Study Medicaid cuts would cost state nearly half a billion annually

Yahoo

28-01-2025

Jan. 28—Proposed changes in Congress to Medicaid laws, if implemented, would cost the state nearly half a billion dollars a year in lost federal grants according to a new analysis from the New Hampshire Fiscal Policy Institute.
The study was based on preliminary discussions about potential federal policy changes and spending projections from the state Department of Health and Human Services and other analysis from the nonpartisan Center on Budget and Policy Priorities.
"Medicaid provides access to health services for over 180,000 Granite Staters. The proposed changes could substantially impact access to health care and the financial capacity of our state to fund public services," said Phil Sletten, NHFPI's research director and author of the report. "A reduced federal match rate could lead to the repeal of critical programs, leaving New Hampshire with difficult budget choices in an already challenging fiscal environment."
Former President Barack Obama, in his Affordable Care Act law, offered states an incentive to expand Medicaid to low-income adults who made just about the eligibility amount under the traditional program.
The federal government pays 90% of the cost to provide health care coverage for these new Medicaid clients while New Hampshire only gets 50% of expenses reimbursed for those on traditional Medicaid.
As a result, 41 states have expanded the program.
The Paragon Health Institute, a free-market health care research firm, has proposed dropping that 90% support to 50%.
In turn, the group has urged Congress to lower reimbursement for those on traditional Medicaid from 50% to as low as 40% in the "income wealthiest" states that include New Hampshire.
Expanded Medicaid could be at risk
Both of these changes would be phased in starting in 2026 and be fully in place by 2034, Paragon said.
"Part of the problem is that the FMAP (federal Medicaid) formula has an arbitrary floor on the federal reimbursement for the wealthiest states," Paragon wrote in its white paper.
"Medicaid's financing structure leads states to spend more on Medicaid relative to other areas like education, infrastructure and policing and leads states to develop financing schemes and gimmicks in order to obtain as much federal money as possible."
Former Trump administration economic advisor Brian Blasé and other health policy experts founded the Paragon research arm in 2021.
Sletten said if adopted, this could put expanded Medicaid, known as the Granite Advantage Health Care Plan, at risk because under state law New Hampshire must exit the program if reimbursement drops below 90%.
"If federal support were substantially reduced, New Hampshire would struggle to maintain current service levels, let alone address additional costs," Sletten said. "The state's capacity to find sufficient savings to offset lost revenue is limited, especially as the state faces declining tax receipts and other budgetary pressures."
Only three state departments spend more than the $493 million annual price tag for these cuts to Medicaid reimbursement if they came to pass.
"As the state's largest program in dollar terms, any reduction in federal Medicaid funding could substantially impact the state budget overall and force tough decisions about funding health services, education, and public safety," Sletten added.
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