By GARRY RAYNO, InDepthNH.org
CONCORD — Crafting the new biennial state operating budget may be more difficult than it already will be with falling revenues, federal COVID funds running out, legal settlements and other issues hanging over lawmakers’ heads.
A report by the New Hampshire Fiscal Policy Institute indicates potential changes to Medicaid — the state-federal health insurance program — could cost the state about half a billion dollars in federal money and likely end the Granite Advantage Program, for the state’s working poor.
“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 Research Director. “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.”
The state faces lower revenues than the previous fiscal year, likely resulting in a budget deficit for this fiscal year and potentially for the biennium, more than $1 billion in claims filed against the Youth Development Center Settlement fund to compensate victims of sexual, physical and mental abuse at the hands of state employees, a new men’s prison, a potential expansion of the Education Freedom Accounts to all students in the state and potential changes to the education funding system requiring as much money as the change in Medicaid would cost the state if the Supreme Court upholds two lower court decisions.
Medicaid is the single largest program in the state budget costing about $2.57 billion, with 56 percent of the money coming from the federal government or $1.43 billion.
Medicaid provides health insurance to children in low-income families, the physically or mentally disabled, older adults, pregnant women, people in need of long-term support, and adults with incomes near or below the federal poverty level.
As of December 2024, 186,039 New Hampshire residents were on the Medicaid program, including 90,275 children and 59,656 on the Granite Advantage Program, which was established under the Affordable Care Act with the federal government paying 90 percent of the cost and the state 10 percent.
In general for New Hampshire, the state and federal government split the cost of Medicaid with some exceptions, such as for children from low-income families where the match is 65 percent federal and 35 percent the state.
What the federal government pays for a match depends on a formula based on a state’s per capita income, with the highest for Mississippi with a federal match of 76.9 percent.
New Hampshire is one of 10 states at the Federal Medicaid Assistance Percent floor, which is 50 percent.
One of the proposed changes to the Medicaid program would be to lower or eliminate the floor for the federal contribution, according to the report, which would cost the state an estimated $194 million based on 2025 fiscal year projections.
The Center for Budget and Policy Priorities estimates lowering the federal match to 42 percent would result in the $194 million loss to the state, which is larger than the entire Department of Corrections budget at $177.3 million.
Another potential change is reducing the floor for the Medicaid Expansion Program or The Granite Advantage Plan to the current floor for other Medicaid programs or 50 percent, according to the report.
State law requires the program to end if the federal government fails to match its current 90 percent obligation or if the programs’ existing revenue streams fall short of paying the state’s share of the program.
According to Sletten, both laws could be triggered by the potential change in federal match, that the federal share falls below 90 percent and with the change in formula, the revenue streams supporting the program would not be enough to cover the state’s costs.
Sletten notes with a 50/50 split between the state and the federal government for the Granite Advantage Plan, the state would need an additional $249 million to meet its obligation.
Currently the state contributes $61.2 million to the program.
If the program ends, about 60,000 state residents would lose health insurance coverage.
If both of the potential changes are made, the state would lose $493 million, according to Sletten’s calculations.
“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 said.
One of the benefits of the Granite Advantage Plan is with a greater number of people with health coverage, the uncompensated care costs health care providers had to recoup from those with private insurance has fallen enough to reduce what would have been premium increases.
Uncompensated care is services health providers, mostly hospitals provide, but are not paid for or not paid the full cost.
The state’s low Medicaid reimbursement rates also contribute to uncompensated care rates for health care providers.
The analysis is based on preliminary discussions of potential federal policy changes currently under consideration, point-in-time expenditure projections from the New Hampshire Department of Health and Human Services, and calculations from the Center on Budget and Policy Priorities.
Sletten estimated the financial impact of the proposed changes by modeling how reductions in federal funding rates would shift additional costs to New Hampshire.
The report notes the potential changes make a challenging budget situation even more so for budget writers.
“If federal support were substantially reduced, New Hampshire would struggle to maintain current service levels, let alone address additional costs,” Sletten noted. “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.”
Garry Rayno may be reached at garry.rayno@yahoo.com.
