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Proposal would create Medicaid stabilization fund using unused Medicaid reversions to soften future downturns
Summary
Representative Mary Cafaro proposed a Medicaid Stabilization Fund to capture unused Medicaid appropriations at fiscal‑year end and hold them for use during economic downturns, rather than allowing the money to revert to the general fund for other uses.
Representative Mary Cafaro presented House Bill 8 80, a proposal to create a Medicaid Stabilization Fund that would capture unused Medicaid appropriations (reversions) and retain them in a restricted fund to be used as a buffer in economic downturns. She explained that the funding source would be unexpended Medicaid general‑fund appropriations at the end of each fiscal year; those reversions would be swept into the stabilization fund rather than reverting to general fund for other uses.
Cafaro said the purpose of the fund is to reduce “chaos” in Medicaid program budgeting when the economy deteriorates, pointing to the budget pressures the state faced in the aftermath of the early 2000s downturn. The bill would adopt trigger rules (referring to existing statutory language in 17‑7‑140) to govern when the stabilization fund could be accessed and in what amounts.
Kim Aiken, chief financial officer for DPHHS, and Josh Plutt from legislative fiscal staff appeared as informational witnesses. Committee members asked whether interest earned on the stabilization fund would remain in the fund (Aiken confirmed yes) and whether the proposal would reduce or compete with the state’s general Budget Stabilization Reserve. Cafaro said the fund is intended specifically for Medicaid needs; staff noted that because funds currently revert to general fund before they can become part of other reserves, the mechanics should be checked to avoid unintended double‑claims on the same reversions.
Representative Grault asked about the scale of past reversions; the sponsor provided a multi‑year total showing unused Medicaid funds over several fiscal years and noted the cumulative balance could be substantial. Committee members requested follow‑up coordination with the state’s budget office to ensure the sweep mechanics work as intended and to clarify interactions with the general Budget Stabilization Reserve.
Ending: The sponsor closed the hearing and agreed to provide statutory crosswalks and mechanics to staff. The committee requested additional coordination with fiscal staff to ensure the proposal does not unintentionally conflict with other statutory reserve mechanics.
