Changes Coming to Medicaid Funding
The U.S. House of Representatives passed its version of the federal budget bill on May 22, 2025, with nearly $880 billion in Medicaid cuts. The Senate followed on July 1, advancing its version to the House for final consideration ahead of a self-imposed July 4 deadline. The Senate bill includes approximately $1 trillion in federal Medicaid cuts over the next decade – roughly 15% of total Medicaid funding.
As of this writing, the final House vote is expected imminently following House Minority Leader Hakeem Jeffries’ marathon floor speech (starting at 4:52 a.m.), reading aloud stories from constituents who would be impacted by the proposed cuts to programs like Medicaid. He spoke against the bill for more than eight hours, breaking a record held by former Rep. Kevin McCarthy.
While a powerful demonstration, Democrats lack the votes to block the bill’s passage. With no ability to amend the measure, extended floor speeches remained the only available tool to delay final approval of this sweeping GOP-led legislation.
Following the passage of the House version, we relied on the outstanding analysis from KFF. They have published a detailed side-by-side comparison of current law, the House-passed bill, and the Senate-passed bill. We’re sharing this as the best available resource to track the Medicaid-related provisions most relevant to our work.
KFF Report: Health Provisions in the 2025 Federal Budget Reconciliation Bill
Citation: Health Provisions in the 2025 Federal Budget Reconciliation Bill, (KFF, 07/02/2025)
kff.org/tracking-the-medicaid-provisions-in-the-2025-budget-bill
For more KFF analysis and resources about the Medicaid changes click here.
KFF is a nonprofit health policy research, polling, and news organization.
Learn more about them here.
While there are many areas of concern, several key changes stand out:
The bill imposes new work and reporting requirements for Medicaid expansion enrollees ages 19 to 64, mandating at least 80 hours per month of work, education, or volunteering. While it provides exemptions for some individuals, including people with disabilities and parents of children age 13 or younger, the exemptions are narrowly drawn and may not cover all individuals with chronic health conditions or caregiving responsibilities. Parents of older dependent children and individuals with significant functional limitations may be excluded. Even those who qualify for exemptions must navigate complex documentation requirements, increasing the risk of losing coverage due to administrative barriers rather than true ineligibility.
It also requires states to conduct eligibility redeterminations every six months instead of annually, doubling the frequency with which individuals must verify their continued Medicaid eligibility. While the bill permits some exemptions (for example, individuals in institutional settings or receiving long-term services and supports), there is no broad exemption for people with disabilities living in the community. This is especially concerning because many people with disabilities, while eligible, may face barriers to completing the required paperwork, such as limited access to transportation, technology, or support to navigate complex systems. Even minor documentation errors or delays can lead to a loss of coverage, jeopardizing access to critical services like personal care attendants, medication, or therapies. The increased red tape poses a particular threat to those with cognitive, intellectual, or behavioral health disabilities, who are often most in need of continuity in care.
The bill reaffirms that no state is required to provide any particular benefit under Medicaid. While many critical services (like Home and Community-Based Services, dental care, and transportation) are already considered optional under federal Medicaid law, this language reinforces and potentially expands states’ discretion to scale back or eliminate these benefits without penalty. As states face reduced federal funding and new fiscal pressures under the bill, there is a real risk that optional services, many of which are vital to people with disabilities, could be among the first to be cut. This is an important area to watch, as state-level decisions in the months ahead may determine whether individuals can continue to access supports that allow them to live independently and avoid institutionalization.
The bill also increases federal oversight of state Medicaid programs, adding new accountability requirements that go beyond current Centers for Medicare & Medicaid Services (CMS) review processes. States would be required to report more frequently on eligibility redeterminations, error rates, and coverage losses, and submit detailed implementation plans for enforcing work requirements. They also must verify compliance with these requirements and demonstrate proper exemption determinations. CMS would be tasked with conducting stricter audits and ongoing evaluations of state systems and enforcement practices. These added layers of federal scrutiny may strain already burdened state agencies and increase the risk of delays, administrative errors, or coverage disruptions.
Finally, the bill places new restrictions on provider taxes and state-directed payments, which are tools states use to finance their share of Medicaid. Provider taxes are fees that states collect from healthcare providers (like hospitals or nursing facilities). That revenue is then used to draw down additional federal Medicaid matching funds. Indiana relies heavily on provider taxes, particularly through the Hospital Assessment Fee (HAF) program, to help fund its Medicaid program, including the Healthy Indiana Plan (HIP) expansion. The budget bill would limit how much states can rely on provider taxes and cap state-directed payments, which would reduce Indiana’s ability to generate matching federal dollars. This change would blow a significant hole in Indiana’s Medicaid financing structure and could force the state to either cut Medicaid services, reduce provider rates, or find new state funding to fill the gap.
As always, we will continue tracking these developments closely and provide updates as more information becomes available. Many of these changes will take time to implement, and their full impact, especially on people with disabilities, remains to be seen. What we do know is this: fewer federal dollars are coming to Indiana’s Medicaid program, and the state will be forced to make real, structural decisions about how Medicaid is funded and delivered. Exactly what those changes will look like is still unclear, but we are committed to monitoring the process and advocating to protect critical services for the people who rely on them most.
The Arc of Indiana Town Hall Meetings
Changes Coming to Medicaid & Medicaid Waivers
Share Your Voice!
Medicaid is changing at both the federal and state levels, and these changes could impact how Indiana supports people with disabilities and their families. The Arc of Indiana will be hosting town halls across the state this summer and fall to:
- Share information about the federal Medicaid budget
- Discuss possible impacts on how Indiana administers its Medicaid programs
- Hear directly from you about what Medicaid means to you or your family
- Learn what you want to make sure policy leaders know
In addition, as Indiana begins proposing changes to its Medicaid Waiver program and collects public feedback, we want to know how these changes will affect you and/or your family.
Later this year, the state will begin discussions around “Waiver Reset,” paving the way for new waiver programs in the years ahead. We want to hear what is important to you.
Join us to stay informed and share your voice.
Bloomington
Tuesday, July 29
1:00 – 2:30 p.m. EST
Monroe County Public Library
303 E. Kirkwood Avenue
Bloomington, IN 47408
Terre Haute
Tuesday, September 2
1:00 – 2:30 p.m. EST
Vigo County Public Library
680 Poplar Street
Terre Haute, IN 47807
South Bend Area
Wednesday, September 10
1:00 – 2:30 p.m. EST
Battell Community Center
904 N Main Street
Mishawaka, IN 46545
Evansville
Wednesday, September 24
12:00 – 1:30 CST
1:00 – 2:30 EST
The Dwelling Place
7825 Oak Hill Road
Evansville, IN 47725