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HCA warns HR1 changes will increase workloads and risk; seeks staffing and affordability funding
Summary
Health Care Authority leaders told the committee federal HR1 changes and Medicaid redetermination requirements will double some caseworker workloads, push utilization higher, and require staffing and IT investments (including EBT chip cards) to avoid large penalties and gaps in coverage; HCA requested staffing and affordability fund support while LFC recommended smaller recurring funds.
Health Care Authority Secretary Carrie Armijo told the Appropriations & Finance Committee that the state‑level impact of the federal HR1 changes is material and immediate: increased work requirements, twice‑annual redeterminations for most adults, and higher acuity among remaining Medicaid enrollees that together raise both operational workload and fiscal risk.
"Our agency, a $15,000,000,000 budget, 85 to 90% of that is, federal funds," Armijo said, noting the state could not backfill a sudden federal funding loss at scale. She said three workload drivers tied to HR1—community engagement/work verification, six‑month redeterminations, and SNAP payment‑error pressures—will substantially increase the casework load and require staffing and IT investments.
On staffing, Armijo explained that HCA is already hiring and expects to add surge staff this year but that LFC’s recommendation does not fund all staff HCA says it needs for FY27. HCA estimated it would need on the order of the frontline FTEs it requested to avoid degraded customer service and federal corrective actions; the agency warned that an elevated SNAP payment error rate could cost the state up to $156,000,000 in general‑fund liability if not addressed.
HCA also asked for one‑time investments in IT and program integrity: a unified portal project (MISER) has already reduced abandoned renewals from about 20% to under 5%, Armijo said, and the agency requested approximately $7 million in one‑time funding to implement EBT chip cards to prevent card‑skimming fraud (HCA reported roughly $2.5 million in benefits stolen over the last 18 months). The secretary said the federal government has reimbursed past losses but signaled federal reimbursement could end, which increases state exposure.
On coverage and affordability, Armijo recommended using the Health Care Affordability Fund and shifting premium‑surtax distributions to the fund to maintain marketplace premium relief and to provide state premium assistance for people who will lose enhanced federal premium tax credits. The executive recommendation funds wider marketplace and immigrant coverage protections than the LFC recommendation; Armijo said the executive is preparing a bill to adjust surtax distributions for the fund.
Legislators asked for follow‑up detail on DD waiver rate studies, potential SAMHSA grant cuts, and the exact mechanics of premium assistance. Armijo and LFC staff said a DD rate study would be published imminently and promised to return with follow‑up on recent SAMHSA communications.
What happens next: The committee voted to adopt the LFC recommendation for HCA at the hearing, but HCA flagged staffing, IT and affordability fund items as priorities for follow‑up work during the session and for possible supplemental appropriations.
