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Governor’s Proposed Medicaid Budget for 2024-2025

Kyle Fisher

With his second proposed budget, Governor Shapiro has provided a spending plan for Fiscal Year 2023-24 that would maintain existing Medicaid service and eligibility levels.  As with his first proposed budget, health and Medicaid-related initiatives are primarily tied to mental health expenditures and intellectual disability and autism waiver programs. 

The Governor’s budget assumes a slight Medicaid enrollment decline in the upcoming fiscal year due to the “unwinding” of the Medicaid continuous coverage requirements.  Major Medicaid cost drivers include managed care rate increases and assessment revenue, the phase-out of the enhanced federal match tied to the continuous coverage protections, and an increase in the state’s base federal match rate (FMAP) from 54.12% to 55.09% effective October 2024.   

The Governor proposes a general fund budget of $48.3 billion for FY 2024-25.  This would be an increase of $3.7 billion (8.4%) over the current fiscal year budget.  For the Department of Human Services (DHS), the Governor proposes a general fund spend of $19.3 billion and a total budget of $58.1 billion, which includes both federal and state funds.  The total budget would represent an increase of $2.04 billion (4.3%) from the current fiscal year. 

The Medical Assistance appropriation is proposed at $28.2 billion, of which $18.1 billion (64%) is federal funds, $6.05 billion (21%) is state funds, and $3.8 billion (13%) is provider assessments and other augmentations.  This would be an increase of 4.5% from the current fiscal year.  Of the overall MA budget, $23.1 billion is allocated for capitation payments to the Medicaid managed care organizations (including both PH and BH HealthChoices).

The Long-Term Living appropriation is proposed at $15.5 billion, of which $8.6 billion (55%) is federal funds, $5.7 billion (37%) is state funds, and $1.2 billion (8%) is provider assessments and other augmentations.  This would be an increase of 1.4% from the current fiscal year.  The Community HealthChoices appropriation ($14.4 billion) comprises the vast majority of the Long-Term Living budget.    

Initiatives included in the proposed Human Services and Medicaid budgets include:

  • Expanding Intellectual Disability & Autism Services – $34.2 million in state general funds is provided to serve an additional 1,250 people in the Community Living Waiver and an additional 250 people in the Consolidated Waiver.  Multi-year capacity growth is proposed through a shift a to management by budget rather than waiver slots.
     
  • Increasing Payment Rates for Intellectual Disability & Autism Services – $483 million (including $217 million in state funds) is provided to increase Office of Developmental Program waiver reimbursement rates by 12%, and $109 million is provided for one-time supplemental payments this fiscal year to improve staffing recruitment and retention.  (DHS will also undertake a study of the reimbursement rates for Personal Assistance Services in the Office of Long Term Living waiver programs.) 
     
  • Expanding County-Level Mental Health Services – $20 million is provided to improve the county-based infrastructure for providing MH and drug and alcohol treatment services.  Combined with the $20 million increase in the current FY budget, this would increase the total investment to $40 million of the $60 million pledged by the Governor over multiple budget years. 
     
  • Expanding School-Based Mental Health Services – $100 million is again provided to the school-based block grant to improve mental health resources for school students and staff.
     
  • Supporting the 988 Suicide & Crisis Lifeline – $10 million is provided to sustain operations and capacity for the 988 Lifeline and enhance crisis intervention services.  Another $5 million is provided to establish and maintain walk-in mental health crisis stabilization centers.
     
  • Expanding Services for Older Adults – $10 million is provided for workforce stabilization and Area Agency on Aging infrastructure.  Another $10 million is provided for the Dept. of Health’s Long Term Care transformation office, which oversees nursing facilities.    
     

For more information, see the DHS Budget Briefing slides here and the DHS Executive Budget (“Blue Book”) here.