EOHHS warns MassHealth budget faces billions in pressure as federal cuts loom

The Executive Office of Health and Human Services and MassHealth officials told the Joint Committee on Ways and Means on April 7 that Massachusetts faces mounting fiscal pressure in FY26 driven by higher caseloads, sicker members and the loss of one‑time federal supports.

Secretary Kate Walsh, the governor’s lead on the H‑1 budget for health and human services, told the committee the House 1 proposal “represents finding EOHHS at $33,300,000,000 including the MassHealth program. This is a 9% increase over FY ’25 GAA.” She said much of that increase stems from non‑discretionary items such as provider rate requirements tied to collective bargaining and mandated chapter 257 rate increases.

The budget risk is compounded by federal uncertainty, Walsh said: “Many programs across EOHHS rely heavily on federal funding… Congress is actively considering several Medicaid reform proposals that would likely translate into billions of dollars of cuts for MassHealth next year.” She warned that proposals under consideration in Washington could restrict eligibility, reduce benefits or lower federal matching and thereby increase hunger and destabilize services paid in part with federal dollars.

MassHealth Director Michael Levine told the committee the program faces four distinct headwinds: larger caseloads since the COVID‑19 public‑health emergency, higher acuity and utilization among members, non‑discretionary increases (for example Medicare Part B/D cost exposure and recent long‑term care law changes), and the loss of one‑time federal budget levers. “If we were to do nothing and just kind of go on autopilot from ’25 into ’26, the MassHealth program would pull $1,300,000,000 more out of the general fund in ’26 than it will in ’25,” Levine said.

To constrain growth, House 1 contains proposals the administration described as both investments and savings, including funding MassHealth at roughly $22.6 billion gross and $8.7 billion net. Levine highlighted two items committee members asked about repeatedly: a pharmacy assessment that would levy an assessment on prescriptions filled in the Commonwealth and then reinvest funds, and a proposal to align growth in the personal care attendant (PCA) program with the Health Policy Commission (HPC) health‑care cost benchmark. Levine described the pharmacy proposal as designed to preserve pharmacies in low‑access areas by increasing Medicaid dispensing fees and requiring managed‑care plans to match MassHealth pharmacy rates; he said the package would net an estimated $20 million in additional pharmacy income while also supporting the general fund.

On PCAs, Secretary Walsh and MassHealth witnesses emphasized tradeoffs. Walsh said House 1 does not remove services for people currently receiving them but seeks to prioritize resources: “What we have proposed in House 1 is not a cut of people getting existing services… we are being very careful and making sure that the people who absolutely need this program on a prioritized basis get this.” Levine described the administration’s proposal as an “invitation to a very transparent and open process” to set the rate at which PCA spending grows; the HPC benchmark is currently roughly 3.6% annual growth, a figure the administration suggested could be used as a guide.

Committee members repeatedly pressed officials on how proposed changes would affect people and providers. Several lawmakers said they worry that constraining PCA growth or imposing caps could push seniors or people with disabilities into institutional care or leave families without needed support. Members also raised pharmacy and PBM transparency, ambulance reimbursement changes that would stop automatic Medicare matching for EMS, the fiscal viability of integrated plans such as Commonwealth Care Alliance (CCA), and whether the MassHealth projections account for a multi‑hundred‑thousand‑person shift from employer‑sponsored coverage.

Levine and Walsh told the committee that many caseload and cost pressures are structural and not easily resolved at the state level: a reported net gain of roughly 200,000 members who shifted from employer coverage to public coverage since the pandemic was cited as one of the drivers increasing MassHealth general‑fund exposure by roughly $1 billion. Both witnesses repeatedly cautioned that the uncertainty in Washington—possible Medicaid reforms, work‑requirement proposals and other federal changes—would magnify the Commonwealth’s choices.

The administration said it will continue to refine proposals with the committee and that staff will provide further modeling on pharmacy assessment impacts and PCA scenarios. Lawmakers asked for more data and recommended joint work on the policy tradeoffs and equity implications as the House and Senate complete their budget work.

Ending note: Officials characterized the FY26 package as an attempt to sustain prioritized services and to protect providers while acknowledging hard choices ahead if federal support is reduced. The committee did not take votes on the items presented; they were budget proposals under consideration during the hearing.