Massachusetts is planning the next chapter of its Medicaid 1115 demonstration, the engine behind a decade of value-based reform and the lowest uninsurance rate in the nation. This time, it is doing so against significant federal headwinds.
For nearly three decades, Massachusetts has run its Medicaid and CHIP program, MassHealth, largely through a Section 1115 demonstration: a waiver that lets a state depart from standard federal Medicaid rules to test reforms, with federal approval. These demonstrations run in roughly five-year cycles, and each renewal is a chance to lock in what worked and rethink what did not. The current demonstration runs through the end of 2027. In late 2025 the state began planning the next one, covering 2028 through 2032, and the early documents reveal both an unusually strong track record and an unusually difficult environment in which to extend it.
What the waiver has built
By the state’s own account, the demonstration has been the engine of Massachusetts’ coverage and delivery-system gains. The Commonwealth’s uninsurance rate sits at roughly three percent, the lowest in the country. Across the last two cycles the waiver financed a deliberate shift away from fee-for-service toward accountable care. Today, seventeen accountable care organizations (ACOs) serve about 1.1 million members and include every major health system and all of the state’s federally qualified health centers. A newer primary care “sub-capitation” model, which pays practices a predictable monthly amount rather than a fee per visit, now reaches roughly 900 practices covering about 92 percent of eligible members and has raised primary care investment by more than $150 million a year.
The waiver funded much more than payment reform:
- An expanded continuum of behavioral health and substance use care, credited with easing the emergency-department boarding crisis.
- Health-related social needs (HRSN) services, housing and nutrition supports that moved from a time-limited pilot into the core ACO benefit and reached about 22,000 members.
- A Quality and Equity Incentives Program tying hospital and health-plan payment to closing disparities in access and quality.
- Workforce investment exceeding $300 million through loan repayment, residencies, and fellowships for primary care and behavioral health providers.
- A reentry initiative to cover certain services before a person’s release from incarceration.
- Steady, predictable funding for the Commonwealth’s safety-net providers.
The goals for 2028-2032
MassHealth’s draft goals for the next demonstration read as continuity rather than reinvention: continue to promote value by improving access, quality, and efficiency; strengthen care delivery in primary care, behavioral health, and pediatrics, with an emphasis on prevention and chronic-disease management and a continued move away from siloed fee-for-service; sustain the safety net through predictable funding tied to accountable care; and maintain near-universal coverage.
The headwind that makes this renewal different
What sets this cycle apart is the federal climate, and the state’s roadmap is unusually blunt about it. A federal reconciliation law enacted in July 2025, which the state refers to as the One Big Beautiful Bill Act, is expected once implemented to cost Massachusetts up to roughly $3.5 billion in annual federal health-care funding and to push as many as 300,000 residents out of coverage. Federal guidance has also shifted underneath the program: regulators have rescinded earlier policy supporting health-related social needs services and signaled they will no longer approve the continuous-eligibility or workforce-investment authorities that states, Massachusetts included, had used to keep people insured and build their care workforce. Layered on top is a state budget squeeze, with MassHealth consuming roughly a third of the Commonwealth’s budget.
The practical consequence is that some of the demonstration’s recent innovations must be scaled back even as the state tries to defend its core. MassHealth has said it will have to end continuous eligibility for people experiencing homelessness and for those leaving incarceration, policies built specifically to prevent coverage gaps for two especially vulnerable groups, because the federal authority for them is being withdrawn.
What MassHealth plans to request
Within those constraints, the state’s interim updates describe a request built mostly around preserving and refining proven elements, with a few additions:
- Accountable care and primary care. Renew the ACO program and the primary care sub-capitation model, with possible refinements to improve access, quality, and efficiency.
- Behavioral health. Renew authority to draw federal funds for care in residential and inpatient settings that qualify as institutions for mental diseases, along with a range of diversionary services such as acute treatment, stabilization, assertive community treatment, and recovery coaching.
- Social needs. Maintain housing and nutrition HRSN services despite the loss of supportive federal guidance.
- Reentry. Continue the reentry initiative and extend community supports for justice-involved members into the pre-release period.
- Two notable new asks. Coverage of contingency management, an evidence-based therapy using incentives that is the most effective treatment for stimulant use disorder, a condition affecting an estimated 40,000 members with no FDA-approved medication; and coverage of traditional healing services for American Indian and Alaska Native members receiving care through Indian Health Service or tribal facilities, which carries full federal funding and therefore no state cost.
Process and how to weigh in
The timeline is deliberate. The roadmap appeared in fall 2025, followed by public input through spring 2026. The state expects to post a formal extension request for public comment in summer or fall 2026, submit it to the federal government by the end of 2026, negotiate through 2027, and begin the new demonstration in 2028. Everything in the interim documents is, in the state’s own words, preliminary, pre-decisional, and subject to change. MassHealth has invited feedback through a dedicated channel and a series of virtual public meetings throughout 2026.
Why it matters beyond Massachusetts
Massachusetts is often a bellwether in health policy, and this renewal is a useful test of a question many states will soon face: how to protect value-based, whole-person Medicaid, accountable care, behavioral health integration, and investment in social needs, when federal funding and federal flexibility are contracting at the same time. MassHealth’s answer, so far, is to hold the line on the delivery-system reforms it considers proven while absorbing the coverage and eligibility rollbacks it says it cannot avoid. Whether that balance holds, and what it means for the members with the least margin for a gap in coverage, will be worth watching well beyond the Commonwealth.