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May 27, 2011

Update: Medicaid, Hospitals and the State Budget

It was a very difficult week, culminating with the Senate Finance Committee finishing up its work on the state budget for the full Senate vote on Wednesday, June 1st.  The Committee did not alter the budget landscape, meaning hospitals are still slated to shoulder over $258 million in spending cuts over the next two years. In addition, the Finance Committee is planning on a surplus of $32.5 million which they earmarked for the state's Rainy Day Fund instead of Medicaid uncompensated care payments to hospitals.

What the Legislature proposes to do is use $158 million of the hospital Medicaid Enhancement Tax (MET) to cover Medicaid provider payments, of which inpatient hospital services are but a portion. By doing so the State will be able to reduce its General Fund obligation by that amount and use those funds, which the State would otherwise appropriate for Medicaid, for other purposes. 

In the end, the Senators adopted another provision that would give hospitals the opportunity to receive payments in 2013 for uncompensated care they provide in 2012 if, and only if, there is a budget surplus (beyond the $32.5 million for the Rainy Day Fund), and if approved by the Legislative Fiscal Committee as well as Governor and Council.  Finance Committee Chair, Senator Chuck Morse described the amendment as such that hospitals would be first in line to receive uncompensated care payments if there was a surplus. Our take ... not likely. 

The hospital community is shocked that the Legislature would balance the state budget on the backs of hospitals and the patients and communities they serve. NHHA's response was immediately released after the Finance Committee vote.  According to Steve Ahnen, "The budget approved by the Senate Finance Committee today will wreak havoc on the health care infrastructure and safety net in New Hampshire. It will increase the cost of health insurance for businesses and individuals, threaten the availability of essential health care services that our communities depend on, and result in the loss of jobs and economic stability."