The fundamental promise of Medicaid is that it is a partnership between the state and federal government to take care of the neediest in our society. But the budget that is about to be adopted by the Legislature turns that promise on its head and is a betrayal of the commitment the State of New Hampshire has made to the people we serve in the Medicaid program.
Many proponents of the budget will argue that it has been balanced without raising any new taxes, but nothing could be further from the truth. The budget that was adopted by both the House and Senate, although in slightly different forms, has the effect of imposing a massive new tax increase on hospitals through the imposition of something known as the Medicaid Enhancement Tax, or MET. While those same proponents of the budget will argue that the MET has been on the books since 1991, what they won’t tell you is that the MET was never intended to be a ‘real’ tax and, until just last year, no hospital ever paid more in their MET than they received in a Medicaid disproportionate share hospital (DSH) payment.
For the past 20 years, hospitals have paid the MET as a means of helping the state generate additional federal revenue that could be used to fund state government and received uncompensated care payments in recognition of their care for patients who have no insurance or who are covered by the Medicaid program – a program that only pays about 50 cents for every dollar of the cost of taking care of Medicaid patients. But hospitals are now facing the prospects of paying this tax and receiving very little, and most likely nothing, back in uncompensated care payments to offset those losses.
And to make matters worse, the State now intends to use the hospital tax revenue, not State General Fund revenue, to fund that portion of the budget that pays providers for serving Medicaid patients. In essence, hospitals will be paying themselves. And for almost every hospital in New Hampshire, the tax they pay will exceed the total amount of reimbursements they receive from the State for taking care of Medicaid patients.
That’s a tax increase, plain and simple. Don’t let anyone tell you differently.
And, as a result, hospitals all across the Granite State will be forced to deal with these increased taxes in one way or another: by trying to shift these additional costs to private insurers, the reduction or elimination of services in their communities and the loss of jobs. For businesses in New Hampshire, this budget will result in further cost-shifting to those with private insurance, meaning health insurance in New Hampshire—already one of the most expensive states in the nation for private health insurance—will only become less affordable.
While hospitals support the need for a balanced budget that helps spur economic growth, creates jobs and ensures that services to our most vulnerable citizens are maintained, this budget breaks the promise to the Medicaid program and the people it serves.