Senators Mull New Tax Credit for Medicaid Recipients

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By Colleen Murphy, Kaustuv Basu, Laura Davison and Alexander Ruoff

Senators are considering creating a new tax credit to help low-income individuals buy health insurance after they leave Medicaid rolls, Sen. Rob Portman (R-Ohio) said.

The House health-care bill, which Republicans passed May 4, would cut $880 billion in Medicaid funds over 10 years, resulting in 14 million fewer people having Medicaid coverage by 2026, according to the Congressional Budget Office. The tax credits in the House bill are refundable and increase with the recipient’s age; a bill amendment puts aside $85 billion for the Senate to increase them. Some Republicans in both chambers have said the bill’s current credit structure is insufficient for older and low-income people.

“There would also be funding for a tax credit that’s not available currently, and I’d like to change the House version of the tax credit, by the way, to focus it more on people who are close to the poverty line rather than having it at the higher end,” Portman told reporters May 9 after a meeting with other Senate Republicans who are beginning to craft changes to the House bill.

The tax credits would “pick up some of these people” who may lose Medicaid coverage, he said. He is working with Sen. John Thune (R-S.D.), a fellow member of the Finance Committee, on the idea. Thune is also a member of the health working group, which met for the second time May 9 primarily to discuss Medicaid.

“Combining the individual market with the Medicaid expansion population” is a key tool to stabilize marketplaces, Sen. Bill Cassidy (R-La.) said. Cassidy has been one of the leaders in the Senate on the topic of a health-care replacement, and he kept the Affordable Care Act’s tax provisions in his first draft of a replacement bill.

Senate Democrats panned Republicans for holding closed-door meetings to discuss bill changes. Senate Minority Leader Charles E. Schumer (D-N.Y.) said the process thus far looks eerily similar to House’s, and said the House bill amounts to a tax cut for the wealthy. Democrats sent a letter to Senate Majority Leader Mitch McConnell (R-Ky.) May 9 calling for a bipartisan effort.

Tax Credit Changes

Sen. Orrin G. Hatch (R-Utah), Finance chairman and a member of the working group, said it’s too early to know how senators will end up changing the tax credits—and he wants to see an updated revenue score from the Congressional Budget Office before making decisions. That estimate is expected the week of May 9.

Still, increasing the tax credits for certain groups is something many Republican senators have said they wanted to do since before the House voted on its bill.

Thune, the chairman of the Senate Republican Conference, said the idea is to redesign the tax credit in a way that delivers more of the benefit to people who are low income and elderly. Thune began working with Cassidy in March on an amendment to redistribute the tax credits.

Thune said he was trying to “shorten the tail” on the tax credit, so that it doesn’t benefit people who are making more than a certain income level.

Asked if there was an agreement toward that approach, Thune said that there was. “We’re not going to get everybody. But I think we’re going to get” most, he said May 9.

Senators have also toyed with the idea of keeping some of the Affordable Care Act’s tax provisions, which could help fund a replacement. The House bill kills all tax provisions except the 0.9 percent Medicare surtax.

“This isn’t going to be a perfect solution. I’m open to keeping some taxes but which ones I’m not sure,” Sen. David Perdue (R-Ga.) said.

To contact the reporters on this story: Colleen Murphy at, Kaustuv Basu at, Laura Davison at and Alexander Ruoff at, in Washington

To contact the editor responsible for this story: Meg Shreve at

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