News

Federal Legislative Update

Here is the federal legislative update as of May 2nd, 2025. The President’s budget request came out the morning of May 2nd; further analysis in the coming week will likely result in additional updates. 

Disability

• Medicaid
  • House Chair of Energy and Commerce, Rep. Guthrie, spoke to media about the options for Medicaid in reconciliation
    • He said that it seemed like there was not political will to change the FMAP rates for the expansion population but there might be more political will on per capita caps
      • Guthrie said that he is not saying FMAP changes for the expansion population are off the table just that they’re undecided
    • Committee insiders met today on the subject of Medicaid and following that meeting the Freedom Caucus put out a letter asking for three core things (said in different words):
      • FMAP changes to expansion population to be more closely aligned with the rates for the traditional population
      • Elimination or reduction of Provider Tax fees States impose on Medicaid providers (more on that below)
      • Transparency initiatives to cut down on waste, fraud and abuse
  • What is likely to be in the House proposal?
    • Changes to provider taxes will almost certainly make the House proposal
      • States impose a tax on Medicaid providers ostensibly to cover the cost of administering Medicaid, however, Congress believes the providers then in turn account for those taxes in the price of providing care to Medicaid recipients which drives up the cost of the program for the federal government
      • The Congressional Budget Office scored the elimination of provider taxes at $612 billion in savings to the federal government which would make up a huge chunk of the $880 the Energy and Commerce Committee is expected to makeup
        • The Committee may choose to cap the amount of taxes which can be imposed instead of eliminate them entirely
    • Taxes, fees or other requirements on Managed Care Organizations (MCOs)
      • This proposal is one of the few with bipartisan support
      • Congress sees MCOs as becoming “profit centers” which is not how they envisioned the program
  • What is still unknown:
    • The fate of the expansion population reimbursement. Internally moderate Republicans are saying they won’t support changes to the expansion population but Freedom Caucus members are insisting on it
    • Changes to any of the waivers or Medicaid based programs have not been widely discussed one way or the other
  • Circulating around the Hill is an internal (leaked) menu of Medicaid options for the Committee. There is no appetite to adopt all of these provisions but these are what the members of the Committee have been asked to consider:
    • Normalizing the expansion population FMAP under 90 — a reference to lowering the 90% share of federal costs for the Medicaid expansion population.
    • Minimum cost-share for expansion population.
    • Lowering the FMAP floor.
    • A 10% FMAP reduction for expansion population for states that cover undocumented immigrants.
    • Prohibition of coverage for undocumented immigrants
    • Rescinding a temporary FMAP increase from the American Rescue Plan.
    • Normalize the District of Columbia's FMAP.
    • Per capita caps.
    • Provider tax reduction
    • Managed care organization tax.
    • Medicaid eligibility reporting requirements.
    • Rescinding Biden-era nursing home staffing rule.
    • Retroactive coverage.
    • Prohibition on transgender care for minors.
    • Prohibition on transgender care for all beneficiaries.
    • The bill is supposed to be passed out Committee May 7 but to be seen if a draft will be ready in time

• House Ed and Workforce ask pointed questions to Admin about Administration for Community Living
  • House Ed and Workforce passed a resolution this week that requires the Secretary of Health and Human services to (essentially) detail the plans they have regarding the closure of ACL and how they plan to meet the mission of the underlying Congressionally passed acts which ACL currently administers
    • The move, while not necessarily a rebuke, does send a message to the Administration that Congress expects the underlying programs to be continued on at their current capacity
       
• SSA Withholding Policy Update:

• The SSA is backing off its March 2025 policy to withhold 100% of beneficiaries’ monthly checks to recover past overpayments. 
• Instead, it will now default to withholding 50% of old-age, survivors, and disability benefits - a partial reversal of the Trump administration’s recent rollback of Biden-era protections. 
• Critics, including former SSA head Martin O’Malley, argue the move still imposes hardship on vulnerable recipients and creates confusion within the agency. 
• You can read more in an industry article here.  

Budget Reconciliation Update

• The House has begun working on their drafts of “budget reconciliation” which is a 10-year budget strategy
• Attached you will find summaries of all the bills the House marked up this week
  • Please let me know if there is a particular policy provision or account or issue you’d like me to check for that is not made obvious in the summaries
• This week the House passed out of committee budget reconciliation bills for:
  • Education and Workforce, Financial Services, Armed Services, and Homeland Security
• My sources on the Hill are telling me that leadership has said they will not be opening the floor for amendments on any of these bills (to be seen of course)
  • However, the Senate still has to pass their bills and then there will be a conference
  • Ultimately, the Senate bills will be a better bellwether for the final policy because the Senate Parliamentarian has ultimate say in what is allowable on reconciliation

