State officials warn of potential hundreds of millions in Medicaid losses if federal proposals advance

Montpelier — Agency of Human Services officials told a joint meeting of the House Committee on Human Services and the House Health Care Committee that a package of federal proposals under discussion in Washington could reduce Medicaid funding to Vermont by hundreds of millions of dollars and would force the state to choose among backfilling with state dollars, cutting provider rates, narrowing eligibility or trimming services.

"This represents $80,000,000 a year in federal funding to the state of Vermont," Ashley Berliner, director of Medicaid policy for the Agency of Human Services, said while outlining elements of the federal proposals. "We think it is very likely that this will go away," she said, referring to the risk to the enhanced federal match for the Affordable Care Act expansion group.

The potential losses are tied to several separate ideas being discussed in Congress or by federal agencies: rescinding the enhanced Medicaid match for the ACA expansion (the "new adult" group), changes to the FMAP formula, limits on provider taxes, work requirements, per-capita caps or block grants and the possible rescission or restriction of Section 1115 demonstration authority that now allows Vermont to operate many programs outside the traditional state plan.

Why it matters: Vermont's Medicaid program covers a large share of the state's health care spending and supports hospitals, home- and community-based services and mental-health programs. Federal Medicaid dollars are paired with state match and other financing mechanisms such as provider taxes; reductions in federal support would have immediate budget implications and likely programmatic effects, committee members were told.

Berliner and committee chairs said the agency is tracking…