Senate Parliamentarian Blocks GOP Medicaid Cuts, Blowing Hole in “Big Beautiful” Budget

Response from GOP is mixed, but the optics for passing look bleak

The Senate’s top procedural referee has just thrown a wrench into Republicans’ most ambitious legislative push since the Trump tax cuts. In a sweeping ruling on Wednesday night, Senate Parliamentarian Elizabeth MacDonough struck down several core Medicaid provisions in the GOP’s “One Big Beautiful Bill” (OBBB), finding them in violation of the Byrd Rule. This old but powerful law restricts what can be included in a budget reconciliation bill.

At the heart of the ruling were three controversial measures: a cap on how states tax Medicaid providers, a ban on Medicaid eligibility for undocumented immigrants, and a prohibition on using Medicaid or CHIP funding for gender-affirming care. All three were deemed insufficiently budget-related and therefore ineligible for reconciliation, the process Republicans are using to pass the bill with just 51 votes.

The consequences are profound. Those Medicaid provisions alone are projected to account for roughly $250 billion in savings. These savings were crucial for funding the permanent tax cuts that comprise the bill’s core. Without them, Senate Republicans are now staring down a massive hole in their budget math, with just days left before their self-imposed July 4 deadline.

From Shock to Scramble: Republican Reaction Splinters

The ruling prompted an immediate and dramatic split among Republicans. Hard-right figures exploded in outrage. Senator Tommy Tuberville of Alabama called for MacDonough’s firing in all caps on social media, blasting her as part of “THE SWAMP.” Representative Greg Steube and others echoed that sentiment, accusing the Parliamentarian, who has served in nonpartisan roles for nearly two decades, of torpedoing conservative priorities through bureaucratic overreach.

Senate leadership, however, took a different tack. Senate Minority Whip John Thune quickly confirmed the GOP would not seek to overrule or remove MacDonough. “We have contingency plans. We’ll plow forward,” he said, adding that Republicans would revise the bill to comply with her guidance. Senators Lindsey Graham, Thom Tillis, and Susan Collins all voiced support for the Parliamentarian’s role, praising her consistency and warning against politicizing her office.

This emerging divide underscores a familiar pattern in today’s Republican Party: a populist flank eager to bulldoze institutional guardrails versus an establishment wing still committed—at least nominally—to Senate norms.

A Budget Built on the Backs of the Vulnerable

The stakes of MacDonough’s ruling aren’t merely procedural. They’re human. The Medicaid provisions struck down would have inflicted severe harm on low-income Americans, particularly in rural states and communities of color.

Health policy experts and hospital administrators had been sounding the alarm for weeks. Craig Thompson, CEO of a rural Missouri hospital, warned that the provider tax cap alone would destabilize safety-net facilities nationwide. “We’re already paid less than our costs to provide care,” he said. “This would make it harder and harder for us to provide those services and stay viable.” His hospital serves a population that includes veterans, children, and small business owners, all of whom stood to lose access to essential services under the GOP plan.

“This wasn’t about fiscal responsibility,” said Dr. Edwin Park, a Medicaid policy researcher at Georgetown University. “It was about shifting costs downward—onto states, providers, and the most vulnerable—and calling that a budget fix.”

Democrats, for their part, greeted the Parliamentarian’s ruling as a moral reprieve. Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee, said the bill’s Medicaid cuts amounted to “an attack on kids, seniors, Americans with disabilities, and working families.” Senator Jeff Merkley dubbed the bill a “Big, Beautiful Betrayal,” a jab at the Trumpian branding used to promote it.

We’ve covered the entire OBBB process extensively. Catch up here:

Parliamentarian Blocks GOP’s Shadow Repeal of Biden Policies

OBBB: A Budget Built to Fail

ICYMI: The One Big Beautiful Budget Breakdown

Watchdogs Warn of Medicaid Chaos

The broader implications of the ruling stretch far beyond Senate floor debates. By targeting state-level provider tax structures, an arcane yet vital funding stream, the GOP’s original proposal risked unraveling the financial foundation of Medicaid itself. These taxes enable states to access federal matching funds; without them, coverage would shrink, hospitals would close, and millions could lose access to care.