Recission Package and President’s Budget Request

• The President released his “skinny” (meaning consolidated) budget request to Congress on Friday morning. Here are some key highlights and see the full budget here: https://www.whitehouse.gov/wp-content/uploads/2025/05/Fiscal-Year-2026-Discretionary-Budget-Request.pdf
  • Department of Education
    • Special Education funding remains flat but a policy proposal is contained in the bill which would consolidate all of the IDEA programs into one program and would lower the administrative workforce focusing on placing dollars in the hands of the families of individuals with disabilities and localized administrators (such as schools)
    • Reduces the Department of office of Civil Rights by 35% targeting all programs related to enforce DEI
  • USAID
    • Shift of funds from traditional USAID programs to the America First Initiative which programs funds for US allies for strategic initiatives like for India and Jordan
  • HUD
    • Elimination of the CDBG program
    • Eliminates HOME partnership program
    • Reprograms rental assistance to be a state based formula directly delivered to states
      • Proposes the reopening of federal land for housing development but without details
  • HHS
    • Creates the Make America Healthy Again Commission tasked with finding causes and cures for chronic disease through holistic and alternative methodologies and asks for $500 million
    • Eliminates the Low Income Home Energy Assistance Program
    • Reduction of $1.7 billion from HRSA through the elimination of the Health Workforce Grant, Maternal and Child Health programs and the Ryan White HIV/AIDS fund
    • Reduces CDC by $3.6 billion and refocuses the agency on infectious disease outbreak eliminating several programs
    • Reduces NIH by $17.9 billion leaving $27 billion for the agencies research mission. The budget includes a specific list of eliminated research focuses
    • Eliminates $1.07 billion from SAMSHA including a list of specific programs leaving $5.7 billion for the rest of the mission
    • Eliminates $674 million from CMS administration specifying it would not impact Medicare or Medicaid benefits and eliminates specifically the CMS programs focused on ‘health equity’
  • EPA
    • Eliminates the State Revolving Fund for water infrastructure
  • Homeland
    • Increases overall funding by $43.5 billion
    • Reduces non-disaster FEMA grants by $646 million
    • Reduces TSA by $247 million
  • DOJ
    • Eliminates $1 billion worth of local grant programs which are listed in the request
    • Reduces the FBI by $545 million and proposes realignment of duties
  • DOD
    • Increases overall spending by $113.3 billion
    • Reduces close to $20 billion from DOD clean energy and environmental programs listed in the proposal
  • DOT
    • Increases FAA operational dollars by $359 million
    • Increases FAA facilities and infrastructure dollars by $824
    • Increase infrastructure (INFRA) grants by $770 million
    • Increases rail safety grants by $400 million
    • Increases shipbuilding and port infrastructure funding by $596 million
    • Reduces the Essential Air Service (which subsidizes flights to small communities) by changing eligibility standards by $300 million
  • Commerce
    • Rescinds unobligated Economic Development Agency dollars and aims to ‘reallign’ the program
  • DOL
    • Eliminates Job Corps
    • Eliminates Senior Service program
  • Interior
    • Cuts about $1 billion through various initiatives at the National Park Service
  • Agriculture
    • Increases rural rental assistance by $74 million
    • Increases food safety inspection by $15 million
    • Eliminates Community Facilities Program
    • Reduces the Forest Services by about $600 million between the various initiatives
    • Replaces Commodity Supplemental Food Assistance with a new program through Make America Healthy Again which delivers food boxes to seniors
  • Treasury
    • Increases Rural Investment by $100 million
    • Decreases the IRS by $2.5 billion
    • Essentially eliminates CDFI grants by $290 million leaving only funds to close out currently awarded projects
  • VA
    • Increases VA medical care by $3.3 billion
    • Increases electronic health records funding by $2.2 billion
  • NASA
    • Increases space exploration funding by $647 million
    • Makes significant cuts to other operations and supports refocusing NASA’s mission to beating China back to the moon
  • Eliminated small independent agencies (key)
    • AmeriCorps
    • Corporation for Public Broadcasting
    • National Endowment for Arts and Humanities
    • Institute of Peace
    • Interagency Council on Homelessness
    • Wilson Center
• The President is also expected to send a recissions package which would ask Congress to rescind already appropriated funds from NPR, USAID and Public broadcasting
  • The package is reportedly $9.3 billion in rescissions total
  • A recission package is a formal process where the President asks Congress to rescind money they already appropriated and then Congress has 45 days to accept or decline. If they do not respond in 45 days, the funds stay in place

Tax Update

• Secretary Bessent has been meeting with Republican lawmakers on possible tax reform for the last couple of weeks
• Today Bessent announced he thought a tax package would be ready by July 4 – this is farther out than the original hope from Speaker Johnson of “before Memorial day”

DOL/Employment

• Federal Job Corps Transparency Report:
  • The DOL released its 2025 Job Corps Transparency Report, offering a detailed financial breakdown of the Job Corps program for low-income youth. 
  • The report highlights graduation rates of 32% (traditional) and 38% (WIOA-defined), with an average cost of over $80,000 per student annually and up to $187,000 per traditional graduate. 
  • Some of the least efficient Job Corps centers cost over $500,000 per graduate. Post-program, participants earn about $16,700 annually on average. 
  • The report from the Trump administration aims to boost accountability and transparency and inform policy decisions around the multi-billion-dollar federal training program.

