In this edition of AcademyHealth’s Situation Report, we highlight a series of federal and judicial activity, including a Senate reconciliation bill that would impose deep Medicaid cuts, stricter Medicaid work requirements, cap provider funding, and grant the president unilateral authority to reorganize agencies and lay off federal workers. At the same time, the Supreme Court upheld Tennessee’s ban on gender-affirming care for minors followed by the closure of one of the oldest and largest gender-affirming care programs in the country.
In today’s issue:
- Senate Proposes Deeper Cuts to Medicaid, Met with Backlash
- Senate Reconciliation Bill Could Empower Executives to Reorganize Agencies, Lay off Feds
- SCOTUS Rules for Tennessee Gender-Affirming Care Ban, Large Hospital Program Announces Closure
- Courts Dismiss Columbia Faculty Lawsuit Over Funding Cuts
- ICYMI: Share Your Story with AcademyHealth
- Other News We're Tracking
Senate Proposes Deeper Cuts to Medicaid, Met with Backlash
On Monday, Republicans in the Senate proposed even more drastic cuts to Medicaid than those already proposed by Republicans in the House. In addition to the provisions already proposed by the House last month, such as increasing the frequency of eligibility checks and implementing work requirements, the Senate Finance Committee proposed only exempting guardians of children who are ages 14 or younger, essentially expanding work requirements to parents of teens, a population that was exempt in the House bill. Moreover, the Senate’s bill would implement additional restrictions on provider taxes, in turn impacting states’ Medicaid expenditure financing. While the House bill proposed freezing such taxes at the current rate, the Senate bill proposed lowering the rate from six percent to 3.5 percent over the next two years in states that have expanded Medicaid under the Affordable Care Act. The Senate bill also places new restrictions on state-directed payments, which providers report are essential in keeping Medicaid-dependent clinics and hospitals running. Currently, the federal government stops matching state funds at the average commercial rate; however, the Senate bill would limit that payment limit to Medicare rates in expansion states and ten percent above the rate in non-expansion states. The Senate bill would also remove a pay bump for doctors that treat Medicare patients.
The Senate’s changes deeply concern health care groups and complicated the likelihood of the bill passing the full Senate. Several representatives from provider groups noted that the proposed cuts would have devasting impacts on American health care access, specifically risking rural hospitals that could be forced to cut services or close entirely. While nearly two-thirds of voters viewed the House bill unfavorably, and the Senate’s added cuts are unlikely to improve favorability, GOP leadership is aiming to push this legislation forward to President Donald Trump quickly - within the next few weeks.
Senate Reconciliation Bill Could Empower Executives to Reorganize Agencies, Lay off Feds
The Senate recently released their version of Republicans’ proposed budget reconciliation package. In the proposal, one controversial provision would grant the White House $100 million and broad authority to reorganize federal agencies without congressional approval. Critics argue this measure represents a significant erosion of congressional power, enabling the president to restructure government agencies with minimal oversight, as long as changes are cost-neutral and do not increase the number of agencies. The proposal revives a presidential authority that expired in 1984 and is framed as a cost-saving measure to offset tax cuts and increased immigration enforcement. However, opponents, including federal employee unions, warn it would allow the administration to bypass legal challenges and further aggressively downsize the federal workforce, characterizing the move as a dangerous surrender of legislative responsibility that could undermine public services and democratic checks and balances. The Senate version of the budget bill includes several other contentious features, including a higher debt ceiling than the previous House version ($5 trillion vs $4 trillion), stricter work and eligibility requirements for Medicaid and CHIP, and delays to the phase-out on clean energy tax credits. With the goal of passing a budget bill by July 4th, Senate deliberations are expected to pick up in the coming weeks.