It’s not just red states that would have suffered. Many of the loudest warnings came from Medicaid expansion states, such as Missouri and Montana, where GOP lawmakers are already facing backlash over hospital closures and cuts to rural clinics. A quiet panic had set in among Republican governors, many of whom feared the bill would force them to raise taxes or slash services at the state level.

In the words of one unnamed GOP strategist quoted by Politico: “This was always a grenade. And now it’s gone off in our hands.”

A Doomed Timeline?

For Republicans, the challenge now is twofold: to rewrite the bill to comply with the Parliamentarian’s ruling and to do so quickly enough to meet their July 4 passage deadline. That timeline now appears to be in serious jeopardy.

White House aides have been working around the clock to propose alternatives, such as potentially eliminating some tax cuts or shifting offsets to other entitlement programs, but with limited runway left. Treasury Secretary Scott Bessent has already urged lawmakers to remove a proposed “retaliatory tax” on corporations that leave the U.S., which had spooked financial markets earlier this week.

Any major revision to the bill would require another review by the Parliamentarian, and each pass could potentially add days to the process. And with moderates like Lisa Murkowski and Susan Collins raising concerns about Medicaid’s impact on their states, it’s unclear whether a revised bill can hold the fragile 51-vote coalition together.

A Moment of Procedural Integrity

In an era when partisan pressures often bulldoze Senate traditions, MacDonough’s ruling served as a rare assertion of institutional boundaries. Her decision wasn’t political. It was technical, rooted in the same Byrd Rule that has shaped budget reconciliation for decades. But its political consequences are seismic.

Republicans gambled on using reconciliation to pass a far-reaching bill stuffed with ideological policy changes, many of which had little to do with the federal budget. That gamble has now backfired, and the party’s most ambitious effort to rewrite the tax code, shrink Medicaid, and reward wealthy donors faces its biggest obstacle yet, not from Democrats, but from Senate rules and their long-serving interpreter.

As one Democratic aide put it bluntly: “They thought they could smuggle in a war on the poor, trans Americans, and immigrants—and just call it fiscal discipline. Turns out the rules still matter.”

Bibliography:

• “Senate Parliamentarian Deals Blow to Republicans’ Medicaid Provisions in Trump’s Tax Bill.” ABC News, June 26, 2025.

• “Medicaid Changes Don’t Meet Senate Rules, Parliamentarian Says.” Becker’s Hospital Review, June 26, 2025.

• “Trump Faces MAGA Revolt as ‘Big Beautiful Bill’ Blows Up Over Medicaid.” The Daily Beast, June 26, 2025.

• “Trump Medicaid Cuts Dealt Major Blow in Senate, Imperiling Tax Bill.” MarketWatch, June 26, 2025.

• “Trump Celebrates 'Big, Beautiful Bill' Despite Senate Parliamentarian Rejecting Key Elements – as It Happened.” The Guardian, June 26, 2025.

• “Megabill Threatens to Languish as Challenges Pile Up.” Politico, June 26, 2025.

• “At Odds over Trump’s Tax Bill, Some Senate Republicans Turn on Chamber’s Referee.” Reuters, June 26, 2025.

• “Senate Parliamentarian Deals Blow to Proposal That Alarmed Missouri Health Care Experts.” St. Louis Public Radio, June 26, 2025.

• “The Senate Parliamentarian Just Complicated Trump’s Big, Beautiful Bill.” Time, June 26, 2025.

• “Who Is the Senate Parliamentarian and Why Do Some Republicans Want Her Fired?” The Wall Street Journal, June 26, 2025.

• “Key Medicaid Provision in Trump’s Big Tax Cut and Spending Bill Is Found to Violate Senate Rules.” WTOP News, June 26, 2025.