Mass. lawmakers warned federal cuts could force deep HHS budget choices; MassHealth faces shortfall

Secretary Kate Walsh told the Joint Committee on Ways and Means on April 7 that the Healy administration’s House 1 proposal for the Executive Office of Health and Human Services (EOHHS) is designed to be fiscally responsible but faces significant federal risks. "What we cannot control and what is not included in our FY26 budget proposal is the impact of potentially drastic federal funding cuts," Walsh said, pointing to federal proposals that could reduce Medicaid and other federal supports.

MassHealth officials outlined the immediate scale of the challenge. "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," Assistant Secretary for MassHealth Mike Levine told the committee.

Why it matters: MassHealth covers more than 2 million people in Massachusetts — about one in four residents — and funds a large share of services for children, older adults and people in nursing facilities. Walsh and Levine said caseload growth since the COVID‑19 public health emergency, higher utilization and several mandatory, non‑discretionary cost increases (including Medicare Part B/D costs and long‑term care law obligations) have combined to raise program costs. Levine said MassHealth’s House 1 funding would pay for $22.6 billion in gross program costs and roughly $8.7 billion net to the general fund, but that the program faces structural pressure if federal funding or policy changes materialize.

Details and tradeoffs: Walsh described the department’s goals — prioritizing essential services, maximizing resources, and serving people in the least restrictive settings — and said the department is trying to ‘‘right‑size’’ spending to match demand and health care inflation. Officials repeatedly warned that many programs depend heavily on federal matches and grants, and that proposed federal changes to Medicaid, SNAP and other programs could force the state to choose between cutting services, tapping state reserves, or finding new state revenue.

Committee members pressed officials on the practical consequences: which services might be preserved and which could be reduced; how changes would affect safety‑net hospitals and smaller providers; and how much the state can absorb if federal Medicaid matching declines. Levine and Walsh repeatedly asked lawmakers for partnership and said choices will be necessary if federal support drops.

Looking ahead: The witnesses urged the committee to consider a mix of investments that maintain community care (for example, home‑based services) while seeking savings where programs have grown faster than revenue. They also warned that congressional policy debates over Medicaid, provider taxes and work requirements could reduce coverage and increase uncompensated care pressures on hospitals and providers.

Ending note: Walsh and Levine framed the budget as an attempt to preserve essential services but said the state cannot fully substitute for large federal cuts. The administration asked the Legislature to weigh priorities and prepare for potentially sizable decisions if federal support changes.