The Health Resources Division (HRD) outlined to the subcommittee on March 1, 2025, a fiscal 2026–27 budget request that shifts more costs to the state as the federal Medicaid matching rate (FMAP) declines. HRD’s all‑funds request includes a $47.2 million increase in general fund, nearly $5 million in additional state special revenue and an overall federal funds reduction of about $140.7 million, with several present‑law adjustments tied to FMAP changes and caseload projections.

Why it matters: the federal FMAP affects how much of Medicaid costs the federal government will cover. A lower FMAP raises the state’s general‑fund obligation for Medicaid, affecting Montana’s budget planning and potential tradeoffs across programs.

Legislative fiscal staff framed the numbers in detail. A staff presenter summarized the division’s funding mix: roughly 76.2 percent federal funds, 15.6 percent general fund and 8.2 percent state special revenue for the HRD request. The staff noted FMAP fell from 62.37 percent for fiscal 2025 to a projected 61.47 percent for fiscal 2026, a roughly 0.9 percentage‑point decline that increases state match pressure.

The department and legislative fiscal staff tied that FMAP movement to a set of present‑law adjustments (DPs). Paired DPs address core services for both Medicaid expansion and traditional Medicaid; several are caseload adjustments that do not change eligibility or covered services but change projected spending because of utilization and enrollment trends. For example, an expansion core services package (DP 11891) proposes a reduction driven by projected lower utilization; by contrast, a traditional Medicaid core package (DP 11991) requests an increase tied largely to pharmacy spending projections.

A single new proposal, DP 11803, realigns $3,000,000 annually by reducing general fund and increasing state special revenue from the I‑155 Healthy Montana Kids (HMK) account. The presenters said the switch does not change total program cost but uses available HMK fund balance and expected revenues to offset general fund needs.

Committee members asked for more granular numbers. Presenters said FMAP projections (example figures cited in testimony) were: fiscal 2025 federal match ~62.37%, fiscal 2026 projected ~61.61% (department projection earlier in the presentation), and fiscal 2027 projected ~61.47%. The staff also said the present‑law FMAP adjustments result primarily in fund switching (federal to state/general fund changes) rather than policy or eligibility changes.

The department noted separate drivers within HRD. Medicaid expansion costs were described as concentrated in hospital supplemental payments, pharmacy and physician services; HRD projected caseload decreases for expansion but increases in traditional Medicaid pharmacy spending. The Healthy Montana Kids (HMK) program showed a recent enrollment decline that reduced its appropriation requests for subsequent years.

Subcommittee next steps and data follow‑up: legislators sought more detail on FMAP sensitivity (dollar effect per percentage point) and asked LFD and department staff to provide clearer dollar translations of small percentage changes. The chair and staff agreed to a follow‑up meeting to consolidate data requests and to provide additional supporting tables and longitudinal reports. LFD staff offered to meet with department staff during lunch or after floor session to coordinate responses and consolidate incoming data requests.

Ending: HRD’s budget presentation concluded with committee members signaling follow‑up work on FMAP sensitivities, caseload methodology and the $3 million fund switch to the I‑155 HMK account. The division and LFD agreed to provide supplemental materials and refined estimates as the committee continues review.