Proposed federal changes to Medicaid could cost the state up to $493 million annually, creating significant challenges for NH’s State Budget and residents’ access to health care, according to an analysis from the NH Fiscal Policy Institute (NHFPI) released in January.
The analysis is based on preliminary discussions of potential federal policy changes that include lowering the federal medical assistance percentage (FMAP), a percentage the federal government reimburses to states for Medicaid costs. It is also based on point-in-time expenditure projections from the NH Department of Health and Human Services, and calculations from the Center on Budget and Policy Priorities.
Additionally, New Hampshire has a law that could trigger the end of Granite Advantage—the state’s Medicaid expansion program—if the federal funding structure changes. The law would automatically repeal the program in 180 days if the FMAP for Granite Advantage drops below 90%, with notification of the program’s end occurring within 10 days. A second state law makes the program’s operation conditional on sufficient funds being available through several different revenue sources, including a significant backstop from the NH Liquor Commission and a prohibition on the use of General Funds.
NHFPI Research Director Phil Sletten estimated the financial impact of proposed federal policy changes by modeling how reductions in federal funding rates would shift additional costs to NH.
“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,” says Sletten. “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.”
Medicaid covers health services for adults and children with low incomes, people with long-term care needs, and individuals with disabilities. Nearly half of Medicaid enrollees in NH are children. The federal and state governments split the cost of funding services for enrolled Granite Staters.
Sletten says it is difficult to know how state lawmakers would address a reduced federal match rate in the coming year. The last time significant changes to Medicaid were discussed in 2017—including changes to the Affordable Care Act—congress did not make major FMAP revisions that impacted the state’s finances. “That was largely due to people’s reaction at the time toward higher costs.”
To access the full report, visit nhfpi.org/blog/potential-federal-medicaid-policy-changes-could-shift-substantial-costs-to-states/.
