A U.S. Senate tax proposal that alarmed Missouri health care leaders faces new obstacles to making it into the so-called "Big Beautiful Bill."
Forty-nine states, including Missouri, use what鈥檚 known as medical provider taxes on hospitals, nursing homes and pharmacies to help pay for their Medicaid program. The Senate wanted to cap the medical provider tax at 3.5%, even though Missouri鈥檚 rate has reached as high as nearly 6%.
But on Thursday, that the proposal would need 60 votes under what鈥檚 known to make it into the wide-ranging tax cut, immigration and debt ceiling package. Because Republicans have only 53 votes, it鈥檚 highly unlikely that the proposal will advance.
Edwin Park is a research professor at the McCourt School of Public Policy at Georgetown University. He said it鈥檚 unclear what MacDonough found objectionable 鈥� and whether senators will try to rewrite the plan in order to pass parliamentary muster. (, though Democrats who serve on the Senate Finance Committee made some of MacDonough鈥檚 decisions public on Thursday.)
鈥淚t could be that the parliamentarian views the provision as not fixable in terms of the Byrd Rule,鈥� said Park, referring to a requirement that anything in a reconciliation package focus on fiscal issues and receive at least 60 votes to waive the rule for non-budgetary matters. But it's also possible that the Senate Republicans may modify that provision in ways that are permissible, according to the parliamentarian.
on Thursday that Senate Republicans are optimistic about salvaging aspects of the medical provider tax plan in the bill. The House placed language in the reconciliation bill barring states from raising or expanding their medical provider taxes.
Taking aim at Medicaid expansion states
The Missouri Hospital Association estimated that the Senate plan capping medical provider taxes at 3.5% could cost the state hundreds of millions of dollars.
Craig Thompson, CEO and president of Golden Valley Memorial Healthcare in Clinton, Missouri, noted this week that Missouri鈥檚 current tax is 4.2% 鈥� and predicted that lawmakers would respond to a budgetary shortfall by paying his largely rural hospital less money for treating Medicaid patients.
鈥淲e're already paid for Medicaid less than our cost to provide care,鈥� Thompson said. 鈥淔rom a simple economic standpoint, if you continue to erode even what we're getting paid today, it makes it harder and harder for us to provide those services and stay viable for the long term.鈥�
Some Republicans contended medical provider taxes amount to 鈥渕oney laundering,鈥� because hospitals ultimately get some of the taxes they send to the state back from the federal government. But Thompson said state lawmakers 鈥減layed within the rules, within the bounds, and really has very judiciously utilized that provider tax to make sure that the state of Missouri has adequate resources to fund the Medicaid program.鈥�
鈥淭here's this perception, and it's misplaced, that Medicaid beneficiaries are despondent, lazy people who are just out taking advantage of the government,鈥� Thompson said. 鈥淲ell, I can tell you: In the rural community that I serve, that is not the case. Medicaid recipients are farmers, they're ranchers, they're small-business owners, they're veterans, and it's a whole bunch of kids. And to think that those individuals want to be on Medicaid, that is not the case. But for many, Medicaid is the resource they have to access health care services.鈥�
Park said it was noticeable that the Senate plan only affected states like Missouri that expanded Medicaid under the Affordable Care Act 鈥� while the 10 states that didn鈥檛 buy into that program can keep medical provider taxes as high as 6%.
鈥淭he goal is to restrict those provider taxes, which were often either explicitly or indirectly financing the Medicaid expansion, to cause states to drop the expansion,鈥� Park said.
But Missouri can鈥檛 easily cut itself off from Medicaid expansion, especially since voters in 2020 place language in the state constitution that requires state officials to enroll Medicaid applicants who earn up to around $21,000 a year.
The only likely way for Missouri to end its Medicaid expansion participation is for voters to repeal the constitutional language protecting the program.
鈥淧rovider taxes are a critical source of financing,鈥� Park said. 鈥淭hey're not the biggest source of financing to finance state Medicaid programs. But if you are reducing revenues related to these provider taxes, they're creating a budget shortfall. States have to balance their budgets, unlike the federal government, and there just aren't alternative sources.鈥�
Hawley and Schmitt鈥檚 views
It was an open question whether the Senate鈥檚 medical provider tax plan could have even crossed over the simple majority threshold.
That鈥檚 because some GOP lawmakers, including Sen. Josh Hawley, disliked the Senate plan. Hawley told 漏 2024 外网天堂 last week that the proposal 鈥渘eeded work,鈥� primarily because it could make it harder for rural hospitals to operate.
Hawley didn鈥檛 immediately return a request for comment on the Senate parliamentarian's ruling.
Before the Senate plan came forward, Schmitt told 漏 2024 外网天堂 that state lawmakers often took a cavalier attitude toward medical provider taxes. He recalled a time when was a member of the Missouri Senate when his colleagues described the tax as 鈥渇ree money.鈥�
鈥淭hat鈥檚 probably not a good way to look at it,鈥� Schmitt said earlier this month. 鈥淢aybe there鈥檚 some reforms that can be had there.鈥�
Schmitt said in a statement on Thursday that 鈥渢he Senate is working its way through the legislative process.鈥�
鈥淭he bottom line is we鈥檙e going to get the One Big Beautiful Bill across the finish line to secure our border, cut taxes for Missouri families, and strengthen our national security,鈥� Schmitt said.
Some Missouri Republican lawmakers, including Congressman Bob Onder of St. Charles County, sharply criticized the Senate parliamentarian for likely striking changes to Medicaid out of the budget package.
鈥淪he is not an absolute monarch,鈥� Onder wrote on X. 鈥淪he should be overruled or fired.鈥�
Senate Majority Leader John Thune told reporters in Washington, D.C., that senators don鈥檛 plan on trying to overrule MacDonough.
