Provision Composition by State

Document Overview

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This addendum to RHTP-03.TD2 establishes which provision mechanisms drive Medicaid cuts in each expansion state, supplementing the total cut figures with provision composition data. The distinction between work-requirement-dominated cuts and provider-tax-dominated cuts determines which RHTP strategies address the underlying fiscal threat. Data derive from the KFF stacked bar chart accompanying the July 23, 2025 analysis, read directly from the published visualization.

Why This Data Matters for 3C

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The precursor document established how much each state loses in Medicaid cuts. This addendum establishes which mechanism drives those losses. The distinction is analytically critical.

Work-requirement-dominated cuts produce enrollment losses. Rural hospitals lose patients, specifically the near-poor working adults who gained coverage through ACA expansion. These losses show up as declining inpatient volume, reduced outpatient utilization, and rising uncompensated care. The provider is not paid less per service; they deliver fewer services to insured patients.

Provider-tax-dominated cuts reduce the state’s ability to generate non-federal Medicaid match. The state cannot create new provider taxes or increase existing ones. As the safe harbor threshold ratchets down from 6% to 3.5% between 2027 and 2032, states must either replace that revenue from general funds or reduce Medicaid payments. Rural hospitals receive lower reimbursement rates per service, a direct revenue reduction on existing volume.

State-directed-payment-dominated cuts eliminate supplemental hospital payments. SDPs are the mechanism through which many states direct additional Medicaid funds to hospitals serving high-need populations. Rural hospitals frequently depend on SDP supplements to close the gap between Medicaid rates and actual costs. When SDPs are capped, rural hospitals lose revenue they have already built into their operating budgets.

The mechanism determines the strategy available to states. Work requirement losses require enrollment mitigation. Provider tax losses require alternative financing. SDP losses require payment model redesign. RHTP planning that does not account for the mechanism of cuts cannot produce effective responses.

Four-Color Legend (KFF Chart, July 23, 2025)

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Note on national percentages: The KFF chart shows the national bar at 53% | 18% | 13% | 11% (total ~95%). The remaining ~5% represents interaction effects and smaller provisions distributed proportionally. These percentages reflect CBO’s allocation after interaction effects; they do not sum exactly to the provision-by-provision gross savings listed above.

Scope note: The chart displays only ACA expansion states plus DC and Georgia (partial expansion). The nine non-expansion states (Alabama, Florida, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wyoming, and North Carolina pre-expansion) are excluded because work requirement and most provider tax provisions do not apply to them. Florida and North Carolina appear in the KFF chart because North Carolina expanded in 2023 and Georgia enacted partial expansion.

State-Level Provision Composition

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Figures read directly from the KFF stacked bar chart. Percentages represent each provision’s share of the state’s total Medicaid spending reduction. Residual (unlabeled) bars represent the fourth/other category.

A dash (–) in the table indicates the segment was either unlabeled in the chart or below the threshold for labeling, not that the provision has zero impact. Provisions affecting all states apply everywhere; the unlabeled bars represent shares too small for the chart to display with percentage callouts.

Pattern Analysis: Three Cut Archetypes

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Archetype 1: Work-Requirement Dominant (above 60% from enrollment loss)

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States: Arkansas (76%), Connecticut (79%), DC (89%), Hawaii (77%), Idaho (68%), Illinois (65%), Kentucky (73%), Maine (81%), Minnesota (72%), Nevada (78%), Rhode Island (74%), Vermont (67%), Washington (82%)

What this means for rural hospitals: These states face primarily volume-driven losses. Rural hospitals lose covered patients as ACA expansion adults lose eligibility through work requirement failures. The fiscal hit shows up in declining Medicaid inpatient days, reduced outpatient visits, and increasing uncompensated care. RHTP strategies in these states should prioritize maintaining volume through alternative coverage mechanisms, community health worker connections, and outreach to work-exempt populations.

