On Tuesday, May 13, 2025, the House Energy and Commerce Committee started their 26-hour consideration of their portion of the budget reconciliation bill. The House Energy and Commerce Committee budget reconciliation instructions required the committee to reduce spending by $880 billion across their programs of jurisdiction. As a result, Medicaid cuts have been source of controversy making the hearing highly anticipated. The bill passed along party lines and no democratic amendments were accepted.
However, as part of the process, all legislation from individual committees to address their specific budget reconciliation instructions goes to the House Budget Committee to be moved forward as a single package. This step is usually not controversial. At the committee’s meeting on May 16, the bill was voted down and was not reported out of committee. This means that changes, particularly in the Medicaid section, are likely to occur before the bill is moved forward for consideration by the House Rules Committee and ultimately by the full House. For example, one change openly discussed is moving the implementation dates up for some sections like the community engagement requirements also known as work requirements.
Subtitle A – Energy:
Subtitle A passed 29-24 on May 13th, 2025, along party lines in the House Energy and Commerce Committee. Democrats offered several amendments that focused on having the Department of Energy certify that these provisions will not raise energy bills for consumers and the Inspector General at the Department of Energy certify the provisions related to the permitting process will not increase corruption. However, none of those amendments passed. The proposed legislation rescinds the unobligated funds for these programs from the Inflation Reduction Act:
- State-Based Home Energy Efficiency Contractor Training Grants – the program provides training assistance and education for the implementation of Inflation Reduction Act’s (IRA) Home Energy Whole-House Rebate Program
- Funding for Department of Energy Loan Programs Office – this funding covers the cost of credit subsidies association with loan guarantees made under Section 1703 of the Energy Policy Act of 2005.
- Advanced Technology Vehicle Manufacturing – This funding covered the cost of credit subsidies to provide loans for vehicle and vehicle supply chain manufacturing facilities.
- Energy Infrastructure Reinvestment Financing – This funding covered the cost of loan guarantees under the new loan program, the Energy Infrastructure Reinvestment Financing program, for retooling, repowering or replacing energy infrastructure that ceased operations.
- Tribal Energy Loan Guarantee Program – This funding covered credit subsidies under the Tribal Energy Loan Guarantee under the Energy Policy Act of 1992.
- Transmission Facility Financing – The program pays direct loans to nonfederal borrowers for transmission facilities designated under the Federal Power Act in a National Interest Electric Transmission Corridor.
- Grants to Facilitate the Siting of Interstate Electricity Transmission Lines – The program provides grants to transmission siting authorities to facilitate siting and permitting for certain interstate and offshore electricity transmission lines.
- Interregional and Offshore Wind Electricity Transmission Planning, Modeling, and Analysis – The program covers expenses associated with interregional and offshore wind electricity transmission planning, modeling and analysis.
- Advanced Industrial Facilities Deployment Program – The program provides financial assistance – grants, direct loans, rebates or cooperative agreements – for industrial or manufacturing facilities to subsidize technology installations with the intent of reducing greenhouse gas emissions.
In addition to the repealing of unobligated funds from Inflation Reduction Act, the proposed legislation covers the permitting process several ways:
- Generates a certificate of crossing for cross-border energy infrastructure application that includes a $50,000 payment notwithstanding any requirements or statutory obligations. The Federal Electricity Regulatory Commission will issue the certificate.
- Creates a $1 million user fee for importing natural gas from the United States paid for by non free trade agreement country.
- Appropriates $5 million to the Department of Energy for five years to conduct section 116 of the Alaska Natural Gas Pipeline Act.
- Generates an expedited permitting process if the applicant for an authorization of a certificate of public convenience and necessity under Section 7 of the Natural Gas Act pays $10 million or 1% of the project’s projected capital cost. The relevant authorities will review and approve the federal authorizations for the project within the year. There is the possibility of an extension of six months before the permits are automatic.
- Allows applicants for carbon dioxide, oil or hydrogen pipeline projects can be considered in the same manner for a certificate of public convenience and necessity under Section 7 of the Natural Gas Act, including the fee of $10 million. This provision extends the federal pipeline routing and eminent domain authority over these gases’ infrastructure.
- Appropriates $10 million through Sept. 30, 2034, to the Department of Energy to establish the De-Risking Compensation Program. The program would provide compensation for unrecoverable capital losses caused by future federal actions that revoke permits or approvals, or cancel, delay or render the federally permitted projects unviable. These projects would include energy projects investing in coal, critical minerals, oil, natural gas or nuclear energy valued at no less than $30 million that chose to enroll. The Secretary of Energy would compensate the project sponsor for up to the full amount of the loss. The funding will come from sponsors that pay 5% of their projected share of capital contribution to the project and an annual premium to the De-Risking Compensation Fund.
