The Boston Herald
By: Stan Soloway, CAMI Board Chair
Governor Maura Healey won reelection last week after a campaign focused on key issues like housing, public safety, and immigration. But over the course of Gov. Healey’s reelection bid, a major issue went unaddressed: the looming Medicaid provisions mandated by the One Big Beautiful Bill Act (OBBBA) that begin in January 2027.
These changes will be hugely impactful as they impose new requirements to prevent dual enrollment across state lines, new work requirements for able-bodied adults, and twice-yearly eligibility reviews, instead of annual redeterminations.
The law also imposes significant new potential costs on states for Medicaid error rates.
Beginning in October 2029, states with Medicaid eligibility error rates above 3% must repay part of the federal share of those payments. In 2023, its latest reporting year, Massachusetts posted a 5.1% eligibility error rate, meaning it issued about $661.2 million in improper payments to beneficiaries. Under OBBBA’s new penalty formula, this translates to a penalty of roughly $272 million a year.
The good news is that Massachusetts can fix this. In 2025, CMS documented more than $37 billion in improper Medicaid payments, with nearly 80% resulting from missing documentation and incomplete administrative steps rather than intentional fraud. The problem, therefore, is less about individuals’ “cheating” or “abuse” than it is about system deficiencies that directly lead to waste. Even so, it could prove costly for state budgets.
This is especially true for Massachusetts, which is currently grappling with budgetary constraints after narrowly closing an over $3.3 billion budget gap this summer amid what House Speaker Ron Mariano characterized as “a very, very difficult fiscal year.” As recently as 2024, a projected $1 billion tax shortfall forced the state to make $375 million in midyear cuts and to redirect more than $500 million meant for the state’s rainy day fund to balance the budget.
Massachusetts’ state-administered public health insurance program, MassHealth, also projects the state will lose about $3.5 billion annually once OBBBA’s changes are fully implemented, according to a recent report from the Executive Office of Health and Human Services.
Considering MassHealth makes up nearly 40% of state spending, this loss will place added pressure on the state’s already strained finances.
Massachusetts cannot undo the federal cuts that account for most of this figure. However, through effective Medicaid eligibility modernization with updated systems that help identify and resolve issues before they lead to improper disenrollment, it can avoid adding substantial federal penalties on top of the cuts. The state can also avoid large increases in uncompensated care that hospitals may not be able to absorb as Medicaid supplemental payments to hospitals have also been cut.
Successful implementation will depend on Governor Healey taking immediate, decisive steps to modernize the eligibility system, beginning with a sustainable technology investment plan. While the state has already earmarked $21 million for upgrading its computer systems and boosting call center staff to prepare for these changes, the expected penalty for exceeding the 3% threshold is nearly 13 times higher, and warrants a much more comprehensive strategy.
The technology and increased call center capacity plan should not only commit more resources but also prioritize protecting the funding across future budget cycles so it cannot be redirected or siphoned off by competing priorities before the work is complete.
In a similar vein, Massachusetts will need to work with trusted private-sector partners whose technology and related expertise would help save the state hundreds of millions of dollars. This
requires carefully balancing the hiring of new, permanent personnel with bringing in experienced contractors who can help implement new technology solutions that automate cross-checks to prevent duplicate enrollment, and attack the root causes of waste with real-time income and work-requirement verification against employment databases.
Having now secured another term, Governor Healey now has both the authority and the responsibility to prevent these penalties and keep Massachusetts afloat financially. And while Governor Healey may have four more years to govern, whether Massachusetts is spared a $272 million penalty will depend on the plan she puts in place in the coming months.