Legislation would cap states’ Medicaid funding, phase out program’s expansion.

Senate Republican leaders released a proposal Thursday that would undo major parts of the Affordable Care Act and transform a large part of the American health-care system by changing and cutting the funding for the Medicaid program. The bill would reverse the ACA’s expansion of Medicaid, a move that could affect millions of people, and would for the first time limit states’ overall Medicaid funding from Washington. It also would eliminate the requirement in the 2010 law that most Americans sign up for health insurance, and provide instead less-robust tax credits than the ACA to help people afford insurance. It would repeal hundreds of billions of dollars in taxes on businesses and high-income households and retroactively cut taxes on capital gains. The Senate plan in many ways echoes a health bill passed by the House last month, but it contains several differences. It isn’t clear if those changes, such as the shape of the tax credits and a more gradual phasing-out of the Medicaid expansion, would be enough to attract more centrist Republicans without alienating the most conservative lawmakers in both chambers. The challenge quickly became evident when four GOP senators—Ted Cruz of Texas, Ron Johnson of Wisconsin, Mike Lee of Utah and Rand Paul of Kentucky—said they couldn’t vote for the bill as it stood, though they were open to negotiation. A more centrist GOP senator, Dean Heller of Nevada, who faces re-election next year, said he had “serious concerns” about the bill, particularly its effect on Medicaid recipients.

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