Cabinet secretary warns of 'enormous' Medicaid cuts

Yahoo

08-04-2025

BOSTON (SHNS) – Having spent her roughly 100-mile drive listening to the national news Monday morning and then hearing her colleagues at a budget hearing dig into the policy and finance specifics of crucial state programs, Rep. Lindsay Sabadosa got a sinking feeling.
'I feel like we're trying to budget on quicksand at the moment,' the Northampton Democrat said as she and the rest of the Joint Ways and Means Committee gathered to review Gov. Maura Healey's fiscal year 2026 budget plan (H 1) with the part of state government that could face the deepest and most immediate consequences of looming federal shifts, the Executive Office of Health and Human Services.
While Beacon Hill continues its usual budget process, President Donald Trump has been moving to reshape the federal government and its spending, with all signs pointing to disruptions in the relationship between D.C. and states like Massachusetts. Medicaid is in the crosshairs of a pursuit for trillions of dollars in tax cuts and federal spending reductions over the next decade, and that could have massive impacts on MassHealth.
The state Medicaid and Children's Health Insurance Program system affords health care coverage to about 2 million Bay Staters and brings about $15 billion of federal revenue to Massachusetts.
Proposals under consideration in Congress 'would likely translate into billions of dollars of cuts for MassHealth for next year,' Health and Human Services Secretary Kate Walsh said Monday, and 'will force some very, very difficult choices.'
MassHealth is the largest single chunk of spending in the state budget, representing about $22.599 billion gross (a $8.672 billion net cost to the state after federal reimbursements) or 36% of line-item spending in Healey's proposal. The governor's plan would increase the MassHealth budget by $1.04 billion gross or $415.8 million net compared to estimated total spending during the current budget year.
Healey's budget, filed before the threat of deep Medicaid cuts became clear, expects federal reimbursement for Medicaid spending to increase by $1.8 billion to $14.2 billion, per the Massachusetts Taxpayers Foundation.
While the scope of federal spending cuts may not become clear for weeks or months, the state budget is on its typical timetable, with the House and Senate planning to pass their spending bills in April and May.
When Attleboro Rep. James Hawkins asked how MassHealth is 'preparing to continue serving residents in the face of these threats,' Assistant Secretary for MassHealth Mike Levine responded that 'a lot of this is going to come back to budget and appropriations and hard choices.'
'It is a matter of identifying our key populations and what we're going to do to support them, and collectively coming up with answers,' Levine said. 'Because you might have a point of view on, you know — 'If we're on track to spend $8.7 billion out of the General Fund and [fiscal] 26, that number can go no higher than X' — that's really going to clarify our choices and what we're able to continue to do and what we're going to have to stop doing.'
Excluding MassHealth, Healey's fiscal 2026 proposal recommends funding EOHHS at $10.156 billion, which the administration said would represent a $452.5 million, or 5%, increase over the budget the governor signed last summer. The increased budget allotment pays for $207 million for new provider rate increases through the Chapter 257 reserve, $524.2 million to annualize provider rate increases from the current budget year, and $460 million for projected caseload growth.
The uncertainty about federal support for Medicaid comes as Beacon Hill Democrats are redrafting Healey's budget while the state's spending demands are elevated and general purpose tax revenue growth is modest. A reduction in federal funding could force state budget managers closer to considering unpopular steps, potentially including allowing federally-funded services to end, cutting back on state support for programs, dipping into preciously-guarded state reserve accounts, or raising taxes to bring in more revenue.
Walsh told Sabadosa that her morning drives are often very similar, and that she has shifted her thinking to 'trying to figure out, well, there must be a better way to do this.' She said most important is understanding what Massachusetts values and 'the basic things that we need to do,' and then finding ways to 'do it differently and better.'
The secretary said the state has to be able to deliver services at a lower cost, but also warned that 'we will be cutting' programs that she, her staff and lawmakers have become attached to.
'We're just going to have to think more creatively and differently. And I think it's going to really challenge the — going back to the values, what's made us all so proud to do this work, which is that we've built programs … that have really saved people's lives, or may enable them to live the best life they could possibly live, and that's easier in this state than probably any other state on the planet,' Walsh said. 'And so how do we get there from here? And I don't know the answer, but we really are at an inflection point.'
The response is going to require a partnership between lawmakers and the administration to make potentially uncomfortable trade-offs, she said.
'So you might want to save a food pantry in your district. And I might say to you, 'no, we need to do this another way,' because it's going to be a more efficient way to get a meal to everyone in the commonwealth,' the secretary said. 'And I think that those trade-offs that you'll have to make for programs again, you've built, sponsored, earmarked, supported — we might not be in the position to do that.'
Walsh added later in her response to Sabadosa, 'That's why I applaud people like [Department of Mental Health] Commissioner [Brooke] Doyle, who came forward and said, 'OK, if I have to cut, this does the least damage.' And we have to trust each other, because we are going to be cutting.'
Healey's budget proposes slashing the DMH case manager workforce from 340 to 170 positions, a move that her administration says would save $12.4 million. Overall, the DMH budget would increase by 7% to about $1.2 billion under Healey's bill, Walsh said.
The proposed cut to the DMH caseload manager workforce was one that a handful of lawmakers took issue with Monday. Another recurring topic of questions from lawmakers was Healey's proposal to level-fund the personal care attendant program and tie PCA spending to health care spending benchmarks from the Health Policy Commission.
The PCA program allows seniors and people with disabilities to hire personal care workers to help with daily tasks like bathing, dressing, meal preparation, and grocery shopping. It helps keep people independent and not in nursing facilities, but the program's costs have soared from $1.2 billion in fiscal 2020 to an estimated $2 billion by fiscal 2027.
'While people in their heads think about PCA and homemaker services as things that are paid for and something that you require when you get old and might be covered by Medicare, in fact, it's paid 100% by the Medicaid program, which we have just identified as in for enormous cuts,' Walsh said. 'So this is a very good example of one of the very hard choices that we're facing.'
Lawmakers did not go along last year with a Healey proposal to trim $57 million from the PCA program, which would have meant that 6,000 people would have lost access to PCA services. That, Walsh said, 'was an example of us trying to get cost under control' but now represents 'the kinds of cuts that we will not be able to look away from in the future.'
'Like-minded people can disagree about whether or not the program's been cut too much, slowed too fast, growing too fast,' she said. 'I think we're in a situation where these will be the good old days and the cuts that were contemplated will be, 'Wow, wish we could have done that.''
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