollment, unless they qualify for an exception –$317 bil.
AZ will already be implementing this as a result of a bill Ducey signed in 2015. AZ will need to expand the required populations up to 64 from 56.
The main way people get knocked off Medicaid with this approach is due to failure or inability to report the work/school attendance rather than not qualifying. How good a job the state does making it easy for people to report compliance is a HUGE part of this.
Provider Taxes that Pay State Match
Freeze current state taxes on most providers in states that have not expanded Medicaid and slowly lower the allowed rates in expansion states from 6% to 3.5%
AZ pays the state part of the match with a provider (hospital) tax for 550,000 AHCCCS enrollees. AZ will be able to collect less from that assessment starting in 2028 making the legislature find a different funding source to keep them enrolled. Will they do that? I think not.
Hospitals will need to work under the assumption that 550,000 Medicaid members will be disenrolled in 2029 because the legislature is unlikely to pick up the tab for the reduction in the hospital assessment – making them way less likely to expand (especially in rural AZ)
Note: these impacts are worse in rural AZ because while about 17% of urban Arizonans are on Medicaid – 38% of rural people are on AHCCCS.
The reduction schedule begins in FY 2028 and gradually reduces the current 6 % cap by 0.5 percentage point per year, reaching 3.5 % in FY 2032.
So, the schedule is:
- FY 2028 → 5.5%
- FY 2029 → 5.0%
- FY 2030 → 4.5%
- FY 2031 → 4.0%
- FY 2032 (and beyond) → 3.5%
–$183 bil.
Limit Provider Directed Payments
Prevent expansion states from using special funding to pay Medicaid providers higher prices than Medicare would pay. Limit non-expansion states to slightly higher prices. –$149 bil.
This will mean the Healthy AZ payments will need to go down and doctors and other providers will leave the Medicaid network because of bad reimbursement. That will hurt rural AZ hospitals the most.
More Medicaid Eligibility Checks
Require states to check eligibility of people in the Medicaid expansion every six months instead of once a year –$58 bil.
AZ Medicaid members will need to get redetermined every 6 months vs once per year – that doubles the chances for people to get knocked off because they didn’t reply to the RFI on time etc.
Rural Health Fund
The bill has a ‘rural health fund’ with $50B in it to help states support rural health care providers
Important Note: the final bill did not change the percentage rate at which the federal government pays for Medicaid in states (aka the FMAP rate).
Requires SNAP State Matching Funds
SNAP cost-shift to States with a payment error rate of 6% or higher. Requires states (except for Alaska) to pay a share of benefits currently funded in full by the federal government. Increases the share of state costs to administer the SNAP program from 50% to 75%
Clean Energy Incentives Eliminated
Ends Residential clean energy credit
Terminates the tax credit for rooftop solar, geothermal heat pumps and other home devices by Dec. 31, 2025 (-77B)
Way fewer people will install rooftop solar.
Ends Clean vehicle credit
Terminate the $7,500 consumer rebate for electric vehicles by Sept. 30, 2025 (-78B)
Fewer people will buy EV – and it’s not just the tax credit ending it’s the enormous tariffs being charged on Chinese EV’s (which are the best and most affordable). tariff is 100%
Ends Qualified commercial clean vehicles credit
Terminate the credit for companies that buy electric cars or trucks, including businesses that lease the vehicles to consumers, by Sept. 30, 2025 (-105B)
Business will stop or really slow down buying EV’s
Ends Clean energy electricity investment credit
Quickly ending tax credits for investments in zero emissions electricity sources. Wind and solar projects to claim the credit as long as they begin construction by July 2026 or come online before the end of 2027.
Nuclear projects would have more time. It is unclear how the changes will affect the provision’s savings. (-178B).
This will make electricity more costly as a main incentive to expand with good solar ends because the tax credits are ending.
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I’m at a loss for words on a final editorial comment on all this. It’s just sad and discouraging that millions of people in this country are good with all this stuff including the 300% increase in spending for ICE agents who abduct, incarcerate, and deport asylem seekers (and other migrants) and the 265% increase in funding for new immigration detention centers.
What’s in the Senate Version of Trump’s Big Policy Bill? – The New York Times
