The Latest on Medicaid

May 27, 2025

The U.S. House of Representatives Passes Budget Reconciliation Bill with implications for Medicaid, Non Profit Charitable tax-exempt organizations and Medicare. Action now moves to the Senate.

The House of Representatives voted on May 22 to pass their version of a budget reconciliation package with a vote of 215-214 that includes $715 billion in cuts to Medicaid, while adding over $2-3 trillion to the deficit (based on various estimates).  The measure includes work requirements targeted at the adult expansion population beginning in December 2026. It also includes caps to provider taxes – which is the way a significant majority of states pay for their share of Medicaid – making it hard for states to fill the gaps in funding  The non-partisan Congressional Budget Office projects that roughly 10 million Americans will lose coverage as a result of the cuts.

Action now moves to the Senate where Majority Leader John Thune (R-SD) has signaled they will look for $600 billion in cuts to Medicaid to pay for the expiring Tax Cuts and Jobs Act. The Senate is expected to pass a budget reconciliation package before the July 4 recess, which means that it will be important to meet with your Senators to ask them to protect Medicaid from cuts.

Our new campaign, Here We Stand. For People. For Care. For Medicaid. Includes resources to support outreach to members of Congress and the media in your local and state markets.

House Budget: Charitable Non-Profit Tax and Medicare Implications

The recently passed House version of the Budget Reconciliation Bill includes implications for nonprofit charitable organizations and Medicare.

Nonprofit Charitable Tax Status: What is NOT included/out

  • The House passed bill does NOT include the provision that would revoke nonprofit status from “terrorist supporting organizations”:
    • House Republicans removed a provision from the bill that would have granted authority to the Treasury Secretary to revoke nonprofit status from “terrorist supporting organizations,” without requiring the Secretary to share full evidence or ensure due process.

What IS included/in: 

  • Charitable Act at $150/300 (single/joint filer) – urge Senators to support;
    • The House bill creates a non-itemizer tax deduction up to $150 for individuals and $300 for married couples, regardless of whether the tax filers claim an itemized deduction (Section 110112).
  • Limits on charitable donations – urge Senators to oppose;
    • These proposals (Section 110011 and Section 112027) discourage charitable donations made by corporations and individuals, ultimately leaving nonprofit organizations with fewer resources to serve their community.
    • Adds new limits on itemized deductions, including the charitable deduction. If enacted, this provision would significantly reduce the value of itemized deductions for high-income taxpayers, disincentivizing charitable giving.
    • Section 112027 creates a 1% floor for charitable contributions made by corporations. In doing so, this provision would discourage corporate giving, if such donations amount to less than 1% of their taxable income.
  • New or expanded taxes on non-profits and foundations – urge Senators to oppose;
  • These proposals (Section 112022 and Section 112024) divert scarce resources away from essential services, undermine the ability of charitable nonprofit organizations to meet needs in their communities, and put greater strain on government.
  • Increases and expands Unrelated Business Income Tax (UBIT) to include any qualified transportation fringe benefit, such as transit benefits or parking benefits, for charitable organizations.  Note: The provision also carves out an exception for church-affiliated organizations.
    • In essence, this provision applies an income tax on an expense. This provision was previously passed in 2017 and subsequently repealed due to the confusing nature of applying an income tax on an expense and difficulty of quantifying the expense of certain benefits such as the cost of a parking spot already owned by a charitable organization.

Medicare:

  • Triggers Medicare cuts under the Statutory Pay As You Go Act of 2010 that could include reductions in provider reimbursements. Because the bill would increase the budget deficit by $2.3 trillion, the CBO projects the White House Office of Management and Budget (OMB) would have to curtail Medicare spending by $45 billion in 2026 and $490 billion from 2027 to 2034.
  • Suspends a rule to facilitate enrollment in Medicare Savings Programs that cater to low-income people eligible for Medicare and Medicaid by pushing back the effective date to 2035. Savings are estimated to be $84 billion.
  • Ends Medicare eligibility for some lawfully present foreign nationals who currently qualify by limiting the program to permanent residents who are green card holders, from Micronesia, the Marshall Islands or Palau, or, in certain cases, from Cuba. This would save $132 million.

LSA will continue to provide updates and actions as the debate moves forward in the US Senate on Medicaid and broader issues.  Stay current on our public policy efforts by subscribing to our advocacy alerts.

Please contact LSA staff with any questions or for more information:

Voice. Evidence. Action.

May 23, 2025

Our strength as a trusted, community-centered national network comes not just from our size and scale, but from the intersections of our work where message, evidence, and action meet. Last week was a vivid example of that alignment as we launched the Here We Stand campaign, published a new issue brief, “Innovating Care Through Community Partnerships,” and hosted a Results Network convening with 50 leaders from across the country.

