It’s a rare thing for a press conference billed as a “major announcement” to live up to the name. Friday morning proved an exception.
Flanked by hospital representatives and politicians, Gov. Chris Sununu unveiled a $50 million pledged donation from New Hampshire hospitals to bolster the state’s alcohol fund, providing five years of support to boost substance abuse services.
Money would be voluntarily donated into the fund by members of the New Hampshire Hospital Association – 31 in total. The new infusion would allow the existing revenue source of the fund – state liquor sales profits – to go toward paying New Hampshire’s share of the federal Medicaid expansion program.
It was presented as a boon to the treatment community, a long-needed boost as the state attempts to climb out of an opioid epidemic. But for the governor, it was also something of a political coup.
In one fell swoop, Sununu restored funding to the alcohol fund for the first time in 15 years; sidestepped a legal standoff with the federal government over Medicaid expansion funding; tackled a major fiscal concern over the Medicaid expansion bill from New Hampshire fiscal conservatives; and set up a legacy item and talking point ahead of his gubernatorial campaign.
And he did it without dipping into state funds and – paradoxically – by keeping much of the status quo intact.
To explain how it happened, it’s easier to start with the problems, some new and some well-worn, that the latest arrangement appears to solve.
Problem One: The alcohol fund has not been fully funded for years. Created in 2000, the state’s alcohol fund, officially known as the Liquor Commission Fund, was meant to solve a growing problem – alcohol and substance abuse – with a logical solution. As set out, 5 percent of all liquor sales by the state’s Liquor Commission would be deposited into the fund. But year after year, lawmakers have balked at that commitment, opting to suspend the law every budget cycle and fund it with far below 5 percent of profits, if at all. The exception was 2003 – the only time it was fully funded at 5 percent.
In the 2017 budget negotiations, Sununu doubled contributions in the fund from 1.7 to 3.4 percent – about $7 million a year. But treatment advocates have pressed for the full 5 percent, and Democrats have used the issue to hammer Sununu since his term began.
Problem Two: New Hampshire’s previous Medicaid expansion scheme was potentially illegal. Late last July, New Hampshire’s health care officials got a jolt. Since 2016, New Hampshire had paid for its share of the federal Medicaid expansion plan – a sprawling program bringing in hundreds of millions of dollars – using a mix of hospital and insurer contributions, and avoiding the need for taxpayer money. But a letter from the federal Centers for Medicare and Medicaid Studies stated that arrangement was likely illegal – hospitals can’t pay into programs they benefit from – and that New Hampshire needed to change it by 2019.
The new proposal includes a simple solution: raise the alcohol fund to 5 percent, and use that to pay for Medicaid. Which leads to Problem Three.
Problem Three: This year’s proposed Medicaid expansion plan takes from the alcohol fund to pay for health care, potentially at the expense of substance abuse treatment. It’s all well and good to use an existing state fund for a federal health care payment. But for the drug treatment community, the new Medicaid proposal was frustratingly vague on how that fund would be replenished to pay for the substance abuse services it was originally intended for.
Under the bill, Senate Bill 313, the fund could be restored with federal money. That would require a waiver, with no guarantee. But even if the federal funds did arrive, they’d likely come with a mess of strings attached, hampering how recovery centers and treatment facilities could use them.
If the federal money didn’t arrive, the state Department of Health and Human Services would be mandated under the new bill to backfill the fund itself. That could mean about $10 million a year siphoned from its other efforts, at a time when many of its divisions – DCYF comes to mind – are already struggling to rebound.
This proposed arrangement attracted skepticism on the House floor Thursday, and was expected to be a prime target for Rep. Neal Kurk, R-Weare, chairman of the Finance Committee.
So how does a $50 million Hospital Association donation tackle such a litany of problems?
It takes on Problem One by fully funding the alcohol fund with private donations, removing a longstanding political football from the Legislature and an attack line in the gubernatorial race.
It addresses Problem Two by keeping the hospital association at arms length from the “Granite Advantage Health Care Trust Fund” – the fund used to pay for the state’s share, roughly estimated at $30 million. That could potentially insulate the program from further objections from Washington.
And it tackles Problem Three by backfilling the liquor profits taken from the alcohol fund for Medicaid with five years of pledged hospital donations, allowing treatment organizations a steady stream of substance abuse funding to better plan ahead, advocates say.
Of course, there’s a lot the new arrangement doesn’t change. Hospitals would be paying in the same amount under this plan as the last – the Association already contributes about $10 million directly to Medicaid expansion, president Steve Ahnen said Friday.
And though Sununu took pains to separate the hospital donations to the alcohol fund from the Medicaid expansion bill Friday, the two are undeniably linked, drawing criticism that hospitals are again stabilizing a program they benefit from, indirect. On Friday, some Democrats groused that financially, the new plan differs little from the one set up by former governor Maggie Hassan and challenged by CMS.
Meanwhile, the new hospital arrangement is not a political panacea for the bill. Many Republicans disagree vigorously with the program, predicting prohibitive costs down the road; about two-thirds of the party voted against the bill when it passed an initial vote in the House on Thursday.
The plan is still expected to face a grueling series of hearings in House Finance this month; on Friday, Kurk said that while he appreciated the hospital donations, it does not solve all of his funding concerns.
Still, as the bill enters its final lap, and legislative deadlines mount, the governor’s 11th-hour announcement could prove its saving grace.
(Ethan DeWitt can be reached at edewitt@cmonitor.co or on Twitter at @edewittNH.)