Congressional Republicans are beginning to discuss overhauling Medicaid using a process that would allow the Senate to bypass the required 60-vote threshold to pass certain priorities, according to GOP lawmakers.

Why it matters: The changes could significantly reshape a safety net program that covers more than 70 million people, reducing federal spending and potentially leading to significant coverage losses.

Driving the news: Perhaps the most likely Medicaid change would be imposing work requirements for recipients, according to GOP sources.

• That idea was discussed as part of last year's debt ceiling talks and is familiar to GOP lawmakers.
• House Majority Leader Steve Scalise (R-La.) told Axios that Medicaid work requirements "potentially" could be included in a legislative package brought up under the fast-track budget procedure known as reconciliation.
• Asked about other Medicaid spending changes, Scalise said members "have a lot of internal conversations to have about all the things that will be included."

Yes, but: It's not clear how much, if any, health policy will be packed into a reconciliation bill, since the overriding focus of the package would be on extending major provisions of the Trump 2017 tax law.

• There has been less recent enthusiasm for controversial health policy changes among Republicans, who'd prefer to focus on taxes, energy and immigration.
• However, a health package could generate valuable savings to help pay for some of the tax cuts, and Medicaid is a large pot of money, costing over $800 billion per year.
• Congressional scorekeepers previously estimated work requirements would save over $100 billion over 10 years — and 600,000 people would become uninsured.

What they're saying: Rep. Brett Guthrie (R-Ky.), one of two leading contenders to be chair of the House Energy and Commerce Committee in the next Congress, told Axios he is interested in capping Medicaid spending on each enrollee, known as a "per capita cap" or allotment.

• This would be a revival of a proposal from the 2017 Affordable Care Act repeal-replace plan.
• "We offered Medicaid reform in reconciliation in the repeal-and-replace package, and it was per capita allotments, which didn't cut Medicaid but it does limit the growth," Guthrie said.
• "I do think it has to be discussed as part of the package" next year, he said, adding he hadn't discussed the idea with leadership yet.

Between the lines: Another potential change is reducing the federal share of spending on the Medicaid expansion population, currently at 90%, so that it matches the lower federal share for the traditional Medicaid population.

• "It makes no sense for federal policy to pay states more for able-bodied enrollees than for disabled people, children and pregnant women on the program," said Brian Blase, president of the Paragon Health Institute and a former Trump administration health official.
• The flip side is that a cash crunch in the states could lead some to drop the Medicaid expansion altogether. Forty states have expanded their programs.

The big picture: The first Trump administration approved Medicaid waivers for conservative-led states that imposed work and reporting requirements. But courts struck down many of the approvals.

• Republicans could be wary of political blowback from efforts to reshape the entitlement program this time around.
• Protests against Medicaid cuts, as well as possible resistance from some Republican governors, helped doom the repeal-replace effort in 2017.
• Democrats also are sure to portray any Medicaid cuts as penalizing the poor to help lower taxes on the wealthy.

Rep. Morgan Griffith (R-Va.), an Energy and Commerce Committee member, acknowledged "people get scared" when Medicaid work requirements are discussed, but he noted the possibility of exemptions for people with disabilities or those in school.

• There have been "some private conversations" though "nothing formal" in the committee about Medicaid changes, he said.

The bottom line: "It's hard to make adjustments to reduce federal spending without touching people who rely on the program," said Robin Rudowitz, director of the Program on Medicaid and the Uninsured at KFF.

With time running out on the 118th Congress, there's growing pressure to extend federal health programs whose funding expires at the end of December.

The big picture: House Speaker Mike Johnson has floated the idea of passing a short-term bill to keep the government running into early next year, which would likely keep afloat expiring programs like community health center funding and Medicare telehealth flexibilities.

Here are some of the targets on the short-term "to do" list:

• Medicare telehealth policies implemented during the pandemic that increased access to virtual care and scrapped certain rules about where a patient or doctor can be located during an appointment.
• The Medicare hospital-at-home program for acute services, which is up for a five-year extension and delivers hospital-level care in patients' homes.
• Funding for federally qualified health centers that care for 30 million people across the country and say they could lose 70% of their funding without congressional action.
• Delaying $8 billion in scheduled cuts to Medicaid payments that support hospitals that treat a large number of low-income, uninsured or underinsured patients. Congress has delayed the cuts multiple times.

Yes, but: Paying for all these priorities is an issue — which is where policies that generate savings could come into play. Lawmakers have eyes on pharmacy benefit manager reforms or changes to the way Medicare pays hospitals for outpatient services.