Together, these initiatives tell a story of collaboration, innovation, and a united, faith-based voice leading with purpose.

Medicaid is a cornerstone of our work and a lifeline for the people we serve in more than 1,400 communities nationwide. As policymakers at both the state and federal levels continue to debate the program’s future, Here We Stand gives voice to our shared values. It boldly affirms our unwavering commitment to the millions who rely on Medicaid and reflects our unique perspective as a network that works across the full spectrum of Medicaid stakeholders. This is more than messaging—it’s a public declaration of who we are and what we stand for.

That voice is rooted in real, on-the-ground innovation. Our new issue brief highlights how Lutheran Services in America members are transforming care by forging partnerships between Medicaid Managed Care and community-based organizations, showing how integration of behavioral health and non-medical services and supports are improving outcomes for children and families and strengthening communities. A future brief and forthcoming blueprint will spotlight similar innovation across the network including in aging services and the Disability Network.

These ideas don’t just live on paper. They come to life through our learning communities. From the Rural Aging Action Networks to the Disability Network and, just last week, the Results Network convening.

These aren’t parallel tracks—they are deeply connected. The message shapes the narrative. The evidence builds credibility. The convenings fuel collaboration, innovation, and momentum.

Together, they show what’s possible when we speak with one voice, ground our work in truth, and lead with courage and community. This is how change happens. This is how we light the way—united, unwavering, and filled with purpose.

Alesia Frerichs is the President & CEO of Lutheran Services in America.

What’s Next on Medicaid Fight

March 12, 2025

With the budget reconciliation process currently moving forward in Congress, the risk of cuts to Medicaid looms large. Lawmakers are looking for significant funding reductions to offset the majority’s plans for permanently extending tax cuts for the wealthiest Americans, with proposals that could drastically impact healthcare access for millions of people. The result would be reduced eligibility and enrollment in Medicaid for families, rural communities, older adults, and people with disabilities.

A Recap of What’s Happening

Key House and Senate committees are tasked with identifying substantial funding cuts based on differing House and Senate budget resolutions. The House budget reconciliation effort calls for one large budget package aimed at $4.5 trillion in cuts at the request of President Trump, while the Senate has opted for a two-phase approach to budget reconciliation. To move forward, the House bill essentially has to be adopted by the Senate. House Republicans are pushing the Senate to adopt their plan and Senate Republicans are working to find a path to the needed 51 votes. As this moves forward, significant cuts to Medicaid stay on the table.

Specifically, the House Energy and Commerce Committee, which oversees Medicaid, is looking for $880 billion in cuts to health-related programs. (See the recent nonpartisan CBO analysis of the House bill that identifies Medicaid as the path to cuts.)

Cuts to Medicaid can take many forms, including work reporting requirements, per capita caps, and restrictions on provider taxes that states use to fund their share of Medicaid.

What’s Next?

With all this in mind, it is important to meet with your members of Congress to ensure “No Cuts or Caps to Medicaid.” Here is what you can do:

  • Reach out to your members of Congress to educate them on the real-life impacts of Medicaid cuts by requesting a meeting or inviting your member(s) for a site visit to see the work of your organizations.
  • Since states share Medicaid funding responsibilities with the federal government, communicating with your governor’s office is also important. Congress is considering eliminating the use of provider taxes, which in most cases covers the state portion of the program – resulting in devastating cuts to Medicaid.
  • Use our Medicaid fact sheet to help guide your discussions and highlight the importance of the program.

Also, don’t miss our next Capitol Conversations webinar, Medicaid: What’s at Stake, on March 20 at 1 p.m. ET. We’ll hear from House Energy and Commerce Committee staff, including Leo Cuello from the McCourt School of Public Policy’s Center for Children and Families at Georgetown University, along with other important voices with insights and updates.

Sue Polis is Vice President of Public Relations and Government Affairs at Lutheran Services in America.

Threats to Medicaid in 2025: Take Action with Us

February 10, 2025

Based on recent statements and policy agendas from Congressional majority leaders who now control both the House and the Senate with the start of the new Congress, it is clear that they are seeking deep cuts to Medicaid and other domestic programs. Lutheran Services in America has two opportunities for you to join us to protect Medicaid.

