Feds' Warning to N.H. Over Medicaid Expansion Raises Stakes in Key Policy Debate

Aug 15, 2017

New Hampshire has a long history of coming up with solutions to fund its Medicaid program that — depending on how you look at it — are either creative or a little crooked. The most recent example can be seen in the plan lawmakers came up with to fund the state’s share of Medicaid expansion for the last two years.

As a refresher: The federal government, to get more states to sign up to expand Medicaid under the Affordable Care Act, offered to cover the full costs of the program for the first few years.

Starting in 2016, the federal government asked states to start picking up some of the tab — a hard sell in a Republican-controlled legislature.

But a bipartisan group came up with a plan to avoid having to spend extra state money: Asking hospitals and insurers to cover the state’s share. The money gets funneled through an outside nonprofit, and state officials say they don’t know how much any individual hospital might be contributing — and state officials are careful to describe the payments as “voluntary donations.”

“I think it is quite unique, and really quite unique in its lack of transparency,” said Steve Norton, head of the nonpartisan New Hampshire Center for Public Policy Studies and a former director of the state’s Medicaid program. “And that’s somewhat by design.”

The federal government recently went even further in their assessment of the funding mechanism, saying New Hampshire’s use of payments from hospitals and insurers might also possibly be illegal. Specifically, they said federal rules prohibit “provider-related donations except in very limited circumstances” — and they’re not sure New Hampshire’s hospital donations meet that standard. (Click here to read the full letter from the Center for Medicare and Medicaid Services to state officials.)

Norton says it’s worth noting this is hardly the first time the federal government has raised questions about some aspect of the state’s Medicaid funding — he pointed to the federal audit and years-long back and forth over New Hampshire’s Medicaid Enhancement Tax.

“Really, the questions being raised right now are similar to those,” Norton said. “And in the most simple way, what this really represents is CMS saying: We’re not really certain that this is appropriate.”

Whether Medicaid expansion continues beyond 2019 now hinges on whether New Hampshire can come up with a plan the federal government deems appropriate — or else it risks leaving about 50,000 state residents without health insurance.

Supporters of Medicaid expansion on both sides of the aisle, say the hospital payments CMS is disputing were never meant to be a long-term solution.

“I always felt that was a one-time funding source entered into by the state,” said Republican Senate Majority Leader Jeb Bradley, a chief architect of the current funding plan. “You know, I never had a lot of hope that it was going to be replicated in the future.”

Both Bradley and Deputy Democratic Leader Cindy Rosenwald said they hope state officials will figure out a new path forward beyond 2018.

“I think the general consensus is this program has worked very well in New Hampshire,” Rosenwald.

Republican Gov. Chris Sununu, who used to be more skeptical of Medicaid expansion before taking office, also voiced his support for a continuation of some kind of coverage.

“There's still time here, and time for us to be creative and put ideas on the table, and make sure that whatever we're doing, we're creating a Medicaid system that can be lasting. That we don't have to have political battles every two years, that doesn't help anybody,” Sununu said. “This is simply about getting good care, great quality care for folks of the state of New Hampshire with a system we can all count on, for the long-term.”

But others who’ve been opposed to the expansion all along, like Republican Rep. John Hunt, says this latest wrench in New Hampshire’s plan is just proof that the expansion was a bad idea.

“What I would say is, I have heard rumblings that enough is enough,” Hunt said, “and it’s time to pull the plug on Medicaid expansion.”

But, as Norton, with the policy center, points out, it’s important to remember this isn’t just some abstract legislative battle.

“When it comes right down to it, there are 45,000 people who have coverage who might not have had coverage before. And that’s somewhere around $400 million dollars of new dollars that have flown into health systems across New Hampshire.”

So that means lawmakers will have to decide how much of an investment on New Hampshire’s part, if any, is worth protecting those returns.