Connecticut Comptroller Sean Scanlon urged state lawmakers on Monday to craft more realistic Medicaid budgets, warning that surging Medicaid costs and shrinking federal aid could push the state toward a fiscal crisis. Speaking during a mid-afternoon online news conference on fiscal and economic trends, Scanlon said he did not call for changing Connecticut’s budget caps that he said limit the General Assembly’s ability to respond to the Medicaid challenge.
Scanlon said the state’s Medicaid spending is a central driver of budget strain, telling lawmakers that “We have an overspending problem,” and that “60% of that overspending right now is happening with Medicaid.” He also said “I think that every option should be on the table for us as we explore how to make sure that the million or so people who get Medicaid can continue to get that … health care that they need.”
Medicaid in Connecticut is described as an omnibus federal program run cooperatively with states, providing medical and behavioral health services, substance abuse treatment, and nursing home and in-home elder care. The Connecticut Department of Social Services’ Medicaid line item is $3.7 billion, one of the state’s largest annual expenses and about 14% of the General Fund, according to the comptroller’s discussion.
Scanlon said enhanced federal Medicaid funding ordered in response to COVID-19 expired in 2023, while Medicaid demand has remained much higher than pre-pandemic levels. He said the state has struggled to keep costs under control, noting that the Department of Social Services overspent its Medicaid budget by almost $160 million two fiscal years ago and by more than $300 million last year, based on the comptroller’s annual reports. Lamont’s budget office, he said, already projects more than $110 million in cost overruns this fiscal year.
The comptroller also raised the prospect of additional federal pressure. He said President Donald Trump and Congress ordered federal Medicaid spending cuts of more than $900 billion nationwide by 2034, with states starting to feel significant effects by 2028, and he said analysts had not yet projected what the impact would be for Connecticut. Scanlon warned that Medicaid spending reductions would be harmful for patients and for the state economy, adding: “It sounds somewhat counter-intuitive, but the more money you spend (up front,) the less money you spend” in the long run.
Scanlon’s remarks also touched on Connecticut’s budget-cap framework. The state has run surpluses topping $1.8 billion—equivalent to 8% to 9% of the General Fund—since aggressive budget caps were installed in 2017, and Lamont’s budget office has said the surpluses have helped build reserves and pay down pension debt that still exceeds $33 billion. The fiscally moderate governor has been wary of adjusting the caps, even as fellow Democrats in the General Assembly majority have criticized them as diverting too much toward debt and weakening health care, education, municipal aid and other core services.
In Scanlon’s view, the current problem is not that the state is overspending, but that it is underbudgeting. He said, “I think that the issue that’s happening right now is less an issue of overspending and more an issue of under budgeting,” and urged officials “to craft more realistic budgets.” He said recent years’ legislative and executive budgeting has underfunded Medicaid by authorizing amounts that ignore growth in demand instead of using special procedures to override budget caps, allowing the Medicaid program to operate at a deficit and then covering cost overruns shortly before June 30, when budget cap rules are more flexible about handling crises.
Sen. Cathy Osten, a Democrat from Sprague and cochairwoman of the Appropriations Committee, said the state has a Medicaid problem and that officials will have to address it, while also saying all state officials need to acknowledge the full reality of federal policy changes that are likely to increase demand. Osten said federal cutbacks on health care, nutrition and other human service programs likely will push demand for Medicaid-funded services to new heights.
Lamont’s budget spokesman, Chris Collibee, said only that the administration would release its next Medicaid funding proposal on Feb. 4, when the governor recommends his budget adjustments for the 2026-2027 fiscal year. Collibee said the proposal’s goal would be “to enhance affordability and opportunity for all Connecticut residents.”
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