MHA: GOP's big beautiful bill puts MassHealth funding at risk
Photo I Marek Studzinski on Unsplash
The U.S. House's One Big Beautiful Bill Act would reduce Medicaid spending by nearly $700 billion.
While the impacts of the U.S. House GOP's tax and funding cuts legislation come into focus, the group that represents the state's hospitals said this week it is closely monitoring provider tax policy for potential changes that could make it even harder to finance care for patients on MassHealth.
The U.S. House voted 215-214 along party lines last Thursday to advance the so-called One Big Beautiful Bill Act that would, among many other things, extend President Donald Trump's first-term tax cuts and reduce Medicaid spending by nearly $700 billion to help pay for it. Officials at MassHealth, the state program that combines Medicaid and the Children's Health Insurance Program, have said the Bay State could be in jeopardy of losing more than $1 billion annually, with hundreds of thousands of residents at risk of losing coverage.
The Massachusetts Health & Hospital Association, in its first weekly "Monday Report" since passage of the House bill, said the current financing arrangements between hospitals, MassHealth and the federal government that deal with provider taxes "appear to be unaffected – for now."
Health policy nonprofit KFF said the bill prohibits states from establishing any new provider taxes or from increasing existing provider tax rates, and that it makes changes "such that some currently permissible arrangements taxes, such as those on managed care plans, will not be permissible in future years."
MassHealth had previously flagged that its annual revenue from managed care organization assessments could be at risk, and MHA said Monday that "any further adjustments to future spending, including the next iteration of the MassHealth waiver in 2027, would be severely limited."
Massachusetts has a $67 billion Medicaid waiver that it secured under Gov. Charlie Baker in October 2022 that allows the state to tailor the public health insurance programs to more closely align with specific preferences and needs here. That waiver is set to run for five years, expiring in 2027, or during Trump's second term.
"That, in turn, would place new pressures on financing care delivered to MassHealth patients. The state’s healthcare-related tax on health insurers would need to be modified per the House bill (and a related Centers for Medicare and Medicaid Services proposed rule)," MHA said.
The American Hospital Association said the U.S. House bill "severely restrict[s] the use of legitimate state funding resources and supplemental payment programs, including provider taxes and state directed payments, under the guise of eliminating waste, fraud and abuse." The group said that it rejects that notion "as these critical, legitimate and well-established Medicaid financing programs are essential to offset decades of chronic underpayments of the cost of care provided to Medicaid patients."
Changes to the insurer tax could have downstream effects, MHA said. The tax is one component of funding for the state's Health Safety Net program, which is already experiencing a massive deficiency.
The House adopted an amendment to its budget on April 28 that would effectuate a $230 million transfer from the Commonwealth Care Trust Fund to help the Health Safety Net program, which supports care provided to low-income, uninsured or under-insured patients by hospitals and community health centers.
Last month, Rep. John Lawn said the program updated its funding assumptions in fiscal 2024 and now faces a funding shortfall of as much as $260 million in fiscal 2026. He said the Commonwealth Care Trust Fund has a current balance of more than $367 million with additional revenues expected this fiscal year and that state finance law allows such a transfer "as necessary to provide payments to acute hospitals and community health centers for reimbursable health services."
"Without funding relief, safety net hospitals will face unsustainable reductions in financial support for care for the low-income, uninsured or under-insured patients," Lawn said in April.
The Senate did not follow suit in its budget, and an amendment MHA backed (#482 from Sen. Barry Finegold) to make the same $230 million transfer was rejected. Sen. William Driscoll withdrew an amendment (#489) that would have required the state and insurers to each contribute to address the shortfall.
Sen. Cindy Friedman, Lawn's co-chair on the Joint Committee on Health Care Financing, said the two amendments were "voted down at this particular moment in time for reasonable reasons." She said the number of people without insurance or without enough insurance seeking care "has been rising significantly and has put our hospitals and community health centers in a very precarious financial situation."
As a result, the Health Safety Net program "has seen enormous amount of use because of people's inability to either pay for health insurance or to get health insurance that covers their medically necessary needs," Friedman said last week.
"I would like to just make the statement that we are very aware of this problem. It is very serious. We take it seriously, and the Senate is committed to finding a solution that supports our hospitals and community health centers and that makes the program sustainable over time," she said.
Benefits, Impacts To Be Felt Unevenly
MHA's roundup additionally touched on the U.S. House bill's provisions requiring states to redetermine Medicaid eligibility every six months for beneficiaries enrolled through an Affordable Care Act expansion of Medicaid and imposing work requirements as a condition to eligibility for most able-bodied adults enrolled in Medicaid. Both requirements, the group said, will make it harder for people to get or keep insurance and will increase administrative burdens for states and health care providers.
The group also flagged a provision blocking federal matching funds for services rendered by providers who took more than $1 million in Medicaid payments in 2024 and offer certain abortion procedures.
MHA said the U.S. House bill reduces the federal matching rate from 90% to 80% for states, like Massachusetts, that use state Medicaid funds to cover undocumented immigrants and certain lawfully present immigrants. MHA said Massachusetts covers children regardless of citizenship status through the Children’s Medical Security Program and provides state-funded coverage to certain low-income immigrants, some of which might be subject to the proposed restriction.
U.S. Rep. Lori Trahan cited the reduction in matching rate last week when she said the bill "slashes $3.7 billion from MassHealth" over 10 years and will cause 270,000 people in Massachusetts to lose health insurance coverage.
The Congressional Budget Office said last week that the bill that passed the U.S. House will mean $698 billion less in federal subsidies for Medicaid, $267 billion less in federal spending for SNAP, $64 billion less in net spending for all other purposes, and a $3.8 trillion increase in the federal deficit all over the next decade.
The CBO also said that it expects the reductions in federal spending to lead to about $78 billion in additional spending among the 50 states "accounting for changes in state contributions to SNAP and Medicaid and for state tax and spending policies necessary to finance additional spending." The office said it is currently analyzing "expectations of the states’ responses to changes in federal funding."
The budget plans the House and Senate will begin negotiating Thursday into a final fiscal 2026 state budget assume about $15.76 billion in federal revenues, an increase over the $14.3 billion in the current budget, including $14.2 billion in federal MassHealth reimbursements alone. Most cuts in the U.S. House bill would hit in federal fiscal year 2027, which begins Oct. 1, 2026 (three months into Massachusetts' fiscal year 2027).
The CBO concluded that "U.S. households, on average, would see an increase in the resources provided to them by the government over the 2026–2034 period" if the U.S. House bill were enacted. But the benefits would be unevenly distributed and tilt more towards high-income households.
For families in the lowest 10% of income distribution, household resources would be expected to decrease by 2% of income in 2027 and increasing to 4% by 2033 "mainly as a result of losses of in-kind transfers, such as Medicaid and SNAP," the CBO said. But for households in the top 10% of income, resources would be expected to grow by 4% in 2027 and slowing to 2% in 2033 "mainly because of reductions in they taxes they owe."
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