The Department of Health Services is now projecting Medicaid GPR spending to come in $213.2 million higher than projected when the 2025-27 budget was signed six months ago.
In a letter to the co-chairs of the Joint Finance Committee, DHS Secretary Kirsten Johnson attributed the projected shortfall to several factors. That includes unanticipated higher costs for prescription drugs, Medicare buy-in programs, and fee-for-service mental health and substance use disorder services.
The state budgeted nearly $9.7 billion in general purpose revenue for Medicaid over the 2025-27 biennium, with an overall cost for the program of nearly $36.2 billion with federal funds factored in. The projected $213.2 million GPR shortfall amounts to 2.2% of budgeted costs.
Three months ago, DHS was projecting a $144.1 million GPR shortfall in the program.
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The factors Johnson cited last week for the higher-than-expected costs include:
- $76 million for the higher costs for prescription drugs, buy-in programs, and fee-for-service mental health and substance use disorder services.
- $45 million due to higher-than-expected enrollment in Family Care, which provides services for older adults and adults with disabilities. Johnson wrote the budget adopted lower enrollment trends than what DHS had recommended. So far this biennium, the trend suggests enrollment will be even higher than what the agency had expected prior to passage of the budget.
- $59 million for nursing home expenditures and $38 million for Children’s Long Term Supports programs due to higher-than-expected utilization.
Johnson wrote some of those higher costs have been offset by savings elsewhere in the program.
