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Governor's HHR budget proposes $3.2B Medicaid forecast and multiple savings measures
Summary
Budget staff briefed the Senate subcommittee on the governor's introduced HHR budget: a $3.2 billion Medicaid forecast, proposed $611 million in Medicaid savings strategies and several program and language changes (caps, limits, delays) intended to reduce projected costs over the biennium.
Budget staff presented the governor's introduced Health and Human Resources budget to the Senate subcommittee, saying the package includes about $3.2 billion in general fund support to fund Medicaid for fiscal year 2026 and the 2026'28 biennium and a biennial HHR general-fund increase of roughly $2.6 billion.
Staff summarized proposed savings strategies that together account for hundreds of millions in reductions. Among the items discussed were: removing automatic inflation and rebasing for certain institutional providers; shifting patients to biosimilar drugs through a preferred drug-list process (staff cited Humira as an example); a proposed adult dental cap ($2,000 annual limit for adults); limiting applied behavior analysis (ABA) to 20 hours per week and requiring an autism diagnosis to access the service; and a proposal to remove all inflation across many Medicaid provider payments, which staff described as the single largest savings strategy (about $238 million over the biennium).
Staff also described non-funding language changes and implementation timing: delays to large behavioral-health redesign initiatives and to a single pharmacy benefit manager procurement (each delayed about six months), modifications to hospital supplemental payments tied to labor-and-delivery closures after Jan. 1, 2026, and changes to how some pass-throughs are structured.
On administration and program shifts, staff explained a proposal to better identify and remove duplicate Medicaid enrollments (members enrolled in other states) and to centralize some functions. Department of Social Services items were detailed separately by staffer Ren, who noted a $100 million biennial increase to reflect the state'share of SNAP administrative costs after federal HR1 changes, and a proposed centralized Child Protective Services intake system ($32.7 million for 132 positions) intended to record and route mandated reports to local departments for investigation.
Senators asked about local fiscal impacts and implementation costs; staff repeatedly noted savings estimates assume current provider and locality behavior and that some strategies would shift costs or require local adjustments. The subcommittee will continue review and may amend the proposals during the budget process.
