After an overnight vote-a-rama, the U.S. Senate narrowly advanced the budget reconciliation bill, H.R. 1, with Vice President JD Vance breaking a 50–50 tie early Tuesday morning. Senators Susan Collins (R-ME), Rand Paul (R-KY), and Thom Tillis (R-NC) were the only Republicans to vote against the measure. Senator Lisa Murkowski (R-AK) ultimately supported the bill following significant pressure from party leadership, after concessions were made to eliminate a proposed tax on solar and wind energy projects and revise a food aid carveout for Alaska.
As expected, the final package retains the Senate’s controversial Medicaid provider tax reforms, despite strong opposition from governors and hospital associations. The revised provision lowers the maximum provider tax rate that Medicaid expansion states may impose—from 6% to 3.5%—with the phase-down beginning in Fiscal Year (FY) 2028, one year later than originally proposed. While the delay eases short-term budget pressure, the longer-term limits on state financing flexibility have raised concerns, particularly for rural hospitals. The bill also provides $20 million to HHS to implement the policy—up from $6 million in earlier drafts.
In response to concerns from moderates about the impact of provider tax reforms on rural hospitals, the final legislation increases the Rural Hospital Stabilization Fund to $50 billion—up from $25 billion in earlier drafts. The final structure provides $10 billion annually from FY2027 through FY2031.
House Outlook
The Senate’s passage now sets up a challenging path in the House, where Speaker Mike Johnson (R-LA) can afford to lose only three Republican votes. He faces pressure from both wings of his conference: conservatives argue the package falls short of his $2 trillion deficit reduction pledge, pointing to $1.5 trillion in spending cuts and $4.5 trillion in tax relief. Meanwhile, moderates have raised concerns about the Senate’s deeper Medicaid cuts and its more aggressive provider tax language, which lowers thresholds instead of freezing them as the House version proposed.
The House Rules Committee is expected to begin preparing the bill for floor debate today, with a full vote likely on Wednesday, as Republicans continue to target the July 4th deadline. However, ongoing GOP divisions have added uncertainty. President Trump has signaled some flexibility, telling reporters Tuesday, “I’d love to do July 4th, but I think it’s very hard to do July 4th.” Meanwhile, Senator Lisa Murkowski (R-AK), who voted for the bill, suggested the House should send it back to the Senate to “continue the work.”
For further information, contact RCRC Senior Vice President for Government Affairs Mary-Ann Warmerdam.