- Appropriates $2 billion to the Department of Energy for activities related to the Strategic Petroleum Reserve.
Subtitle B – Environment:
Subtitle B passed along party lines in the House Energy and Commerce Committee following a large debate over the repeal of Inflation Reduction Act (IRA) provisions. Democrats offered amendments to challenge the repeal and recessions of key provisions of the IRA benefitting projects on both sides of the aisle. None of the amendments passed.
Part 1 – Repeals and Recessions:
The proposed legislation repeals the following programs and rescinds any unobligated balance made under that section:
- Grant awards for purchasing electric vehicles which is Section 132 of the Clean Air Act
- IRA competitive grant and rebate programs for the purchase of zero-emission port equipment or technology which is Section 133 of the Clean Air Act
- The Green House Gas Reduction Fund known as the “Green Banks” grant programs which is Section 134 of the Clean Air Act
- IRA-appropriated additional funds for the Diesel Emissions Reduction Act
- Appropriated additional funds for air monitoring related to Section 60105 of Public Law 117-169
- Grants for the monitoring and reducing air pollution in schools, technical assistance, and design, construction and renovation standards for school buildings from the IRA.
- IRA appropriated funds for consumer related education, technical assistance, industry related outreach and intergovernmental outreach related to the reduction of emission for domestic electrical generation.
- Funding from the IRA related to the data collection of greenhouse gas emissions and evaluating the environmental impact of biofuels.
- Funding for the implementation and compliance of the American Innovation and Manufacturing Act.
- IRA funding to update software to track environmental compliance actions utilized by EPA and states.
- IRA funding for enhanced standardization and transparency for corporate climate action commitments.
- IRA provided funding to generate environmental product declarations advertising the environmental impact of products.
- The Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems.
- Funding from the IRA for “Climate Change Action Plans” worked on by states, local governments and tribes and environmental justice initiatives.
- Funding of the IRA to hire and train new staff at the EPA.
- IRA funding for the program to identify and label construction material and products with low greenhouse gas emission life cycles.
- Environmental and Climate Justice Block Grants
Part 2 – Repeal of EPA Rule Relating to Multi-Pollutant Emission Standards:
- Repeals the final rule issued by the EPA titled “Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles.”
Part 3 – Repeal of NHTSA Relating to CAFE Standards:
- Repeals the final rule issued by the National Highway Traffic Safety Administration titled “Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027 and Beyond and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030 and Beyond.”
Subtitle C – Communications:
Subtitle C passed early in the morning on Wednesday, May 14 along party lines. While the Democrats offered several amendments, the amendments were not passed and voted along party lines.
Part 1 – Spectrum Auctions:
The proposed language requires the National Telecommunications and Information Administration and the Federal Communications Commission (FCC) to identify 600 megahertz of commerce or federal spectrum in the covered band to be auctioned by 2034. The FCC is required to auction the spectrum on an exclusive, licensed basis for mobile broadband services, fixed broadband services, or mobile and fixed broadband services. After three years, the FCC needs to auction at least 200 MHz and after six years, the remaining spectrum. Democrats offered amendments that the resulting money be utilized to fund the BEAD program and expanding broadband services in the United States.
Part 2 – Artificial Intelligence and Information Technology Modernization:
The legislation appropriates $500 million to the Department of Commerce to modernize and secure federal information technology systems through the deployment of commerce artificial intelligence, automation technologies, and replacement of antiquated business systems. Additionally, the section places a 10-year moratorium on states or political subdivisions enforcing or regulating artificial intelligence models, artificial intelligence systems, or automated decision systems. Democrats offered an amendment to stop the moratorium on states passing legislation related to artificial intelligence.
Subtitle D – Health:
Subtitle D proposes reducing spending in the Medicaid program by $715 billion 2025-2034. According to the Congressional Budget Office (CBO), these changes would result in 8.6 million individuals losing coverage by 2034 based provisions included in Part A. Roughly, 13.7 million are projected to become uninsured by 2034 due to the proposed legislation from House Energy and Commerce Committee combined with the House Ways and Means Committee not renewing premium tax credits that were part of the Inflation Reduction Act. Since the passage of the Budget Resolution, debate concerning how the committee would reduce Medicaid spending focused on lowering the amount the federal government matches for state spending, or introducing per capita spending caps, and the reduction or elimination of provider taxes. However, the final proposal did not include lowering the federal matching rate or per capita caps. It did include a freeze on provider taxes.
Part 1 – Medicaid:
Subpart A – Reducing Fraud and Improving Enrollment Processes:
- Places a moratorium for 10 years of two Biden-era rules that were designed to streamline enrolment in Medicaid, CHIP and the Basic Health Program.
- Requires states to verify enrollee’s address and ensure that individuals who are deceased do not remain enrolled as well as ensuring that providers who have been terminated from the program in another state are deceased are not included in provider enrolment.
