Health Lobby Reeling as Trump’s 2025 Bill Enacts Major Medicaid Cuts

Washington D.C. – The healthcare industry is grappling with a significant political setback after President Donald Trump signed a sweeping tax and spending bill into law on July 4, 2025. Despite weeks of intense lobbying and dire warnings from doctors, hospitals, and insurers about widespread coverage losses and potential hospital closures, Republican lawmakers pushed through the legislation, which includes substantial cuts to Medicaid funding.

The bill’s passage marks a rare and unexpected defeat for the health sector’s typically powerful lobbying forces, which are now assessing the damage and the reasons behind their inability to prevent the cuts to the $900 billion state-federal health insurance program.

Several factors are cited for the lobby’s failure. Many GOP lawmakers reportedly prioritized appeasing President Trump over potential backlash from local healthcare providers or constituents. Bob Kocher, a partner at Venrock, noted that “Members were more scared of Trump issuing a primary challenge than disappointing local voters.” This sentiment was underscored by the case of Sen. Thom Tillis (R-N.C.), who reportedly faced threats of a primary challenge after initially opposing the bill.

Another contributing factor was lingering Republican resentment towards the healthcare industry’s perceived support for the Affordable Care Act (ACA). Ceci Connolly, CEO of the Alliance of Community Health Plans, observed an “overriding sense on the part of Republicans in Congress to deliver a major victory for President Trump,” which superseded other concerns.

The new law, while not altering Medicaid eligibility or benefits directly, mandates states to verify eligibility every six months and ends auto-enrollment in marketplace plans. The Congressional Budget Office predicts this could lead to approximately 5 million people losing coverage by 2034. Additionally, the legislation limits states’ use of provider taxes, a long-standing method for hospitals to leverage federal Medicaid funding, though implementation of these cuts has been delayed until 2028.

Despite the overall defeat, some lobbying efforts yielded minor concessions, such as a $50 billion fund for rural hospitals and health providers, and an exemption for community health centers from new co-payment requirements. The American Medical Association also secured a one-time 2.5% Medicare pay bump for doctors in 2026, though it fell short of a permanent solution. As the industry reflects on this outcome, many are strategizing for future legislative battles, particularly with the 2026 midterm elections on the horizon.

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