DHS February forecast: Medicaid spending rises as waiver, long-term care costs climb

The House Human Services Finance and Policy Committee heard Feb. 11, 2025, from Department of Human Services officials that updated forecast data show rising Medicaid and long-term‑care costs that will increase state spending in the coming biennia.

DHS Chief Financial Officer David Greenman and Budget Director Elise Bailey presented the February forecast and the department’s view of the drivers behind projected increases in fiscal 2024–25, 2026–27 and the planning years 2028–29. “The February forecast reflects changes in projected spending for forecasted programs operated by DHS relative to the projections from the previous November forecast,” Bailey told the committee.

The forecast matters because Medicaid accounts for the bulk of DHS spending and state fiscal exposure: DHS officials told the committee Medicaid covers about 1.2 million Minnesotans and amounts to roughly $20 billion in annual payments to providers, with the federal share about $13 billion a year. Bailey said about 55% of DHS funding for fiscal 2026 is projected to come from the federal government and roughly 37% from the state general fund.

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