INSIDE THE ISSUE

> The Governor’s FY26 Budget
> Consensus on Violence Prevention Bill
> Executive Orders
> Healthcare in Budget-Cutting Crosshairs

MONDAY REPORT

Governor Releases FY26 Budget Proposal

Last week, the Healey-Driscoll Administration unveiled a $62.1 billion budget proposal for Fiscal Year 2026 (FY26), which includes $1.95 billion in surtax funding aimed at stabilizing the MBTA, boosting investments in higher education and infrastructure, and managing costs to maintain services that support the affordability and quality of life across the commonwealth. The proposed budget represents a 3% increase over the current Fiscal Year 2025 spending estimates and is based on a consensus tax revenue projection of $43.614 billion for FY26, including $2.4 billion in income surtax collections.

The Executive Office of Health and Human Services (EOHHS) stands out as the largest Massachusetts secretariat, overseeing 11 agencies with more than 23,000 employees, and a projected budget of over $33 billion for FY26. In the governor’s H.1 budget, there is a 12.6% increase in the MassHealth budget relative to the FY25 budget, while a 4.8% increase over projected FY25 spending. Notably, the budget assumes most provider reimbursement rates, including those to hospitals, will be held flat, with mention of some “targeted adjustments.” MassHealth is planning a $13.8 million increase in primary care investments, with an additional $5 million allocated to expanding access to behavioral health services for the state’s most complex members.

A major component of the Medicaid budget is the new pharmacy assessment proposal, which will place a $2 tax per prescription or 6% of total revenues on outpatient pharmacies, whichever is less. MassHealth will use this funding and related federal revenues to support an increase in MassHealth pharmacy reimbursement rates and other MassHealth program spending. There is also a proposed penalty on drug manufacturers that increase prices on a prescription drug in excess of the change in the Consumer Price Index.

Of note, to manage long-term spending growth in the Personal Care Attendant (PCA) program, the proposal makes a recommendation to tie funding to the Health Policy Commission’s Health Care Cost Growth Benchmark. The line item for the Affordable Care Act expansion population has seen a significant increase in the governor’s budget proposal, rising to $3.6 billion, up from $2.4 billion in FY25. This group benefits from the enhanced federal match of 90%, which has been a key focus for GOP lawmakers in D.C. pushing for future reforms (see related story below).

Hospitals, Unions Unite to Press for Passage of Violence Prevention Bill

MHA will soon be releasing its legislative package – a collection of priority bills to continue advancing the progress on healthcare that the legislature and Healey-Driscoll Administration made during the just-ended legislative session.

The proposed legislation is the result of input from MHA’s membership and the association’s allies, as well as from legislative sponsors of the bills.

Heading the list is a workplace violence prevention bill that advanced last year. Now, MHA and the state’s two largest healthcare unions are officially partnering to put it back on the docket, saying it should be an immediate priority in the current session.

MHA, the Massachusetts Nurses Association, and the Massachusetts Division of 1199SEIU wrote legislators last week asking them to co-sponsor the re-filed Act Requiring Health Care Employers to Develop and Implement Programs to Prevent Workplace Violence (H.3502/ S.1639), sponsored by Rep. John Lawn (D-Watertown) and Sen. Joan Lovely (D-Salem).

The bills would develop and monitor new statewide standards for evaluating and addressing hospital security risks, while ensuring inclusivity of patient health equity considerations and the needs of patients in a behavioral health crisis. In turn, hospitals would implement workplace violence prevention and training programs based on those standards. The legislation would also increase penalties for those who, with intent, knowingly and deliberately assault caregivers. And victims of violent acts who are pursing related legal action would have increased supports made available to them.

Other facets of the bills include regular reporting of assaults to the Department of Public Health; robust information-sharing between healthcare facilities and public safety agencies for patients involved in the criminal justice system; and the establishment of an interagency task force to address the lack of safe placement options for behavioral health patients in crisis, state-agency involved patients, and criminal justice-involved individuals with a behavioral health diagnosis.

