Officials from the Department of Social Services (DSS) painted a mostly bleak picture of the future for Medicaid services in the state Friday afternoon, as news regarding lower-than-expected Medicaid expenditures was overshadowed by potentially devastating cuts coming to the program in the future.
During the monthly Medical Assistance Program Oversight Council (MAPOC) meeting, DSS administrators began by outlining the financial trends in the Connecticut Medicaid program from fiscal year 2024 through the first half of fiscal year 2025.
According to the data, Medicaid enrollment is still above pre-pandemic levels, and expenditures and utilization of the Medicaid program continues to rise after a significant drop during the pandemic. The increased utilization is due to Medicaid recipients receiving treatment for conditions that they delayed during the pandemic.
Hospital visits remained the largest expenditure of Medicaid funds, accounting for 29% of costs in FY24 and 27% in FY25 so far. Long-term care, such as nursing home care and similar services, accounted for the next largest category of expenditures at 17% for each fiscal year. Finally, home health waiver and Community First Choice services rounded out the top three at 14% for FY24 and 16% for FY25.
One of the areas of concern for DSS is the growth in cost per member per month (PMPM). For residents on Husky A, which includes parents and caregivers, pregnant people and their postpartum coverage, and children, the cost increased from $373 in FY24 to $395 in FY25.
Husky C costs, which include individuals 65 and older and people under 65 with disabilities, grew from $3,105 in FY24 to $3,339 in FY25. Finally, for people aged 18-64 with no disabilities or children on Husky D, costs rose from $667 in FY24 to $746 in FY25.
As a result of cost increases, DSS is projecting a Medicaid shortfall of $290 million.
Despite these challenges, Connecticut has managed to keep its Medicaid costs as a share of the total state budget lower than both its peer states and the national average. For FY24, the state’s Medicaid costs were 23.6% of the overall state budget. That’s lower than both our peer state average at 27.6% (peer states include the other New England states, New York, and New Jersey) and the national average of 29.8%.
Sabrina Trocchi, President and CEO of Wheeler Health, said that the Medicaid savings come at the cost of providers.
“Between the total Connecticut budget spend and the rate studies that the state of Connecticut has completed, we clearly understand that there’s an issue with the rates being paid in the state of Connecticut across a number of the Medicaid programs,” Trocchi said. “This data continues to drive home that providers are the ones that are bearing the financial burden for continuing to deliver the care that should be paid fully by the state.”
The second half of the meeting took on a grim tone, as William Halsey, Medicaid Director for DSS, presented a series of models that DSS developed in collaboration with the Tobin Center for Economic Policy at Yale.
The models seek to predict potential impacts to Medicaid funding for the state based on a resolution passed in the U.S. House of Representatives instructing the Energy and Commerce Committee to cut $880 million in spending. It is widely expected that those cuts will come from the Medicaid program.
“I feel like I need to ask everyone to take a deep breath,” Halsey said. “There’s a lot of uncertainty in this space.”
Halsey presented eight different scenarios for how potential cuts to Medicaid could affect Connecticut going forward. The most devastating scenario would be a reduction of matching funds from the federal government to the Husky D program, reducing the federal match from 90% to 50%, combined with the removal of the federal match minimum floor.
The amount that the federal government matches states in Medicaid is determined by a formula based on each state’s per capita income. However, the federal government imposes a 50% match floor, so that each state is always reimbursed at least 50% of their costs. Without that floor, Connecticut’s match percentage would drop to 28%.
Those two changes would cost the state over $2 billion in Medicaid costs, and impact the coverage of over 250,000 state residents.
Other potential changes include changing Medicaid funding into a block grant, penalizing the state for funding the health care of non-citizens, and reducing the federal government’s administrative cost match from 62% to 50%.
While Hasley was clear to say that these were simply models based on predictions and that there wasn’t enough information yet to know which direction the federal government would go in, the staggering numbers sent chills through the call.
“My biggest fear is this federal match floor,” Rep. Jillian Gilchrest, a West Hartford Democrat and co-chair of MAPOC, said after the presentation. “That [potential change] is the most terrifying, because when you look at the states who also would lose out, they tend to be blue states.”
MAPOC’s other co-chair, Sen. Saud Anwar, D-South Windsor, was also gravely concerned about the loss of Medicaid funding.
“In my mind, I have no doubt that if there are going to be significant cuts, we will have people die in our state,” Anwar said. “That’s a reality.”
