Mid-Year Financial Plan Update Released

November 26th, 2019

The Division of Budget released their mid-year update to the State’s Financial Plan which projects a shortfall of over $6 billion for the next fiscal year. The report points to Medicaid cost overruns as the culprit, specifically singling out increases in the minimum wage for health care providers, a phase out of enhanced funding by the federal government, an increase in enrollment and costs for managed long-term care, and payments to financially-distressed hospitals.

 The report identifies two steps to address the current-year deficit. The first step will be to permanently adjust the timing of payments, alleviating $2.2 billion of the current-year deficit. The second step calls for a savings plan that may include across the board reductions in rates paid to providers and plans as well as other actions that can be done administratively to create another $1.8 billion in savings. Details on the “FY2020 Savings Plan” will not be released until next year’s Executive Budget in January.