Budgets Dictate Healthcare Headlines as States Adjourn
As a handful of states adjourned from their regular sessions this past month and a new fiscal year began on July 1 in the majority of states, a litany of healthcare policy reforms and Medicaid investments were included in budget bills in the waning hours. Part of the rationale, particularly as it relates to Medicaid provisions, was to ensure adequate preparation for responding to the recently enacted federal reconciliation bill (HR 1). However, other states boosted Medicaid reimbursement rates to stabilize workforce shortages, invested in community-based mental health services, intervened in 340B reform, or sought to impose limitations or transparency requirements on healthcare stakeholders.
State Budget Highlights: Healthcare Policy Changes
Most budget decisions seen over the past month reflect divergent strategies as to how states are beginning to grapple with reduced state revenue, rising healthcare costs, and a pending federal Medicaid funding cliff. Here’s a quick look at what we have been tracking over the past month.
California's Medicaid Enrollment Freeze
California enacted a $321 billion spending plan, the budget freezes enrollment in Medicaid for undocumented adult immigrants beginning in January 2026.
Florida Boosts Long-Term Care Facility Rates
Florida’s $115 billion budget for the next fiscal year increased Medicaid rates for long-term care facilities to the tune of $286 million in total, in addition to a statewide expansion of a Medicaid managed care program for individuals with intellectual and developmental disabilities.
Minnesota Eliminates Adult Immigrant Coverage
Minnesota’s $66 billion funding package eliminated Medicaid coverage for undocumented adult immigrants (approximately 15,000 enrollees) but left children still eligible for the program.
Ohio's Conditional Medicaid Expansion Requirements
Ohio’s new fiscal year budget includes a requirement that the state must drop Medicaid expansion if the federal match were to ever be reduced below 90 percent; a requirement that Medicaid enrollees in the expansion population must be redetermined every six months; the establishment of a Rural Ohio Tax Pilot Program authorizing counties to establish local hospital assessments; and payment and transparency requirements pertaining to 340B stakeholders.
Wisconsin's Hospital Provider Tax Increase
As part of Wisconsin’s $111 billion budget for the next two fiscal years, the bill includes a significant increase in the state’s hospital provider tax from 1.8 up to the 6 percent net revenue threshold allowed under federal law. It’s expected to generate $1.5 billion in additional Medicaid dollars for the state.
Looking Ahead: States Navigate Future Medicaid Funding
Given that most of the significant Medicaid cuts from the federal reconciliation bill were provided an extended effective date in 2027 or 2028, it’s unlikely that many states will be coming back into special session over the coming months to grapple with any immediate reduced federal Medicaid revenue. With an exception for some who may make an attempt to amend their hospital provider tax rate. Expect most states to navigate the future Medicaid funding cliff with their state budgets beginning in the 2026 regular sessions.
Track Health Care Policy
The ever-evolving state health policy landscape will continue to influence how health care organizations make business decisions. MultiState's team pulls from decades of expertise to help you effectively navigate and engage. MultiState's team understands the issues, knows the key players and organizations, and we harness that expertise to help our clients effectively navigate and engage on their policy priorities. We offer customized strategic solutions to help you develop and execute a proactive multistate agenda focused on your company's goals. Learn more about our Health Care Policy Practice.