House Budget Committee hearing spotlights Medicaid, SNAP reforms and risks to hospitals

The House Budget Committee on June 24 heard competing views on GOP reconciliation proposals to tighten eligibility and add work requirements for Medicaid and SNAP, with Republican lawmakers and witnesses describing widespread improper payments and state “money‑laundering” schemes and Democrats and other witnesses warning that the changes could cause millions to lose coverage and force rural hospitals and clinics to close.

Republican Chairman Jodey Arrington framed the hearing around what he called a mission to “rein in waste, fraud, and abuse” in entitlement programs and to preserve funding for the most vulnerable. He and witnesses urged verification of eligibility and limits on state financing mechanisms that claim extra federal matching dollars.

"Improper payments in Medicaid were identified at $31,000,000,000 last year," said Chairman Arrington in his opening remarks, citing Government Accountability Office figures discussed at the hearing. He described a package — repeatedly called during the hearing the “1 Big Beautiful Bill” — that would restore eligibility checks, curb provider tax schemes and introduce community engagement or limited work requirements for able‑bodied adults without dependents.

Supporters argued the reforms would reduce what they described as perverse incentives that have diverted federal dollars away from children, seniors and people with disabilities. Brian Blaise, president of the Paragon Health Institute, told the committee that expanded enrollment and delayed verification since the pandemic have created opportunities for fraud and costly improper payments. "Automatic reenrollment perpetuates improper enrollment," Blaise said, adding that brokers and bad actors took advantage of relaxed checks during pandemic-era rule changes.

Nick Staley, vice president of communications at the Foundation for Government Accountability and a parent of a child on Medicaid waiver wait lists, described long waits for home‑and‑community‑based services and urged reforms to prioritize those services over expanded coverage for able‑bodied adults. "Every dollar that goes to an able‑bodied adult on Medicaid who can and should be working is a dollar that doesn't go to the people the program was intended to help," Staley said.

Democratic members and witnesses disputed the magnitude of the problem as presented and warned of operational risk. Representative Brendan Boyle, the committee's top Democrat, cited nonpartisan Congressional Budget Office estimates that the reconciliation package would increase the number of uninsured Americans by millions and said most of those affected are U.S. citizens or lawfully present. "The fact of the matter is most folks in my district work hard and play by the rules," Boyle said.

Robert Gordon, a fellow at Georgetown McCourt School of Public Policy who led Michigan's Medicaid implementation efforts, described the administrative cost, time and complexity of putting work requirements in place at the state level. Gordon said Michigan spent tens of millions and would have required substantial new systems and staffing; the state's rule was later enjoined. "Baked into this law's DNA is a future of failure," he said, arguing that aggressive paperwork and reporting requirements can cut eligible people off coverage and increase mortality and uncompensated care.

Several witnesses and members drew a distinction between two targets for anti‑fraud efforts: individual beneficiary errors and provider or state‑level schemes. Multiple speakers said provider‑side fraud and high provider payment rates (including alleged state provider tax and directed‑payment schemes) are major drivers of improper federal outlays. Blaise and others described arrangements in which states use provider taxes and accounting mechanisms to obtain higher federal matching funds and then expand benefits; they called those practices "money‑laundering" and urged caps on state‑directed payments.

Democrats and some witnesses urged the committee to prioritize stronger enforcement against provider and contractor fraud and to restore and fund inspector general and Justice Department enforcement capacity rather than adding eligibility red tape. Witnesses cited evidence from Arkansas, Michigan and Georgia experiments showing that work and reporting requirements often did not raise employment but did raise administrative costs and increased the uninsured.

Committee members from both parties raised the likely effects on hospitals and other providers. Representatives from states with many rural hospitals warned that cuts or enrollment churn would worsen already‑thin operating margins and could force facility closures, longer travel times for emergency care and job losses in local economies. "Rural hospitals are critical economic engines," Gordon said; several Democrats said they had lists of hospitals at risk.

The hearing produced no committee votes. Members on both sides asked witnesses to provide additional documents and analysis for the hearing record; the chairman said the committee would accept written questions and that witnesses' submitted statements would be part of the record.

The hearing highlighted a central tension in the debate: whether to prioritize eligibility verification and work incentives to curb improper payments and alleged state gaming of federal matches, or to focus enforcement on provider fraud and preserve broad access to coverage and benefits while investing in program integrity. Both sides framed the choice as protecting taxpayer dollars; they disagreed sharply over which reforms would actually achieve that goal without harming vulnerable people or public health infrastructure.

The committee adjourned after hours of testimony and member questions, and members may submit additional questions for the record.