CHA Weighs in on Federal Medicaid Cuts Bill

This week, the House Energy and Commerce Committee, which oversees Medicaid, unveiled a plan to reduce federal spending by $800 billion over the next decade as part of a broader budget reconciliation package.  In the proposal, congressional Republicans take aim at state provider taxes, prohibiting any new taxes, imposing caps on state-directed payments to providers, and applying additional scrutiny on whether provider taxes adhere to federal law.

“If federal contributions to state Medicaid programs are frozen, over time, healthcare providers will have no choice but to make up the significant losses elsewhere or cut back on services.  This would be devastating to affordability and access,” Paul Kidwell, senior vice president of policy at CHA, said in media interviews to CT Mirror and NBC Connecticut.

Under federal government rules, states can place a tax on healthcare providers to help finance their Medicaid programs.  Medicaid is a state and federal partnership, which means the state and federal government each pay a share of all payments for Medicaid services.  Every state dollar that’s used to fund Medicaid services is matched by at least one federal dollar, sometimes more.  States can use hospital tax dollars as the state share, allowing them to access federal matching dollars to pay for Medicaid services.  Most states use the federal revenue to strengthen hospitals.

“This is a bad bill for Connecticut hospitals and for our patients,” Kidwell told WTNH, stressing this bill comes as hospitals face extraordinary financial pressures.  “When the state can’t bring in those federal dollars to support Medicaid, hospitals and other providers have to go try to find those resources from other places.”

The proposal would also implement copays for certain Medicaid enrollees, require eligibility screening every six months instead of every year, and penalize states that provide Medicaid-like coverage using state-only funds to undocumented individuals.  In 2024, Connecticut expanded such state-sponsored health coverage for immigrants to include children up to age 15.

Medicaid, known as HUSKY Health in Connecticut, covers roughly 1 million people in the state, according to the Department of Social Services (DSS), which equals about 25% of the population.  The state’s Office of Policy and Management (OPM) projects Connecticut will spend a total of $11.6 billion on Medicaid this fiscal year.  The federal government contributed about $6.9 billion, or 59%, of that funding.

CHA continues to work with Connecticut’s congressional delegation to safeguard Medicaid and protect healthcare.

Click here for more information on CHA’s federal advocacy efforts.