Healthcare Fund That Covers Massachusetts Uninsured Facing $600M Deficit

BY ALISON KUZNITZ

The state account that handles the cost of healthcare for uninsured or underinsured Bay Staters could reach a $600 million deficit by fiscal 2028 as patients, care providers and state officials struggle with the human and financial impacts of federal policy changes, a Healey administration undersecretary said Tuesday.

The account faced a $300 million shortfall last year, forcing lawmakers to raise assessments on hospitals to cover costs. It now appears the fund’s deficits are widening, putting more pressure on policymakers to come up with solutions. 

The Health Safety Net Fund is “under a lot of strain,” Undersecretary of Health Amy Rosenthal acknowledged during a health equity summit that united government officials, community health leaders, medical providers and students at UMass Boston.

“It will continue to only grow in its challenges,” Rosenthal said. “The projection that we’re using by FY ’28 is there will be a $600 million hole as we see more and more people become uninsured.”

The fund typically has about $318 million available for uncompensated care delivered at acute hospitals and community health centers, but $418 million is available in fiscal 2026 due to funding from the Legislature and federal revenues, according to a spokesperson for the Executive Office for Administration and Finance. That extra money combined with a cheaper pharmacy formulary brings the projected shortfall to $150 million in fiscal 2026, the spokesperson said.

State officials project 300,000 residents could lose their insurance through MassHealth or the Massachusetts Health Connector due to federal policy changes within the One Big Beautiful Bill Act.

The biggest losses will start in 2027, as new Medicaid work requirements and more frequent eligibility checks take effect. The turbulence comes as MassHealth Undersecretary Mike Levine steps down from his post next week.

Rosenthal said the Centers for Medicare & Medicaid Services released highly anticipated guidance Monday about how states are supposed to implement and administer the new requirements. The guidance is almost 400 pages.

“We are still literally actively processing and understanding what that is,” Rosenthal said. “I think that there is certainly some concerns about what that guidance will say and what kind of disruption that will provide. But I would say the next couple of days and weeks, we’ll have a better handle on it.”

MassHealth is working to “minimize” the actions that people need to take to stay covered, including setting up infrastructure to automatically enroll eligible individuals, Rosenthal said.

In January, the Healey administration rolled out its plan to spend $250 million on heavily subsidized insurance offered through the Massachusetts Health Connector, in an attempt to help people struggling with the impacts of expiring federal tax credits.

Massachusetts is expected to lose $3.5 billion in federal dollars annually once all healthcare provisions of the federal law take. Lt. Gov. Kim Driscoll said the looming “federal headwinds” feel more like a “federal hurricane.”

“I think these cuts are driven by profoundly mean-spirited mentality, like they’re doing exactly what they’re designed to do — to target the most vulnerable members of our society in the cruelest ways,” Driscoll said.

Driscoll also called the federal cuts “dumb,” saying, “If the federal government turns its back on providing for the most vulnerable, it only drives up the cost of care for everyone.”

Jen Cedor, supervising attorney at Health Law Advocates, spoke about using medical-legal partnerships to stave off coverage losses for immigrants. Some 36,000 immigrants lost healthcare subsidies on Jan. 1, in one of the first major cover losses due to shifting federal policy.

“We partner with hospitals, and community health centers, and organizations to represent folks who are actively facing health crisis and at the same time facing issues with their insurance coverage and service denials,” Cedor said. “And so we work with the providers, case workers, everyone on the health team in order to advocate for access to care and coverage for individuals.”

Ilana Steinhauer, executive director of the healthcare program Volunteers In Medicine Berkshires, suggested setting a statewide self-pay rate that is “reasonable and affordable” for people who lose their insurance.

“We need to do that ASAP,” Steinhauer said. “This is important, so that when people come in and they do need something, we know what the cost is going to be before they have that bill come to them. So we can have shared decision making and hopefully avoid those costly ER visits.”

Massachusetts did receive $162 million from the federal law to bolster rural health. State officials are reviewing proposals aimed at closing equity gaps in rural areas and investing in new ways to deliver care, Driscoll told the News Service. Rosenthal said that a Training Healthcare for Retention, Innovation and Excellence, or THRIVE initiative, will be focused on “providing support and strengthening the full continuum of the healthcare workforce in rural communities.”