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The Role of MassHealth “Budget Neutrality” Requirements in Designing Policies to Expand Health Coverage

The feasibility of certain aspects of the various health care reform proposals currently being considered in Massachusetts is heavily dependent on the availability of federal dollars. Under the MassHealth waiver, there is a limit on the total federal dollars available, known as the “budget neutrality ceiling.” Budget neutrality considerations may impose a constraint on the flexibility the state has to expand MassHealth eligibility as one approach to reducing the number of people without health insurance. This issue brief reviews the concept of budget neutrality and, within its constraints, the options available to maximize federal dollars for coverage of the uninsured.

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