Key Medicaid provision in Trump's bill is found to violate Senate rules. The GOP is scrambling

WASHINGTON — The Senate parliamentarian has advised that a Medicaid provider tax overhaul central to President Donald Trump's tax cut and spending bill does not adhere to the chamber's procedural rules, delivering a crucial blow as Republicans rush to finish the package this week.

Guidance from the parliamentarian is rarely ignored and Republican leaders are now forced to consider difficult options. Republicans were counting on big cuts to Medicaid and other programs to offset trillions of dollars in Trump tax breaks, their top priority. Additionally, the Senate's chief arbiter of its often complicated rules had advised against various GOP provisions barring certain immigrants from health care programs.

Republicans scrambled Thursday to respond, with some calling for challenging, or firing, the nonpartisan parliamentarian, who has been on the job since 2012. Democrats said the decisions would devastate GOP plans.

''We have contingency plans," said Majority Leader John Thune of South Dakota.

He did not say whether Friday's votes were on track, but he insisted that ''we're plowing forward.''

But Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, said the Republican proposals would have meant $250 billion less for the health care program, ''massive Medicaid cuts that hurt kids, seniors, Americans with disabilities and working families.''

Trump wants action on the bill

The outcome is a setback as Senate Republicans hoped to get votes underway by week's end to meet Trump's Fourth of July deadline for passage. Trump is expected to host an event later Thursday in the White House East Room joined by truck drivers, firefighters, tipped workers, ranchers and others that the administration says will benefit from the bill as he urges Congress to pass it, according to a White House official.

GOP leaders were already struggling to rally support for Medicaid changes that some senators said went too far and would have left millions without coverage. The nonpartisan Congressional Budget Office has said more than 10.9 million more people would not have health care under the House-passed bill; Senate Republicans were proposing deeper cuts.

Republican leaders are relying on the Medicaid provider tax change along with other health care restrictions to save billions of dollars and offset the cost of trillions of dollars in tax cuts. Those tax breaks from Trump's first term would expire at the end of the year if Congress fails to act, meaning a tax increase for Americans.

GOP torn over Medicaid cuts

Several GOP senators said cutting the Medicaid provider tax change in particular would hurt rural hospitals that depend on the money. Hospital organizations have warned that it could lead to hospital closures.

Sen. Josh Hawley, R-Mo., among those fighting the change, said he had spoken to Trump late Wednesday and that the president told him to revert back to an earlier proposal from the House.

''I think it just confirms that we weren't ready for a vote yet,'' said Sen. Thom Tillis, R-N.C., who also had raised concerns about the provider tax cuts.

States impose the taxes as a way to help fund Medicaid, largely by boosting the reimbursements they receive from the federal government. Critics say the system is a type of ''laundering,'' but almost every state except Alaska uses it to help provide the health care coverage.

More than 80 millions people in the United States use the Medicaid program, alongside the Obama-era Affordable Care Act. Republicans want to scale Medicaid back to what they say is its original mission, providing care mainly to women and children, rather than a much larger group of people.

The House-passed bill would freeze the provider taxes at current levels. The Senate proposal goes deeper by reducing the tax that some states are able to impose.

Tough choices ahead

Senate GOP leaders can strip or revise the provisions that are in violation of the chamber's rules. But if they move ahead, those measures could be challenged in a floor vote, requiring a 60-vote threshold to overcome objections. That would be a tall order in a Senate divided 53-47 and with Democrats unified against Trump's bill.

''It's pretty frustrating,'' said Sen. Rick Scott, R-Fla., who wants even steeper reductions.

But Sen. Lindsey Graham, R-S.C., stopped short of calls against the parliamentarian. ''I have no intention of overruling her,'' he said.

To help defray lost revenues to the hospitals, one plan Republicans had been considering would have created a rural hospital fund with $15 billion as back up. Some GOP senators said that was too much; others, including Sen. Susan Collins of Maine, wanted at least $100 billion.

The parliamentarian has worked around the clock since late last week to assess the legislation before votes that were expected as soon as Friday.

Overnight Wednesday the parliamentarian advised against GOP student loan repayment plans, and Thursday advised against provisions those that would have blocked access for immigrants who are not citizens to Medicaid, Medicare and other health care programs, including one that would have cut money to states that allow some migrants into Medicaid.

Earlier, proposals to cut food stamps were ruled in violation of Senate rules, as was a plan to gut the Consumer Financial Protection Bureau.

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Associated Press writers Kevin Freking, Leah Askarinam, Joey Cappelletti and Michelle L. Price contributed to this report.