GGH relevance: Social care navigation becomes critical in these states, connecting people with exempt status documentation, tracking which patients lost coverage, and maintaining care continuity for the newly uninsured.

Archetype 2: Provider-Tax or SDP Dominant

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States where provider tax + state-directed payments exceed work requirements as cut drivers.

Indiana (18% work req. | 44% provider tax | 26% SDP), the most extreme outlier nationally. Indiana’s HIP 2.0 managed care structure relies heavily on provider taxes and state-directed supplemental payments. The cuts hit Indiana’s financing mechanism directly, not its enrollment. Rural Indiana hospitals face rate reductions on existing volume rather than volume decline.

Pennsylvania (21% | 38% | 27%), similarly financing-mechanism driven. Pennsylvania’s Medicaid managed care system uses substantial provider taxes and hospital supplemental payments. Rural Pennsylvania hospitals will see lower base payments and declining supplemental revenue simultaneously.

New Hampshire (26% | 33% | 29%), provider tax and SDP nearly dominate. NH has a small but heavily managed Medicaid system.

New York (39% | 33% | 16%), New York’s MCO provider tax is specifically affected by OBBBA’s waiver uniformity provision (one of four states. CA, MA, MI, NY, with MCO taxes above the 3.5% threshold). New York loses on both enrollment and financing dimensions nearly equally.

North Dakota (36% | 35% | 14%), uniquely balanced, with work requirements and provider taxes nearly tied. ND’s small expansion population means work requirements generate less savings than in larger states, bringing provider taxes into relative prominence.

RHTP strategy implication: In financing-mechanism-dominant states, RHTP payment model innovation work (4F) is more directly relevant than enrollment stabilization. Hub-and-spoke networks and alternative payment arrangements (4E, 4F) address the underlying revenue shortfall.

Archetype 3: Mixed (No Single Provision Above 55%)

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States: California, Colorado, Delaware, Georgia, Louisiana, Massachusetts, Maryland, Missouri, Montana, New Jersey, New Mexico, Oklahoma, Oregon, South Dakota, Utah, West Virginia

These states face cuts across multiple mechanisms simultaneously. RHTP strategy must address both volume and reimbursement dimensions. They are analytically complex and operationally demanding. Multi-mechanism exposure means no single intervention addresses the full fiscal challenge.

Implications for RHTP Article 3C

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The Medicaid Math Is Not Uniform

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The Medicaid Math ratios in the main precursor document show how much each state loses relative to its RHTP award. The provision composition data shows why the same dollar loss hits differently.

Kentucky (20.9:1 ratio, 73% work-requirement driven): A state losing primarily enrollment. $22.2B over 10 years from coverage loss for working-age rural adults. The rural hospital revenue impact is the lost Medicaid revenue from those patient encounters, roughly $2.2B annually in foregone rural Medicaid payments. RHTP cannot replace this; it must help systems survive lower volume.

Indiana (18.8:1 ratio, 44% provider-tax driven): A state losing primarily financing capacity. $19.5B over 10 years from restrictions on how Indiana funds its Medicaid program. Rural Indiana hospitals face rate compression even for patients who retain coverage. RHTP payment model work can partially address this; community-based revenue diversification becomes essential.

Pennsylvania (47.3:1 ratio, 38% provider-tax + 27% SDP): The worst combination, catastrophic scale AND financing-mechanism dominance. Pennsylvania rural hospitals face direct rate reductions on current volume plus supplemental payment losses, and the state has severely limited ability to replace those funds through new provider taxes. RHTP’s $0.97B over 5 years is insufficient to offset $45.7B in cuts regardless of how it is deployed.

The Non-Expansion Outlier Pattern Confirmed

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The provision composition chart covers only expansion states, which explains why Florida, Texas, Tennessee, and other non-expansion states appear elsewhere. Their cuts derive entirely from “other provisions”, eligibility rule prohibitions, redeterminations, and home equity limits, making them analytically distinct even when dollar amounts are large (Texas: $31.3B from all-states provisions only).