SCOTUS Rules for Tennessee Gender-Affirming Care Ban, Large Hospital Program Announces Closure
This past Wednesday, the U.S. Supreme Court (SCOTUS) upheld Tennessee’s ban on gender-affirming care for transgender minors, which experts view as a setback to transgender individual’s right to access medical care. The Tennessee law bans puberty blockers and hormone treatments for transgender minors but allows the same drugs to be used for other purposes. The Biden Administration had previously called on SCOTUS to strike down the ban as unlawful sex discrimination, but the Trump Administration told SCOTUS they did not believe that the law violated the right to equal protection. The majority opinion states that the Tennessee law should be evaluated under the lowest standard of review, rational basis, rather than heightened scrutiny, as the law’s restrictions hinge upon age and medical use rather than sex.
This ruling comes amongst multi-pronged federal and state efforts to regulate transgender people’s lives. SCOTUS has allowed the Trump Administration to ban transgender service members from the military, at least 11 states have adopted laws barring transgender girls and women from bathrooms corresponding to their gender identity at public schools, and 26 states have passed laws similar to the recently upheld Tennessee law. Indeed, one of the oldest and largest gender-affirming care programs in the country, Children’s Hospital Los Angeles, shortly before the ruling announced that it will shutter its health care program for transgender children and young adults due to political pressure. This closure is particularly significant, as this program was one of the few facilities that provided puberty blockers, hormones, and surgical procedures to youth with public insurance. Hospital executives cited recent federal developments as viable threats to the safety net hospital’s ability to care for their patients, including a memo from the U.S. Attorney General, the HHS review of interventions for children with gender dysphoria, and the FBI’s solicitation of tips on hospitals and clinics providing gender-affirming surgeries on children.
Courts Dismiss Columbia Faculty Lawsuit Over Funding Cuts
A federal judge dismissed a lawsuit filed by Columbia University faculty, represented by two labor unions, challenging the Trump administration’s funding cuts to the university and demands to strengthen oversight of curriculum on Middle Eastern Studies. U.S. District Judge Mary Kay Vyskocil, a Trump appointee, ruled the unions lacked legal standing, emphasizing that Columbia itself was not a plaintiff. The judge stated that such cases must be brought by the directly affected party, not third parties, and warned against granting sweeping judicial relief for political objections to executive actions. The unions plan to appeal the decision, denouncing the cuts as part of a broader assault on education and civil liberties. Columbia, the first university targeted under this policy, also faces a threat to its accreditation, which could jeopardize access to federal student aid.
ICYMI: Share Your Story with AcademyHealth
AcademyHealth is collecting stories from across the health services research community to document the real-world impact of federal policy and funding changes. What happens when research is delayed, defunded, or derailed? What’s lost—for patients, for communities, for progress? Help us show policymakers and the public what’s truly at stake when research is sidelined. Your story can inform advocacy, spark action, and protect progress. Share your story here.
Other News We’re Tracking
Why A Vaccine Expert Left the CDC
Dr. Fiona Havers, a senior CDC advisor on vaccine policy overseeing COVID-19 and RSV hospitalization data, resigned after 13 years at the agency, citing concerns that her team’s data would no longer guide vaccine decisions scientifically. Her departure follows an escalating series of actions to dismantle processes that formulate U.S. vaccination standards, including Rober F. Kennedy Jr.’s controversial move to dismiss all 17 members of the CDC’s Advisory Committee on Immunization Practices and name eight new members, many of whom oppose the science of vaccines. Dr. Havers is at least the second prominent CDC official to resign because of the agency’s rising antagonism to vaccines. While HHS claims decisions will remain data-driven, many fear these changes will politicize vaccine policy and undermine critical public health protections.
University Coalition Proposes Alternative to Capping Indirect Costs
In response to the administration’s intention to cap the indirect cost rate for NIH grants at 15 percent, a coalition of ten university and research institutions organized under the Joint Associations Group has developed alternative funding models to sustain scientific work. They propose two new mechanisms by which the government could pay institutions for facility and administrative expenses connected with research. The first idea proposes variable overhead rates based on institution type and research category. The other involves a detailed accounting of these costs as line items in each grant proposal. The coalition hopes this policy framework could guide federal form to ensure research infrastructure remains supported.
Previous Updates
This is the latest in a series of Situation Report updates from AcademyHealth. You can find prior issues here.
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