As a matter of policy, I don't like it one bit.
The ObamaCare taxes are the most urgent reason the whole thing needs to be repealed, and the worst thing about the Medicaid expansion is that it brought even more people into dependence on government for health care. What we need to do with Medicaid is return it to its original purpose, which is to provide a safety net for the truly poor. The idea that you can tighten up Medicaid requirements, but then turn around and still spend taxpayer money on those no longer eligible, simply creates one more way to make Uncle Sam everyone's sugar daddy at the doctor.
As a matter of politics it doesn't seem much better. It sounds like you might get Rob Portman and Bill Cassidy, although it still not enough to bring Susan Collins on board. And why should Mike Lee or Ted Cruz go for it? But this seems to be the opening salvo in the White House's attempt to take what was dead and bring it back to life:
