The House Committee on Human Services Finance and Policy heard a nonpartisan budget briefing showing large projected increases in the Department of Human Services (DHS) general‑fund budget driven primarily by growth in Medicaid waiver enrollment and per‑recipient costs.

Joe Harney, a fiscal analyst with House Fiscal, told the committee the combined House HHS base budget for the 2026‑27 biennium is about $21.6 billion — roughly 32% of the state general fund — and that the Department of Human Services accounts for about $19.9 billion of that total. Harney said the November 2024 forecast produced a net $183 million reduction in the current biennium and a $523 million increase in the 2026‑27 biennium relative to the February forecast, with the increase largely driven by long‑term care (LTC) waiver growth and a smaller federal FMAP share beginning in October 2025.

“This forecasted growth in MA is really tied to the statutes that set forth the benefits and amount of enrollees,” Harney said. “If you want to adjust the growth in MA spend, you are faced with a few simple possibilities. You either have to adjust the benefits that recipients receive, or you have to adjust the amount of people who are enrolled, or you have to find the revenue to pay for the amount that is growing.”

Harney and Doug Berg, who handles Direct Care and Treatment (DCT) budget work for House Fiscal, delivered line‑item figures for major budget activities. For the 2026‑27 biennium, the presentation listed: Medicaid long‑term care (waivers) base appropriation of about $8.5 billion; Medicaid elderly and disabled basic care about $5.3 billion; Medicaid long‑term facilities about $1.3 billion; central office roughly $551 million; behavioral health fund $236 million; alternative care $111 million; general assistance $167 million; Minnesota supplemental aid $136 million; housing support $544 million; and base DHS grants about $626 million.

The November forecast showed several specific waiver changes: the CADI (Community Alternatives for Disabled Individuals) waiver average payment is projected to rise about 4.5% in fiscal 2024‑25 and about 11.8% in fiscal 2026‑27, a change Harney said amounts to about $116 million in the current biennium and $369 million in 2026‑27. The DD (Disability Waiver) average payment increase was shown at about 3.5% in each biennium, producing roughly $73 million in 2024‑25 and $107 million in 2026‑27. Harney also cited projected CADI caseload increases (1.8% in 2024‑25 and 5.6% in 2026‑27) that add substantially to the state share of costs.

Harney described a federal funding change in the forecast: the federal medical assistance percentage (FMAP) applied to Minnesota is projected to drop from 51.16% to 50.68% effective October 2025, increasing the state’s share of Medicaid costs in 2026‑27 by about $74.6 million in the presentation.

Elise Bailey, budget director for the Department of Human Services, answered committee questions about who is affected by waiver growth. Bailey said a growing share of people receiving long‑term care at home are on CADI: “In 2015… that was 23 percent; that has grown to 43 percent,” she said, referring to people 65 and older receiving long‑term care in homes and communities who are served through the CADI waiver.

Committee members asked for additional detail on assumptions and spreadsheets underpinning the forecast. Doug Berg said the new Direct Care and Treatment agency will be created July 1, 2026, and for now its budget activity remains included in DHS figures; he said the split will appear on next biennium accounting work but is shown in current spreadsheets for consistency.

Harney and Berg recommended the committee consider options the legislature historically uses to address medical assistance growth: benefit changes, enrollment policy changes, or new revenue. They noted that non‑Medicaid (direct appropriation) programs are easier to adjust because the legislature directly sets grant amounts.

The committee was told nonpartisan staff will provide links to the budget book and a summary of the governor’s budget recommendation ahead of later hearings; members were also reminded that counties and DHS will appear at subsequent meetings.

Ending: The committee is scheduled to hear county perspectives and public testimony on the governor’s budget in upcoming meetings; DHS is slated to present the governor’s proposal later in the week.