As the Senate scrambles to vote on its version of Republicans’ sprawling “One Big, Beautiful Bill” over the weekend, the chamber has run into a problem worth approximately $250 billion. To help offset its planned tax cuts, the Senate Finance Committee included in its portion of the legislation a provision that would crack down on Medicaid provider taxes, a mechanism by which states transfer additional costs of their programs to the federal government. This week, however, the Senate parliamentarian ruled that the language of this change was not permissible under the rules of budget reconciliation, forcing Republicans to drop it from the bill.

It is likely, given its enormous potential savings, that Republicans will attempt to rewrite their provider-tax provision to gain the parliamentarian’s approval. If that effort is successful, though, the problems do not end there. Various senators have voiced alarm over the Medicaid change that could reduce federal money to their states by tens of billions of dollars. In response, Senate leadership has floated adding a $15 billion fund for rural hospitals, which so-called “Medicaid moderates” such as Susan Collins (R., Maine) have bemoaned as terribly inadequate. Even if the GOP can get provider-tax reform past both the parliamentarian and its own senators, they face yet another obstacle in the House, where Speaker Mike Johnson warns the policy could cost him the Republican majority in the midterms.

With all the political turmoil surrounding provider taxes, one might assume that restricting them as the Senate has proposed is a deeply radical policy. In reality, it’s a rather moderate version of an obviously sensible both parties have supported in the past. That limiting provider taxes has received such strong pushback is a testament to how dependent states have become on federal money that they never should have received.

The cost of Medicaid, which is supposed to provide health coverage to low-income Americans, is intended to be shared between the state governments that run the program and the federal government. But in the 1980s, states figured out how to receive more Medicaid money from the federal government than they were entitled to under law. They began imposing taxes on health care providers, such as hospitals, and directed the revenue into higher Medicaid payments for those same providers, leaving both the providers and states no worse off financially. By technically spending more on Medicaid, however, states received higher reimbursements from the federal government to help cover the supposed cost — which they never actually had to carry.

In response to this clever scheme, Congress passed a bipartisan law in 1991 that limited how much states could use provider taxes to fund their Medicaid programs, but did not ban them outright. Today, states can only recycle money to health care providers with taxes that do not exceed 6 percent of their revenues from treating patients. Every state except Alaska takes advantage of this option, which will cost the federal government a projected $630 billion in extra Medicaid reimbursements over the next decade. So, although states purportedly pay for 36 percent of Medicaid spending — already well below the historical average — they actually bear a mere quarter of the program’s cost once provider taxes are accounted for.

The Senate’s allegedly catastrophic plan is to lower the 6 percent provider-tax threshold to 3.5 percent. This means states would still receive hundreds of billions more in Medicaid money than they should. As the Paragon Health Institute remembers, that reform is almost exactly what President Obama proposed in his 2012 and 2013 budget plans. In 2010, the bipartisan Simpson-Bowles fiscal commission recommended an even better policy: banning provider taxes entirely.

Relative to that good idea, the Senate’s proposal looks downright moderate. If Republicans cannot muster enough votes to reduce provider taxes by less than half their current level, it will be yet another indication that America’s “party of fiscal responsibility” is nothing of the sort.