Senate Republicans unveiled an updated 940-page version of President Trump’s “big, beautiful bill” late Friday with hopes of holding a procedural test vote to begin debate on the bill Saturday.
The updated bill reflects changes made by multiple Senate committees throughout the week to bring the measure into compliance with the chamber’s rules for budget reconciliation, the filibuster-proof process Republicans are using to advance the bill.
They tweaked Medicaid provisions and added money to help rural hospitals weather the cuts, gave Alaska a carve-out from cost-sharing in the food stamp program for states that mismanage benefit payments, added restrictions to the sell-off of federal lands, and created a new funding incentive for states to adopt a 10-year moratorium on regulating AI.
The update also includes a long-awaited compromise on the state and local tax deduction, known as SALT.
The bill would temporarily raise the cap on the SALT deduction to $40,000, with minor gradual increases through 2029 to account for inflation. However, the cap amount phases down for anyone earning more than $500,000.
In 2030, the cap would drop back to $10,000 with no income limitation, which is the provision under current law that’s set to expire at the end of this year.
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Some changes are designed to win over holdouts who had concerns about the initial version, but it’s not yet clear whether the updated product will secure enough votes.
GOP leaders cannot afford more than three Republican defections.
Sen. Rand Paul, Kentucky Republican, has said he will vote “no” because of the $5 trillion debt limit increase in the bill.
And on Friday, Sen. Thom Tillis, North Carolina Republican, said he would oppose the bill if provisions to overhaul Medicaid did not substantially change.
Medicaid
The latest version makes mostly minor tweaks to bring Medicaid provisions into compliance with Senate rules and is not expected to be enough to earn Tillis’ support.
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The updated bill would push back a year the previously scheduled implementation of a crackdown on Medicaid provider taxes, which many Republicans have called a “money laundering scheme.”
The Senate measure would still force most states to lower provider tax rates to no more than 3.5% if they want to use the revenue to pay for increased Medicaid payments to the same providers, which would inflate the cost of their Medicaid programs and the share the federal government must contribute. The phase down of what is known as the “safe-harbor” limit, currently 6%, would not begin until fiscal 2028.
The new 3.5% safe-harbor limit, which wouldn’t take full effect until fiscal 2032, applies only to the 40 states and the District of Columbia that expanded Medicaid under Obamacare to include low-income, able-bodied adults without dependents earning up to 138% of the poverty level. Those states receive a 90% federal contribution to cover the additional beneficiaries and thus are more incentivized to use higher provider taxes to inflate the amount of funding they receive from the federal government.
A handful of GOP senators have raised concerns that the Senate’s provider tax crackdown would lead to steep Medicaid funding cuts that their states can’t make up on their own.
Mr. Tillis said North Carolina is estimated to face a $38.9 billion funding shortfall, including a $9.75 billion hit to hospital receipts.
Several senators have raised concerns about the impact on rural hospitals in particular, so the updated bill adds a $25 billion “rural health transformation program.”
States would have to submit applications to the Centers for Medicare & Medicaid Services detailing how they’d improve health care services and outcomes for their rural residents to qualify for a share of the funding.
The $25 billion for the program would be made available over five years, starting in fiscal 2028 when the ramp down of the provider tax safe-harbor limit begins.
The rural health funding may win over some Republicans who had concerns about the provider tax changes, like West Virginia Sen. Jim Justice, who said Friday he was now “comfortable” with the bill.
But it may not be enough for other Republicans, like Sen. Susan Collins of Maine, who had wanted a $100 billion fund for rural health providers.
Alaska is the only state that doesn’t have Medicaid provider taxes. But Sens. Lisa Murkowski and Dan Sullivan have significant concerns about another aspect of the bill that would shift costs to states: an overhaul of the Supplemental Nutrition Assistance Program, formerly known as food stamps.
SNAP
The leaders of Alaska’s legislature published an op-ed in The New York Times on Friday that warned the bill would have “particularly ugly” impacts on their state.
“Nearly 40,000 Alaskans could lose health care coverage, thousands of families will go hungry through loss of benefits from the Supplemental Nutrition Assistance Program, or SNAP, and the shift in costs from the federal government to the state will plunge our budget into a severe deficit, cripple our state economy and make it harder to provide basic services,” wrote Bryce Edgmon, the speaker of the Alaska House of Representatives and Cathy Giessel, the Republican majority leader for the Alaska Senate Bipartisan Coalition.
The updated bill provides some help for Alaska on SNAP.
A proposal to make states with high rates of overpayments and underpayments, known as error rates, contribute 5% to 15% of the cost of SNAP benefits includes a carve-out for Alaska, which has the highest error rate of any state by far.
The cost-sharing increases are not set to take effect until fiscal 2028. At that time, the Agriculture secretary can waive the requirement for any noncontiguous state, meaning Alaska or Hawaii, for up to two years if the state is actively working to reduce its error rate.
Alaska also gets the ability to request a waiver under another provision to tighten SNAP work requirements for able-bodied adults when its unemployment rate is at least 1.5 times the national average.
The bill otherwise would raise the age exemption from 54 to 64 and apply the work requirements to able-bodied adults with dependents age 14 and older, up from 18 under current law. Starting in 2029, Alaska would no longer qualify for the waiver from these requirements.
Ms. Murkowski has also raised concerns about the Medicaid work requirements in the bill. There was no special waiver for Alaska added to that section, but the original Senate bill already included a provision allowing any state to request an exemption if it can demonstrate “a good faith effort to comply” with the work requirements.
“Work requirements instituted in Medicaid are untenable for rural Alaska, with many communities facing limited broadband access and job opportunities,” Mr. Edgmon and Ms. Giessel wrote in their op-ed.
Climate change
The updated bill includes a key tweak to the phase out of clean energy tax credits designed to win over fiscal conservatives and President Trump, who wanted to repeal all of President Biden’s “green new scam” subsidies.
Subsidies will be cut off for new solar and wind projects if they’re not “placed in service” by the end of 2027.
While it’s not the full repeal Mr. Trump and conservatives wanted, it does at least ensure they’ll end during his presidency. The original Senate bill used a less strict standard for the projects to begin construction, ensuring the subsidies would be available for years after Mr. Trump’s presidency ended.
Federal land selloff
Other provisions changed in the bill may not be enough to win over critics. Sen. Steve Daines, Montana Republican, reportedly said he has enough votes to strike a section of the bill requiring the Bureau of Land Management to identify a small portion of federal lands that can be sold for housing and associated community needs.
Sen. Mike Lee, Utah Republican, altered the proposal to reduce the requirement on how much land BLM has to sell from the over 245 million acres the federal government owns. The original bill required 0.5-0.75% of federal land to be sold, and the update drops that down to 0.25-0.5%.
The proposal already excluded the sale of national parks and monuments and recreation and wilderness areas, but the update adds exemptions for all Forest Service land and land with grazing rights and other valid permitted uses.
It also clarifies that only lands near population centers can be sold since the goal is to provide areas for affordable housing.
The amended proposal directs 10% of the proceeds from the land sales to be used for hunting, fishing, and recreational amenities and to address BLM’s deferred maintenance backlog.
Artificial Intelligence
Also changed is a section of the bill that would have forced states that accept federal broadband funding to place a 10-year moratorium on regulating artificial intelligence. That language, which drew opposition from several Republicans, stood to impact all 50 states and the District of Columbia.
The bill drops the moratorium’s tie to an existing funding source that states have already tapped into and instead creates a new one, $500 million for the National Telecommunications and Information Administration to support the deployment of AI models or systems. Only states that voluntarily adopt the 10-year regulation ban can access the funding.