  • Join us on February 13 at 1 p.m. ET for the next session of our Capitol Conversations series, “What’s at Stake: Medicaid at Risk in the Expiring Tax Cuts and Jobs Act.
    • This webinar will provide a unique opportunity to hear directly from key policymakers, leading experts, and Lutheran Services in America staff as we explore the latest legislative developments under the new Congress, the risks they pose to Medicaid, and what’s at stake for our network and the communities we support.
  • Take Action: We invite you to use our advocacy tool to  urge your lawmakers to protect Medicaid and oppose any legislation that seeks to cap, cut, or block grant Medicaid. We encourage you to personalize the message, including stories of how important Medicaid is to the work that you and your organization do, and to share this message with your colleagues and partners.

This is a critical moment for action. Join us in using our united faith-based voice to strengthen our collective advocacy and ensure our mission remains at the heart of this national conversation.

Sarah Dobson is Senior Director of Advocacy and Public Policy at Lutheran Services in America.

Early Administrative & Congressional Action Expected: Threats to Medicaid in 2025 and Broader Federal Policy Outlook

December 19, 2024

Early Administrative & Congressional Action Expected: Threats to Medicaid in 2025 and Broader Federal Policy Outlook

By Sue Polis

With the new year, we will welcome the new administration and Congress and prepare for the work ahead. As a $26 billion network largely funded through Medicaid and other federal programs, understanding the changing policy landscape is critical to our shared success. The following is meant to provide an overview of key issues we are tracking related to federal policy and member interests.

Potential Early Administrative Actions Specific to Medicaid and Long-Term Care

We may see some shifts early on through administrative action that would impact Medicaid, including:

  • Delay of implementation of rules meant to streamline Medicaid enrollment and renewal.
  • Approval of Medicaid waivers with work requirements and/or the delay of implementation or new rules to undo the recent Medicaid Access Rule.
  • Loosening regulations governing skilled nursing facilities (SNFs) and specifically, rolling back the staffing minimum on SNFs.

Early Congressional Threats to Medicaid

With the Tax Cuts and Jobs Act (TCJA) of 2017 set to expire next year, cuts to Medicaid are possible as Republicans move to reauthorize the legislation. Through the TCJA, corporate tax cuts were largely made permanent, while the individual income and estate tax cuts were largely temporary and expire at the end of tax year 2025.

Based on Congressional Budget Office (CBO) estimates and Republican plans, which include efforts to make the expiring tax cuts permanent, the potential price tag could be as high as $4 trillion over the next 10 years. With President-elect Trump signaling that Medicare, Social Security and spending on defense are off the table to pay for permanent tax cuts, that leaves Medicaid and the Affordable Care Act to potentially make up the difference. We expect action early in the new year that could impact Medicaid, with Senate Majority Leader John Thune (R-SD) signaling Congress may make changes through a two-step budget reconciliation process that would start as soon as January 20. We will continue to monitor efforts and will ask you to send a letter to Congress to urge them to protect Medicaid in any budget negotiations next year.

There are a number of threats or ways Medicaid could be impacted, which include:

  • Block grants: Block granting Medicaid effectively changes the structure of the program because a set amount of federal money is provided to each state and notably, it does not change if enrollment rises, the cost of care rises or new health threats emerge. Some proposals to date include small increases each year and with the actual cost of care already not covered, this would widen the gap. While block grants could range in size, most proposals call for deep cuts. Example: A 2017 legislative proposal would have cut federal funding by 25% over 10 years and 30% over 20 years (CBO estimate of BCRA).
  • Per Capita Caps: Essentially, each state receives a capped allotment per enrollee and while the cap may slightly increase each year, it is not set up to keep with the actual cost of care or anticipate new health threats (which makes an existing challenge worse). While in theory the cap can be of any size, previous proposals have always included massive cuts.
  • Cutting Federal Medicaid Match or FMAP: The FMAP is the portion of Medicaid costs that the federal government pays to states, which varies state-to-state based on a formula. In states that have expanded Medicaid under the Affordable Care Act, an enhanced FMAP effectively covers 90% of costs. Anticipated cuts to the FMAP would effectively eliminate the enhanced FMAP producing a massive cost shift to states – which in most cases produces a gap that could not be covered. The result is effectively an end to Medicaid expansion in several states which effectively results in massive cuts in eligibility and enrollment.
  • Work Requirements: Proposals that call for work requirements for eligibility in Medicaid effectively result in cuts as they create more red tape and cause people to lose their health coverage. The Congressional Budget Office (CBO) has estimated that past work requirement proposals cut $109 billion from federal Medicaid over 10 years. Data shows most working age adults enrolled in Medicaid already work, and work requirements do not increase employment. Exceptions for people with disabilities and caregivers have generally not worked as intended and, in effect, force decisions between work and Medicaid.
  • Repeal of Streamlining Eligibility and Enrollment Rule: As noted above in expected administrative actions, repeal of streamlining enrollment is essentially a $164 billion cut to Medicaid over ten years according to CBO estimates. The rule change will impact people with disabilities by adding administrative burdens to continuation of coverage.
  • Restricting Provider Taxes: Taxes on providers and insurers help states generate funding for their portion of Medicaid costs; every state has some version of these taxes that are regulated by federal law and have been part of Medicaid for decades. Amid existing state budget challenges, any restrictions in provider taxes will essentially produce cuts to Medicaid.