“We came together with MNA and SEIU to craft this legislation because there is no greater point of consensus than the urgent need to protect the talented and committed caregivers who work on behalf of patients, often at risk, every day across the commonwealth,” said Steve Walsh, MHA’s president & CEO. “We have the power to stem this unacceptable trend, and we look forward to working with our elected leaders and partners in organized labor to make it happen.”

Healthcare facility workers continue to suffer violent assaults and other incidents of workplace violence at least five times more often than the average private sector worker. Meanwhile, employee surveys show troubling increases in violence across Massachusetts’ hospitals, with a physical assault, verbal abuse or serious threat now occurring nearly twice every hour. Workforce shortages and strains, unstandardized security prevention/planning, and a lack of appropriate consequences all contribute to these unacceptably dangerous working conditions.

At the outset of the session, the legislature is often preoccupied with the filing of the governor’s budget, and then the subsequent filing of the House’s proposed budget. However, MHA, the MNA, and 1199SEIU expressed hope that the workplace violence prevention bill could be given priority during the early weeks of the session.

Sweeping Healthcare Actions Emanating from D.C.

Now that Donald Trump is once again President of the United States, some dramatic changes in the healthcare sector will occur – or already have.

By executive order in the hours following his swearing in, the president announced his intention of withdrawing the United States from the World Health Organization and also revoked one of former President Biden’s first executive orders from January 2021 that outlined the coordinated federal approach to confronting COVID-19.

Among other rescinded Biden orders were ones relating to those outlining the federal government’s approach to “responsible” artificial intelligence, an order for three new drug pricing model pilot programs under the Center for Medicare and Medicaid Innovation, and the Affordable Care Act healthcare marketplace enrollment extension.

The U.S. Department of Health and Human Services last week ordered a pause on grant and research decisions as well as all public facing communications, notices, and routine data reports. For example, the CDC’s Morbidity and Mortality Weekly Report released each Thursday fell silent last week.

The new president issued an executive order ending the use of diversity, equity, and inclusion (DEI) practices in federal hiring processes and scrubbed federal rules and advisories that include DEI, while also eliminating DEI positions throughout the federal government. Through his executive order, President Trump revoked a 1965 executive order that President Lyndon Johnson signed, which prohibited discriminatory hiring and employment practices for private government contractors. That Trump directive also encourages the private sector to phase out DEI and instructs each federal agency to “identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.”

Through another executive order, the president vowed a forceful crack down on undocumented immigrants. In a Justice Department memo to all employees on January 21, the new administration said that any local and state officials that attempt to interfere with the federal government’s deportation efforts would be subject to prosecution. The president’s border security executive order revokes a Biden Administration executive order which listed hospitals among the “sensitive” areas protected from enforcement action. A full list of the president’s orders is here.

House Majority Considers Significant Health Cuts

The Republican-controlled U.S. House Budget Committee has released a tight timeline to consider a budget resolution in February to be followed soon after with the development of a reconciliation package. That package is expected to include an extension of the Trump Administration tax cuts, border security, energy and defense investments – all of which will incur significant expenditures.

To pay for such programs, the committee floated a list of reconciliation options, which includes extensive healthcare proposals that, if enacted, could result in billions in savings – while also further destabilizing hospitals and health systems. The options include eliminating Medicare bad debt, imposing Medicare site neutrality, cutting Graduate Medical Education, eliminating hospital non-profit status, and eliminating an individual’s tax deduction for charitable contributions to health organizations.

The extensive list of options also includes numerous Medicaid proposals, including transferring Medicaid to a per capita cap program; restricting Medicaid state-directed payment and provider assessments; lowering the Medicaid federal medical assistance percentage floor, and requiring Medicaid work requirements.

It is unclear how many of these proposals can gain traction, but Medicare and Medicaid, long a target for fiscal conservatives, are obviously now in the crosshairs.

John LoDico, Editor