While more than half of Granite Staters receive their health insurance through an employer, public health coverage remains essential for helping to ensure all residents can access health care services and contribute to a growing New Hampshire economy. At the end of March 2025, 186,319 people, or about 13% of the state’s population, were enrolled in Medicaid. This state-federal fiscal partnership provides health coverage to residents with low incomes, disabilities and other eligible populations. Although prior policy decisions have helped expand access to public health coverage and keep more Granite Staters enrolled in Medicaid, nearly one in 20 Granite Staters remained uninsured in 2023.
New Hampshire’s Medicaid Enhancement Tax (MET), a 5.4% tax on hospital revenue from inpatient and outpatient services, helps fund the state’s share of Medicaid as well as uncompensated care provided at hospitals. Under a law that expired last year, hospitals received back 91% overall of the amount they collectively paid in MET through Disproportionate Share Hospital (DSH) payments. These payments help offset health service costs for patients who are uninsured or on Medicaid, which typically pays lower reimbursement rates to providers compared to private insurance.
DSH payments are based on hospital size, capacity and location, with larger payments typically going to hospitals that provide more services and earn more revenue, as well as those located in areas with higher needs. For example, five of the 13 hospitals receiving DSH payments in State Fiscal Year 2024 were located in municipalities where at least 20% of the population was enrolled in Medicaid in 2023.
Upcoming changes in the state budget could decrease this funding and leave hospitals with fewer state and federal funds to support uncompensated care. With the expiration of an agreement between the state and hospitals, both the Governor’s and House’s proposals for the upcoming budget biennium would reduce allocations for DSH by $138.3 million, or 61%, between the current authorized amount for State Fiscal Year 2025 and proposed amount for 2026.
Other proposed changes to the Medicaid program could place an increased strain on health care. The House’s State Budget, which is now being considered by the Senate, proposed a 3% rate reduction for all Medicaid providers, which would reduce reimbursements for services. Potential federal funding changes could also shift more Medicaid costs onto the state, which already faces fiscal challenges. Without continued support, health providers may be required to reduce services, hindering Granite Staters’ ability to access the care they need.
Jessica Williams is a policy analyst with the NH Fiscal Policy Institute. The NHFPI Policy Memo is a partnership of the NH Fiscal Policy Institute and NH Business Review.