Non-Profit Charitable Tax Outlook

As noted above related to the expiring Tax Cuts and Jobs Act of 2017 (TCJA) and the need to find revenue to make the estate tax and personal income tax cuts permanent, a key area of focus is also the non-charitable tax deduction. As noted in the “Reining in America’s $3.3 Trillion Tax-Exempt Economy” report, which is being used to inform legislation on Capitol Hill, Lutheran Services in America is working with Leadership 18 to monitor and inform on-going discussions with a focus on restoring and making permanent the nonitemizer deduction and specifically to pass the bipartisan Charitable Act (H.R. 3435/S. 566). At present, across L18 supporting organizations, we are pulling together shared resources including materials for outreach to Senate Finance and House Ways and Means Committee members.

Non-profit organization status related to terrorism

Moreover, we are also monitoring a bill (H.R. 9495) that would essentially strip non-profit status from organizations deemed as supporting terrorism. We are working through a non-profit coalition of partners including the National Council of Nonprofits to voice opposition related to Section 4 of H.R. 9495 that would provide broad authority to the Secretary of the Treasury to revoke non-profit status without requiring the Secretary to share full evidence or reasoning with accused nonprofits.

More Managed Care

And while much remains uncertain, the continuing shift towards managed care and value-based payment is likely to pick up speed. With the nomination of Dr. Mehmet Oz to lead the Centers for Medicare and Medicaid Services (CMS), a lot of attention is being focused on his past statements related to Medicare Advantage. Specifically, a June 2020 op-ed authored by Dr. Oz and George Halvorson, the former CEO of Kaiser Permanente, called for expanding “Medicare Advantage for All.” We expect a lot of scrutiny through the confirmation process, especially from Democrats, in the coming weeks about Dr. Oz’s financial ties to Medicaid Advantage plans.

We will continue to monitor and share updates on all of these issues and efforts into the new year when we expect new legislation and action to commence.

For more information, contact:

Sue Polis at Spolis@lutheranservices.org or Sarah Dobson at Sdobson@lutheranservices.org or Bill Kallestad at Bkallestad@lutheranservices.org.

Sue Polis is Vice President of Public Relations and Government Affairs at Lutheran Services in America.

Strengthening Families to Improve Health Outcomes

November 14, 2024

Lutheran Services in America (LSA), in initial collaboration with UnitedHealthcare (UHC), is embarking on a multi-year initiative to reshape and foster alignment between health and social care systems through the “Strengthening Families Initiative.” We aim to improve outcomes for children, youth and families enrolled in Medicaid, with an initial focus on behavioral health conditions. Specifically, building upon LSA’s Results Innovation Lab and Family Stabilization Initiative, we seek to better leverage the capacity and leadership of the LSA member network, in alignment with key health and multi-sector stakeholders, to improve health outcomes.

Lutheran  Services in  America is one of the nation’s largest networks of health and human service providers with a mission to cultivate caring communities that advance health and opportunity for all. Together, we are 300 nonprofit organizations across 1,400 U.S. communities with more than $26 billion in combined annual services.

Lutheran social service organizations have been working by, in, with and for their communities for decades — and in some instances, for more than a century. This new initiative incorporates national and local efforts with the engagement of Lutheran Services in America member organizations, including Gemma Services in Philadelphia and enCircle in Roanoke, Virginia.

As faith-based, trusted and community-centered leaders our aim is to continue to develop and foster innovative national and local partnerships, including with Medicaid Managed Care Organizations (MCOs), to improve individual and community outcomes. We are pleased to announce our collaboration with UnitedHealthcare through a $1.5 million award as we seek to expand engagement with other MCOs along with philanthropic partners.

UnitedHealthcare (UHC) is a health care and well-being company with a mission to help people live healthier lives and make the health system work better for everyone. In the United States, UnitedHealthcare offers the full spectrum of health benefit programs for individuals, employers, and Medicare and Medicaid beneficiaries, and contracts directly with more than 1.7 million physicians and care professionals, and 7,000 hospitals and other care facilities nationwide.