- Requires the Department of Health and Human Services (HHS) to reduce the federal financial participation to states for errors identified through a ratio of a state’s erroneous payments directly attributable to payments to ineligible individuals or for ineligible services.
- Established a ceiling of $1 million for permissible home equity values for individuals when determining allowable assets for Medicaid beneficiaries that are eligible for long term care services. This section also prohibits the use of asset disregards from being applied to waive home equity limits.
- This provision removes the federal financial participation for individuals whose citizenship, nationality or immigration status has not been verified. Current law permits states to enroll individuals in coverage and then provide a 90-day period that allows individuals to immediately begin coverage and verification can occur up to 90 days and the state would receive a federal financial participation.
- Reduces the federal Medical Assistance Percentage (FMAP) for expansion states who provide coverage for undocumented immigrants under Medicaid or another state-based program. The amount of the reduction is 10%
Subpart B – Preventing Wasteful Spending:
- Places a moratorium on a Biden-era rule requiring 24-hour registered nurse staffing in skilled nursing facilities.
- Limits retroactive Medicaid coverage to one month prior to an individual’s application date. Current law permits retroactive coverage up to three months.
- Requires retail and applicable nonretail pharmacies participate in the National Average Drug Acquisition Cost survey which measures pharmacy acquisition costs and is often used in the Medicaid program to inform pharmacy reimbursement.
- Bans “spread pricing” by pharmacy benefit managers in Medicaid.
- Prohibits federal funds in Medicaid and CHIP being used for gender transition procedures for minors and prohibits Medicaid funds from being used to pay providers that are nonprofit organizations that are essential community providers that are primarily engaged in family planning services or reproductive health such as Planned Parenthood.
Subpart C – Stopping Abusive Financing Practices:
- Ends the temporary enhanced FMAP provided under the American Rescue Plan that was passed in part because of the COVID-19 pandemic. The provision would apply prospectively.
- Freezes provider taxes at current rates in effect in states at the time of enactment.
- Directs HHS to revise regulations to limit state directed payments for services furnished on or after the enactment of this legislation from exceeding the total published Medicare payment rate. This section revises a Biden-era rule that was in the process of being implemented.
- Changes the criteria by which HHS must consider when determining whether certain health care related taxes are generally redistributive. A tax would not be considered generally redistributive if within a permissible class, the tax rate imposed on the taxpayer or group explicitly defined by its relatively lower volume or percentage of Medicaid taxable units is lower than the tax rate imposed on any other taxpayer or rate group.
- Requires budget neutrality for Medicaid demonstration projects under Section 1115. HHS would be required to certify that the total expenditures for the federal portion do not exceed what would otherwise have been spent if the demonstration project had not been implemented.
Subpart D – Increasing Personal Accountability:
- Establishes “community engagement” requirements as a condition of receiving Medicaid for able-bodied adults without dependents. To meet this requirement these individuals must work, be engaged in community service or education, or a combination of those activities for 80 hours a week. This requirement would not apply to pregnant women, individuals under the age of 19, over the age of 64, foster youth and former foster youth under the age of 26, members of tribes, those considered medically frail or who have a condition as defined by the state and approved by the secretary as meeting the definition of medically frail, individuals in compliance with work requirements for TANF or SNAP, individuals who are caregivers of a dependent child or an individual with a disability or those who are incarcerated or recently released form incarceration. The provision also specifies the frequency by which a state must verify the individual is meeting the requirement.
- Requires the imposition of cost sharing on Medicaid Expansion adults with incomes over 100% of the federal poverty level. The cost sharing cannot exceed $35 per service. Cost sharing may not exceed five percent of the individual’s income and would not permit cost sharing on primary care, prenatal care pediatric care or emergency room care except for nonemergency care provided in an emergency room.
Part 2 – Affordable Care Act:
- Ends special enrollment periods in Affordable Care Act (ACA) exchanges for income-based reasons.
- Requires numerous verifications of income, and other criteria in relation to enrollment.
- Requires individuals on whose behalf advance payments of the premium tax credits are made to file and reconcile on an annual basis.
- Revises rules on allowable variation in actuarial value of health plans
- Prohibits automatic reenrollment from bronze to silver level qualified health plans.
- Prohibits coverage of gender transition procedures as an essential health benefit under exchange plans
Part 3 – Improving Americans’ Access to Care:
- Streamlines enrollment for eligible out-of-state providers under Medicaid and CHIP
- Delays reductions in Disproportionate Share payments.
- Provides for the Medicare “doc fix” to address the reductions in payments that went into effect at the beginning of the year.
- Provides for reform of Pharmacy Benefit Managers business practices to provide more transparency.
- Clarifies the exclusion of orphan drugs under the Medicare Drug Price Negotiation Program.
