Division 3 advances Medicaid budget changes in HB 2 including premiums, co‑pays and eligibility adjustments

House Finance Division 3 continued a work session on Medicaid on March 5, 2025, focusing on provisions in House Bill 2 that would change eligibility, cost sharing and other Medicaid program rules. The committee heard technical presentations from Nathan White, chief financial officer at the Department of Health and Human Services, and Henry Littman, the state Medicaid director, then posed detailed implementation questions to staff and attorneys.

Division members were presented with the governor's proposed HB 2 adjustments and a handout showing service additions and eligibility changes enacted since 2019. DHHS staff outlined the provisions that Division 3 most directly considered: a return to pre‑public‑health‑emergency income verification standards, establishment of prescription co‑payments up to $4, and a premium structure affecting higher‑income CHIP and a separate premium for Granite Advantage enrollees. DHHS officials told the committee the budget assumes the reinstituted verification and cost‑sharing changes will lower general‑fund costs in the 2026–27 biennium, and indicated estimated savings on a schedule included in their handout.

Committee members repeatedly asked for implementation detail. Representatives sought clarity on who would be subject to co‑pays and premiums, how the measures would be administered by managed‑care organizations, and whether the systems to collect payments and avoid duplicate charges could be built without eroding projected savings. Nathan White said the administration could provide further reporting showing fund splits (general, federal, other) for the cost and savings estimates and would add a third column for “other funds.” Division members asked DHHS to model the enrollment and administrative impact if the governor signed the budget late in the fiscal year.

The bill text in HB 2 that Division 3 reviewed included: section 107 (establishing Medicaid prescription co‑pays up to $4), section 108 (limits on the number of managed‑care rate filings to one per year for planning purposes), section 109 (premiums for Granite Advantage enrollees), section 110 (CHIP premiums for families above the 255% FPL threshold), and section 111 (return to pre‑PHE eligibility verification). DHHS told the committee the estimated biennial general‑fund savings tied to those items are captured in the department’s crosswalk spreadsheet but cautioned that the timing of implementation, IT changes and federal approvals could affect the first‑year numbers.

Members expressed two recurring concerns: (1) the near‑term operational burden on eligibility staff when certain PHE flexibilities expire and case redeterminations resume, and (2) the potential for modest co‑pays or premiums to deter enrollment, especially for families near the eligibility thresholds. DHHS staff described ongoing outreach work — including MCO and department calls and tailored notices — and agreed to provide a breakdown showing how many people would be affected by each HB 2 provision and the projected administrative costs tied to implementing the changes. Several public witnesses representing health‑care advocacy organizations urged caution on co‑pays and premiums, citing national studies and state experiences that associated premiums and modest cost sharing with drops in enrollment and increased administrative costs.

The work session ended with committee requests for written follow‑up from DHHS: (1) a third‑column breakdown (general/federal/other) for the department’s cost and savings spreadsheet; (2) the expected number of people (by eligibility group) who would be affected by each HB 2 provision; and (3) implementation timelines and one‑time IT/administrative costs needed to operationalize co‑pays and premiums. Division 3 scheduled further review as part of its continuing budget work.

Less critical details: Division members said they would not require immediate statutory language changes from the committee; instead many members asked DHHS to return with program‑level modeling showing the operational impacts of each provision.