The Future of Medicaid and Healthcare Funding in New Jersey
A Decade of Change in Medicaid and Hospital Funding
Over the past decade, New Jersey has seen significant shifts in its healthcare funding landscape. In 2015, the state allocated roughly $850 million to support hospitals and $11.4 billion for Medicaid. Fast forward to 2025, and the current budget reflects a stark contrast: just over $700 million for hospitals and a nearly doubled Medicaid allocation of $21.3 billion. However, the federal contribution to Medicaid has been on the decline, dropping by 11% from the budget year that ended in June 2024.
The Impact of Federal Funding Cuts
Federal funding for Medicaid and other social service programs is under threat from Republican-led initiatives in Congress. These proposed cuts could result in up to $5.2 billion less from the federal government to pay Medicaid claims next year, along with a loss of $4.2 billion used to support hospitals and nursing homes. Changes to eligibility rules could leave as many as 700,000 New Jerseyans without Medicaid coverage, according to state modeling obtained by NJ Spotlight News.
Assembly Speaker Craig Coughlin (D-Middlesex) has expressed grave concerns about the potential impact of these cuts. "We don’t have an extra $12 billion dollars lying around. That’s an unachievable number," Coughlin said, referring to the current federal share for Medicaid. "We can’t hope to find a way to replace that at the state level. It’s just not there."
The Role of Medicaid in New Jersey’s Healthcare System
In New Jersey, Medicaid plays a crucial role in supporting various healthcare services. The program pays 60% of the costs for people living in nursing homes, nearly one-third of the births, and one in four hospital patients. Cuts to Medicaid would have far-reaching consequences for healthcare providers and patients alike.
Cathy Bennett, president and CEO of the New Jersey Hospital Association, warned, "The far-reaching proposed cuts would be catastrophic for continuity of care for infants, children, seniors and families. It’s an access-to-care crisis in the making."
Governor Murphy’s Budget Proposals
Governor Phil Murphy, a Democrat at the end of his second term, is set to outline his spending plan for fiscal year 2026, which begins in July. While Murphy’s office has declined to comment, the governor has emphasized the need for fiscal restraint. In an interview with NorthJersey.com, Murphy noted that 15% of the state’s workforce is funded through the federal government.
In an op-ed previewing the budget for NJ Spotlight News, state treasurer Elizabeth Maher Muoio highlighted Murphy’s commitment to improving the state’s fiscal health and making it more affordable. "These investments do come with a cost," she wrote.
The State’s Current Budget and Future Challenges
The state’s nearly $57 billion spending plan for the current fiscal year includes a structural gap between projected annual revenues and expenditures. Murphy and lawmakers are plugging this gap with more than $2 billion from surplus to maintain balance on paper, as required by the state constitution.
Despite these financial challenges, Murphy has underscored his commitment to healthcare. The state Department of Banking and Insurance recently announced record enrollment in New Jersey’s health insurance marketplace, "Get Covered New Jersey." More than 513,000 residents signed up for marketplace, or Obamacare exchange policies this year, nearly 200,000 of them new, a 30% increase over last year’s enrollment period.
The Impact of the Affordable Care Act
The Affordable Care Act (ACA), also known as Obamacare, has significantly expanded access to insurance nationwide. In New Jersey, more than 500,000 residents gained coverage through Medicaid or the Obamacare marketplace. This expansion has led to declines in charity care costs, from $650 million in 2015 to $342 million in 2024.
Funding for graduate training has also grown, while quality improvement support has remained fairly level. In the current state budget, Murphy and lawmakers further trimmed a portion of hospital aid, known as charity care, to just $137 million, by shifting a portion of the burden to Medicaid, which receives a higher federal match.
The Future of Medicaid Enrollment and Costs
Enrollment in Medicaid had declined in the last year or two after the federal government called on states to review everyone’s eligibility requirements, a process that had been purposely stalled during the pandemic. However, as Baby Boomers age, the number of Medicaid members in costly long-term care is growing – estimated to expand by 3.7% this year – forcing the state to invest an extra $134 million for their care in 2025. Additionally, state laws increasing wages for low-income workers have also impacted the program, adding at least $16.5 million to the state’s Medicaid tab this year.
Did You Know?
New Jersey’s Medicaid program, NJ Family Care, now covers roughly 1.9 million people who are poor, disabled, or living in nursing homes. Despite the decline in enrollment, costs continue to grow, with experts predicting a 2.7% increase over twelve months. If enrollment had remained stable, experts estimated cost growth of more than 13%.
Pro Tip
Stay informed about the latest developments in healthcare funding and Medicaid policies. Follow reliable news sources and government announcements to understand how these changes might affect you or your community.
FAQ Section
Q: How much does Medicaid pay for nursing home care in New Jersey?
A: Medicaid pays 60% of the costs for people living in nursing homes in New Jersey.
Q: What is the current Medicaid budget in New Jersey?
A: The current Medicaid budget in New Jersey is nearly $21.3 billion.
Q: How many people are covered by NJ Family Care?
A: NJ Family Care covers roughly 1.9 million people who are poor, disabled, or living in nursing homes.
Q: What is the impact of federal funding cuts on Medicaid?
A: Federal funding cuts could result in up to $5.2 billion less from the federal government to pay Medicaid claims next year, along with a loss of $4.2 billion used to support hospitals and nursing homes.
Call to Action
Stay tuned for more updates on healthcare funding and Medicaid policies in New Jersey. Share your thoughts and concerns in the comments below, and don’t forget to subscribe to our newsletter for the latest news and insights.