Vermont officials outline Medicaid’s $2.3 billion share of state budget and explain full 1115 “Global Commitment” waiver, including new housing authority not-y<

Vermont health officials told a legislative briefing that Medicaid accounted for roughly $2.3 billion of the state’s $8.7 billion appropriation in the most recent budget, equal to about 27% of the state appropriation, and described how the state’s 1115 “Global Commitment” waiver gives Vermont both federal funding and flexibility to pay for programs that would not otherwise qualify under the Social Security Act.

The Global Commitment waiver also recently granted the state authority to pay up to six months of rent or six months of medical respite for people experiencing homelessness, but officials said the authority is not yet implemented because it requires state funding and comes with CMS guardrails.

Why it matters: Medicaid’s size and the federal match rates behind it shape large swaths of Vermont spending. State officials told legislators that in addition to direct Medicaid spending, the waiver lets Vermont use federal matching dollars in ways other states generally cannot — including reinvestments and several targeted programs — and that changes to those waiver-authorized elements require federal approval.

Officials said about 197,000 Vermonters receive some form of Medicaid or Children’s Health Insurance Program (CHIP) assistance; roughly 150,000 use Medicaid as their primary coverage and another roughly 46,000 have a partial relationship with Medicaid (for example, receiving drug assistance while holding Medicare as primary). Total health spending for Vermonters across public and private payers was presented as roughly $8 billion (a cited 2020 number that presenters said is likely higher now). Presenters emphasized the difference between total health spending and the state appropriation: the $2.3 billion figure is the Medicaid amount in the state budget (state and federal funds combined).

Federal match and FMAP: Presenters explained how the Federal Medical Assistance Percentage (FMAP) affects state costs. Vermont’s primary FMAP for most Medicaid spending was reported as roughly 58.81% federal and 41.19% state for the fiscal year described — meaning every $1 of state spending draws about $1.43 in federal match for a total of $2.43 in Medicaid services. Presenters also noted other match rates: CHIP roughly 70/30, the ACA expansion population at 90/10, and many administrative costs at 50/50. They cautioned that FMAP is formula-driven and can lag economic changes, producing spikes and dips tied to per-capita income changes over multi-year averages.

Global Commitment and what it covers: The presenters described Vermont’s 1115 waiver (referred to as Global Commitment) as the unique case in which the state’s entire Medicaid program is authorized under a single 1115 demonstration. That waiver, first approved in 2005 and renewed periodically, must be budget-neutral and is set to expire at the end of 2027 under the current authorization. The presenters said the waiver provides two main benefits: it authorizes federal match for some services and populations that wouldn’t otherwise be payable, and it allows the Department of Vermont Health Access to operate as a managed-care-like entity where savings are reinvested in programs rather than distributed as private profit.

New housing authority and guardrails: Presenters said a recent amendment — effective Jan. 1 of this year — gives Vermont authority under the waiver to pay up to six months of rent or six months of medical respite for Medicaid-eligible people who are homeless or have a history of homelessness. The presenters emphasized several limitations: (1) individuals must be Medicaid-eligible; (2) funds cannot be used to build housing (no brick-and-mortar construction); and (3) the waiver funding cannot supplant existing state base funding and has CMS-imposed strings. Officials said CMS had not previously approved this specific use broadly, and while the authority exists at the federal level, Vermont must secure state funding and design permissible program rules before payments can begin.

Investments and reinvestment model: Officials outlined Vermont’s managed-care-like reinvestment model, describing roughly $120 million a year of federal-matchable “investments” drawn from program savings. Presenters said the state currently lists about 69 investments that are paid with reinvested dollars; examples cited included federal match paying part of the Department of Health’s public-health laboratory, the 2-1-1 information line, hospital diversion programs and student loan forgiveness for medical providers. Presenters said some investments have clear evidence of impact while others are undergoing evaluation.

School-based services and other changes: Presenters said Vermont is working with the Agency of Education and the University of Massachusetts to revise school-based service billing and reimbursement to capture more federal dollars and reduce administrative burden for schools. They said the project has federal grant funding for planning and was targeted for a fall 2026 implementation, noting the work is complex and intended to increase the federal share of certain special-education and mental-health school costs.

Questions from legislators focused on how Medicaid counts are reported (primary vs. partial coverage), how FMAP fluctuations affect the state budget, and the restrictions on using waiver funds for housing. Presenters repeatedly stressed that waiver-only programs (the “bottom half” of slides shown) are dependent on the 1115 authorization and would end if the waiver were not renewed, while many standard Medicaid services (the “top half”) could be adjusted by the state without federal amendment. The presenters also cautioned that cutting state Medicaid dollars reduces services disproportionately because lost state funds also eliminate the associated federal match.

Ending note: The presenters urged legislators to consider the timing of the waiver (renewal due in 2027) and the need for state funding and program design before the new housing authority or other waiver-only changes can be implemented. They said the state will continue evaluating investments, refining school-based service reimbursement and working with CMS on allowable housing-related expenditures.

Quote attribution note: Direct quotations quoted in this briefing are attributed below to the presenters named in the transcript.