Medicaid Waiver and the State´s Tightening Budget

November 30, 2007

Tight Fiscal Scenario for State The symptoms of a tightening state fiscal picture are emerging. The state is turning to short-term borrowing for cash flow purposes earlier in the fiscal year than usual and tax collections in October 2007 were down compared to October 2006. Growth in lottery revenues has slowed and fallen far shy of budget projections, and tax refunds this fall are up, raising warning signs that capital gains taxes are not filtering in at the same clip as previous years.

Healthcare Deficits and the Medicaid WaiverIn related news, the last waiver extension assured Massachusetts of receiving $385 million a year in federal health care funds. The current waiver includes conditions - most prominently compliance with federal "budget neutrality" standards. Massachusetts Health and Human Services Secretary JudyAnn Bigby said state officials have made it clear to their federal counterparts that the waiver is important to the continued success of health care reform and how Medicaid runs in Massachusetts. "It's a very important part of our strategy," said Bigby.

Unexpectedly high levels of enrollment in the state´s new, heavily subsidized Commonwealth Care health insurance program are raising concerns about the law's affordability and state Senate leaders recently indicated that the Legislature may soon consider substantive changes to the health care law. The cost of Commonwealth Care may lead to a $150 million deficit.

State officials are also monitoring payments to acute care hospitals that will outpace budget targets by $120 million this fiscal year.

On a more positive note, US Secretary of Health and Human Services Michael Leavitt, in Boston, said he has "great optimism" for the Massachusetts Medicaid waiver that is due to expire in seven months and which is critical to continuing state health insurance expansion. "We all have a stake in seeing this successfully implemented," said Leavitt. Massachusetts´s current three-year waiver, a critical policy and financial underpinning of insurance expansions efforts that have attracted national attention, expires June 30, 2008 and negotiations are expected with Bush administration health and human services officials on another extension.

"I have great optimism for what it represents," said Leavitt.

We will keep a steady watch for cost savings measures to come out of the Legislature, Medicaid and the Connector.

Please feel free to e-mail any questions, comments or concerns. We will continue to update you as more information becomes available.

Back to Headlines

Healthcare Financial, Inc. is a one of the top resources for information on healthcare changes in Massachusetts.

Stay informed - Please sign up to receive our Industry Update emails.