Other Federal 

• Waltz Stepping Away From NSA Role:
  • National Security Adviser Mike Waltz is being pushed out of the Trump White House but has been nominated to UN Ambassador
  • Secretary Marco Rubio will be interim NSA Director until a replacement is confirmed by the Senate
• Funding Target Date Announced:
  • Treasury Secretary Scott Bessent announced July 4 as the new target date for passing the GOP’s sweeping domestic policy bill, which includes tax reforms and a debt ceiling hike. 
  • The deadline aligns with Republicans' broader economic agenda focused on trade, taxes, and deregulation. 
  • Though the federal “X-date” for default remains uncertain, lawmakers expect more clarity soon, as raising the debt limit will be part of the package.
  • The “x date” is the day when the Federal Government can no longer make its payment obligations due to debt ceiling
• AI and Deepfake Regulation:
  • Congress has passed bipartisan legislation to combat non-consensual deepfake pornography, sending the bill to President Trump, who has signaled support. 
  • The bill, passed 409–2 in the House and unanimously in the Senate, requires websites to remove AI-generated explicit content within 48 hours of request or face penalties. 
  • First Lady Melania Trump publicly endorsed the measure, which intends to address the growing misuse of deepfake technology, especially against women and girls. 
  • Critics warn the law could risk free speech online, while some Democrats argue broader protections for children are still needed. 
  • Enforcement would fall to the Federal Trade Commission, raising concerns amid President Trump’s efforts to reshape the agency.
• Auto Tariffs Expected to be Eased:
  • President Trump is set to sign an executive order easing the impact of upcoming auto tariffs by offering temporary offsets to carmakers using imported parts in US-built vehicles. 
  • The policy allows up to a 3.75% offset in the first year and 2.5% in the second, before phasing out, incentivizing domestic manufacturing. 
  • It also helps to prevent stacking of tariffs on imported vehicles by waiving separate steel and aluminum duties. 
  • The move, which is conveniently timed with President Trump’s upcoming visit to Michigan, hopes to support American auto jobs while responding to industry concerns about supply chain disruptions. 
  • Automakers like Ford, GM, and Stellantis have praised the decision as a needed reprieve.
• DOGE Progress Report:
  • Elon Musk’s 130-day tenure as the public face of the federal cost-cutting initiative DOGE has cost him an estimated $113 billion in personal wealth, driven largely by Tesla’s plummeting stock and consumer backlash. 
  • Musk’s deep involvement in federal decisions, from agency restructuring to defense contracts, drew increasing criticism and political blowback, ultimately culminating in a failed $20 million intervention in Wisconsin’s Supreme Court race. 
  • Musk will be stepping back from DOGE and the federal government in mid-may due to his temporary employee status coming to an expiration date (he only had 130 days before he had to divest in his businesses)
  • President Trump praised Musk’s contributions in the past tense as he signaled the transition, suggesting Musk's formal departure from DOGE is imminent.
• UK Considers IDA Withdrawal:
  • The UK is considering reducing its £1.98 billion pledge to the World Bank’s International Development Association (IDA) as it redirects foreign aid funds toward military spending, aligning with the Trump administration’s cuts to global institutions. 
  • This marks a significant departure from the UK’s historical leadership in international development, with former development priorities now under urgent review by Labour’s new minister Jenny Chapman. 
  • The proposed aid reduction reflects broader budget pressures, including rising defense costs and refugee housing expenses. 
  • The UK’s aid budget is set to fall to 0.3% of GDP by 2027, well below the UN-recommended 0.7%. 
  • Cutting IDA contributions could weaken funding for programs combating global poverty, even as officials acknowledge the IDA’s high value and cost-efficiency.
• Update on Unreleased Federal Funds:
  • As of President Trump’s 100th day in office, over $430 billion in federal funding remains delayed, frozen, or under legal dispute, according to Democratic appropriations staff. 
  • The affected funds span a range of programs intended for families, businesses, and local governments. 
  • Some of the delays stem from ongoing policy reviews or legal challenges, and in a few cases, courts have ordered the administration to release specific funds. 
  • However, implementation has been inconsistent due to administrative or logistical hurdles. The figure does not include additional funding at risk due to staffing changes or pending fiscal year 2025 allocations.
  • You can view the full tracker that includes specifics here.

Source: SUPRA