Earlier this week President Trump announced he would be cancelling a meeting with Democratic Congressional leadership due to their “unserious” demands to avoid a government shutdown. These demands included a major rollback of pro-taxpayer changes to Medicaid contained in the One Big Beautiful Bill Act and the extension of COVID-era Obamacare subsidies. While NTU strongly believes a government shutdown would be reckless, equally so would be attaching any of these policies to a deal keeping the government funded on a short-term basis.
Much to their credit, the House of Representatives voted last week on a short-term funding deal that would keep the government open for another seven weeks. This Continuing Resolution (CR) would fund the federal government at the same level as the last fiscal year. While it does not cut funding, which would be preferable, a “clean” CR avoids a costly and inefficient shutdown that is a waste of taxpayer dollars.
Unfortunately, Senate Democratic Leadership is refusing to move forward with this stopgap proposal unless Republicans meet a series of unreasonable demands that would soak taxpayers with hundreds of billions of spending. In addition to demanding an extension to temporary COVID-era Obamacare subsidies, Democrats are asking for a complete reversal of Medicaid changes enacted this summer.
A detailed look at their demands includes:
A Permanent Extension of the Enhanced Premium Tax Credit ($410 billion)
These COVID-era tax credits were meant to be temporary to ensure people had access to health care during a period of lockdowns, yet making them permanent would funnel billions of dollars to high-income households while leaving taxpayers on the hook. Families earning six figures—or even over $500,000—now qualify for support. At an annual cost of $40 billion, extending these credits on a permanent basis would entrench an expensive and regressive subsidy for the well-off.
These enhanced subsidies also encourage higher premiums by shielding consumers from the true cost of coverage. Coupled with the fact that millions of enrollees never used their plans in 2024, government data show a 26% improper payment rate, the highest of any federal health program. Rather than continue propping up fraud-ridden handouts, Congress should advance reforms that address the causes of higher healthcare costs.
A Rollback of Work Requirements for Able-Bodied Adults ($325 billion)
The One Big Beautiful Bill Act requires eligible working-age, able-bodied Medicaid recipients to either maintain a job, be enrolled in school, or volunteer for 20 hours per week. These are reasonable conditions to obtain government-sponsored healthcare through Medicaid. Importantly, numerous constituencies are exempt from work requirements, including for physical limitations, family obligations, and more.
These changes will protect coverage for those in genuine need over people choosing not to work. Without these work requirements, enrollment would continue to swell and states would be forced to cover higher Medicaid and SNAP outlays. Repealing these requirements doesn’t just weaken incentives to work—it drives up public spending at a time when federal healthcare spending is already out of control.
Enabling State Medicaid Money Laundering ($191 billion)
The Democratic proposal would repeal limitations on healthcare provider taxes that were put in place to help control Medicaid spending. Medicaid expansion states have been taking advantage of the current system through provider taxes, allowing them to extract more funding from the federal government. Capping and phasing down healthcare provider taxes prevents states from overleveraging these levies to draw excessive federal matching funds. Preventing states from gaming the federal matching formula to generate Medicaid funds in turn protects taxpayers from ballooning federal outlays. Efforts to reduce the provider tax level yield a significant amount of budget savings that can offset the cost of the bill in a way that reduces the size of government in the healthcare system.
Allowing Medicaid Enrollees to Claim Benefits in Multiple States ($17 billion)
The Center for Medicaid and Medicare Services finds there are almost 3 million Americans potentially enrolled in multiple Medicaid exchange plans. This allows states to obtain a greater portion of federal dollars through improper means. Ensuring enrollees cannot claim benefits in multiple states simultaneously reduces both fraud and administrative costs. Letting enrollees game the system will only further erode public trust in government.
Allowing Illegal Immigrants to Claim Medicaid ($6.2 billion)
Eliminating restrictions on Medicaid eligibility for illegal immigrants would drive up costs for both the federal government and the states. Limiting coverage to citizens and lawful residents ensures that taxpayer funds are only directed to those legally entitled to receive benefits. Rolling back this reform would expand enrollment without increasing resources, which, in turn, would only further strain federal and state budgets.
A Rollback of Verification Tools to Ensure Medicaid Enrollees Are Not Deceased
Rolling back requirements to verify deceased Medicaid enrollees would directly undermine efforts to prevent wasteful and fraudulent spending. By regularly checking the Social Security Death Master File, states can promptly remove deceased individuals from the rolls, reducing improper payments and ensuring taxpayer dollars are spent only on eligible beneficiaries. Repealing this provision would allow unnecessary payments to continue, driving up costs for both the federal government and the states. Moreover, this safeguard helps streamline administrative processes and reduces the burden on state Medicaid agencies.
Conclusion
No one wins from a government shutdown, and Congress should work to avoid such a scenario. Small business loans don’t get processed, bureaucrats are paid to not work, and important energy infrastructure project permits get delayed. Some estimates project government shutdowns can cost in the billions of dollars.
It has become too common to avoid the regular appropriations work and, instead, Congress lurches from short-term patches to giant, last-minute omnibus packages that cost too much and few lawmakers have time to read. The annual scramble to keep the government open underscores the importance of enacting the Prevent Government Shutdowns Act, commonsense legislation authored by Senator Lankford and Representative Arrington.
Their legislation would keep federal agencies open by automatically extending funding at current levels in rolling two-week increments until Congress passes new spending bills. Its enactment would be a much better improvement to the system than the political nature of the minority party’s desire to sow dysfunction. As is the case here, the Prevent Government Shutdowns Act is a much more efficient (and cheaper) option than what Democrats are demanding.