Among state budget items, MassHealth is well known as one of the largest spending categories, while its role as a significant source of federal revenue is often overlooked. This brief takes a look beyond the budget totals to help stakeholders better understand the actual state cost of MassHealth when factoring in the state and federal partnership that finances this program. In fiscal year (FY) 2019, the state projects it will spend approximately $16.7 billion on MassHealth. This total (or “gross” amount) is approximately 36 percent of total estimated state spending for FY 2019. However, because the federal government reimburses Massachusetts for more than half of its MassHealth spending, the state’s actual cost for MassHealth (“net of”—or minus—federal revenue) is $8.3 billion or 24 percent of total state spending in FY 2019. Fully understanding the actual state cost of MassHealth requires appreciating the details of the federal and other revenue sources that support this essential and comprehensive program.