As part of this effort, we will:

  • Disseminate case studies and a series of briefs, based on LSA member organization efforts to innovate approaches that address behavioral health challenges and unmet health-related social needs, along with a literature review and environmental scan of on-going national, state and local efforts, to improve understanding and inform action that build upon successes and lessons learned in aligning health and social care.
  • Convene national and local leaders from health/behavioral health systems and providers, social service organizations, payers, community-based nonprofits, policymakers, people with lived expertise, along with community and other key stakeholders to foster coalition building and partnership towards aligned action; and
  • Disseminate a ‘blueprint’ to identify and define the policy, practice and system changes necessary to catalyze and foster coordination, connection and alignment that improve health so all families can thrive.

Goals of the Initiative

Through this initiative, our shared aim is to align data-informed, community-centered approaches that have sustainable reimbursement and financing mechanisms to better address social determinants of health (SDOH) and that improve outcomes for children and families. Specifically, our work is guided through the following areas of focus:

  • Spurring a shift from segmented services provided to individual family members to a family-centered orientation, that considers measures and metrics related to family-based and community outcomes.
  • Improving cross-system collaboration to ensure alignment to better address social drivers of family stability and well-being by meeting holistic health and mental health-related social needs, including:
    • Access to food, housing, employment, childcare, among other services.
    • Support to address substance use disorder and mental health challenges within families (across all life stages), including parents, caregivers and children.
  • Building capacity and enhancing the capability of providers, community-based organizations (CBOs), and payers to ensure resources, including adequate reimbursement, and coordination are in place to better address the holistic needs of families.
  • Applying a lens that considers family structure and traditions.

Guiding Principles

The following principles and objectives will guide the overall effort:

  • Articulate a clear value proposition to deepen and expand coordination and alignment of care with appropriate and equitable services and payment to better address the holistic needs families, especially those historically marginalized.
  • Identify practice, policy and systems changes needed to catalyze more efficient and effective approaches to improve outcomes for families.
  • Identify effective ways to engage community and family voice so efforts reflect and address the highest priority needs of historically and persistently marginalized people and places.
  • Explore the workforce, data and technology considerations necessary to support and better align the delivery of quality care and services.
  • Identify the critical success factors for high-performing partnerships and collaboration to advance policy and systems change, especially the ways in which CBOs and Medicaid Managed Care Organizations (MCOs) coordinate and align for improved outcomes.
  • Build support for federal, state and local policy changes necessary to broadly advance the conditions for families to have their needs met in a sustainable way.

Alesia Frerichs is President & CEO of Lutheran Services in America.

CMS Final Medicaid Access Rule — Action Moves to States

May 29, 2024

What: In April, the Centers for Medicare & Medicaid Services (CMS) released the final Medicaid Access Rule. As you know from our recent update, many of our shared concerns across the network were not addressed in the final rule, including new requirements related to payment of the direct care workforce. Specifically at least 80% of all Medicaid payments must be spent on compensation for direct care workers and/or states must report annually on percent of payments that go to the direct care workforce.  Other provisions also include changes in access to home- and community-based services (HCBS), health and safety protections, and quality measures.   Given the scope and impact on our work and services, our work continues and also moves to the state level.

What Happens Now? Because the Access Rule requires states to make significant changes to their Medicaid programs, CMS is allowing states several years to implement the provisions. This is a time to consider strengthening your discussions with state-level decisionmakers to inform the implementation of the provisions.

Under the rule, states are required to create home care and rate-setting advisory boards made up of Medicaid beneficiaries, home care workers and others to advise states on provider payment rates and worker compensation. Thus, its important to be in conversation with state-level officials to inform the make-up and considerations of these boards. We will continue conversations with CMS as we learn more about guidance, timing and other considerations.

How to prepare: Given the rationale for the rule change is to improve job quality and pay for direct care workers to attract more people to those jobs, it will be important to articulate the impact to your organization, including how this makes it harder to deliver quality services. The rule will also require states to be more transparent in how they pay for home- and community-based services, as well as how they set rates.

The following are the key components of the rule to be aware of:

  1. at least 80% of all Medicaid payments must be spent on compensation for direct care workers and/or states must report annually on percent of payments that go to the direct care workforce,
  2. states must report information on HCBS wait lists (specifically timely and full access to services),
  3. prioritization of person-centered planning,
  4. states must demonstrate an electronic incident management system,
  5. states must establish and manage a grievance process and
  6. states must report on a set of nationally standardize quality measures.

For more information, please contact Bill Kallestad.

Bill Kallestad is the Director of Public Policy and Advocacy for the Lutheran Services in America Disability Network.

Supporting
Our Neighbors,

TOGETHER.

Our shared Lutheran tradition of service to our neighbor is more vital than ever.

Join us as we work to ensure our network continues delivering essential services to all in need.