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Medicaid caseload and higher per‑case costs drive $240 million FY25 shortfall, agencies say
Summary
OFA and OPM officials told lawmakers that Medicaid is the principal deficiency pressure in FY25, with current estimates of roughly $240 million in unmet need driven by caseload growth and higher costs per case, including hospital services, pharmacy, home care waivers and nursing home care.
Officials from the Office of Fiscal Analysis and the Office of Policy and Management told appropriations and finance legislators that Medicaid is the largest single deficiency pressure in the FY25 general fund.
OPM Secretary Jeffrey Beckham told the committee: “Since last winter, our Medicaid shortfall has continued to trend upwards, and we're currently showing that at $240,000,000.” OFA’s presentation also listed Medicaid among the largest negative components in FY25, with OFA’s slide noting Medicaid projected roughly $225,000,000 above the FY25 budget under the FAR assumptions used for the report.
What officials said about causes
- Both OFA and OPM attributed the shortfall to a combination of higher caseloads than anticipated and rising cost per case. Beckham identified hospital services, pharmacy, home‑care waivers and nursing home care as contributors. (OPM)
- Agencies noted an additional factor in the accounting: costs tied to providing care for some persons who are undocumented, and both agencies said work is underway to ensure those counts are correctly categorized in DSS data. Beckham said the classification issue may explain some portion of reported undocumented costs but is unlikely to account for the full shortfall.
Why it matters: Medicaid is one of the largest entitlements in the general fund. A multi‑hundred million dollar deficiency in a single program reduces fiscal flexibility and is a common focus for corrective actions during the mid‑session deficiency process.
Questions from legislators and follow‑up
Legislators pressed OFA and OPM for detail on the $240 million figure and requested breakdowns by major Medicaid components (hospital, pharmacy, long‑term services and supports, home care, and undocumented coverage counts). Beckham and OFA staff said they will provide additional detail as they continue to reconcile DSS categories and late data from the Comptroller’s office.
Provenance and evidence
OFA’s and OPM’s numbers and comments were given during their presentations and repeated in the committees’ monthly revenue/deficiency discussion; the agencies pointed to accounting, caseload and unit‑cost increases as the principal drivers of the FY25 shortage.
