Healey's new $63 billion budget, up 3.8%, would eliminate coverage for weight loss drugs

Gov. Maura Healey plans to file a $63 billion fiscal 2027 budget Wednesday — a 3.8% increase that outpaces inflation and aims to rein in rising health care costs, while responding to federal funding cuts from the Trump administration.

Healey’s fourth annual spending plan arrives as state revenues are growing. But state officials are contending with a president who’s increasingly hostile toward Democratic states, an uncertain economic outlook and a rising rate of spending that fiscal hawks warn is unsustainable.

Healey said Trump has taken a “hatchet to federal funding and so many of our programs and services.”

“At the same time that the President and Congress have made these significant cuts to states around the country, we've also seen the President continue to double down on tariffs, which have only been driving the cost of everything up,” Healey said at the State House.

In a surprise move, Healey is looking to eliminate weight loss drug coverage under MassHealth. Administration and Finance Secretary Matthew Gorzkowicz said the plan is to eliminate coverage for GLP-1 weight loss drugs and to cap dental benefits at $1,000 annually in an effort to curb the cost of MassHealth.

Gorzkowicz said many other states have already taken aim at weight loss drug coverage after they exploded in popularity over the past several years.

Officials in Healey’s administration said they’re concerned about ballooning health care costs amid $3.5 billion in federal cuts for MassHealth, the state Medicaid program, as a result of Trump’s “One Big Beautiful Bill.”

The budget allocates $22.7 billion for MassHealth, or roughly $600 million more than the 2026 budget and almost $1 billion more than in 2025.

Doug Howgate, president of the Massachusetts Taxpayers Foundation, said state health care spending will be the largest challenge the Healey administration and Legislature tackle this coming fiscal year.

Spending on MassHealth grew by 10% in the fiscal year 2026 budget, Howgate said, a pace of growth that is “not something we’re going to be able to sustain.”

Meanwhile, Healey is proposing to send more than $1.1 billion to the MBTA between the budget and a separate supplemental spending package that taps revenue from the so-called millionaires tax.

The governor said that money will help “stabilize” the transit agency’s budget, which faces a deficit starting in July, and will help the T respond to a federal safety investigation.

In addition, the budget proposes $7.6 billion in local aid for school districts, an increase of $241 million. That includes $75 in minimum aid per pupil.

But there's no question Healey is staring into a punitive funding outlook from Washington. President Trump and Congressional Republicans' cuts are expected to slice roughly $3.7 billion away from Massachusetts between fiscal years 2025 and 2028, according to data from the Healey administration.

Trump’s big tax and spending bill signed last year is projected to siphon away nearly $1 billion over two fiscal years, economic experts told state lawmakers in December.

Healey’s fiscal 2027 budget incorporates $15.8 billion in federal funding, a slight drop from $16.1 billion in 2026. Gorzkowicz said state officials are not in a position to backstop any permanent revenue reductions made at the federal level.

Howgate said the federal funding cuts, coupled with an end to red-hot, pandemic-era tax collections, has put the state in a situation where spending is outpacing what officials can expect in tax collections.

“The longer that divergence goes on, the more you have what's called a structural deficit, and the less well positioned you are to an economic downturn,” Howgate said.

Trump’s bill makes a series of tax code changes that are expected to cut $664 million in tax revenue in fiscal 2026 and another $282 million in 2027, according to the state Department of Revenue.

Healey’s budget proposes phasing in a handful of changes to ease the impact of Trump’s signature legislation.

Outside of spending, Healey proposed in her budget to authorize the Massachusetts Department of Transportation to establish a speed camera enforcement program and require that all sexual assault rape kits be stored for a minimum of 15 years.

Healey also took aim at digital subscriptions, and wants to require companies to make canceling them “as simple as signing up.” She first floated the idea in her State of the Commonwealth speech last week.

Healey is filing her fiscal 2027 budget a week after officially kicking off her reelection campaign.

Three Republicans are competing to be their party’s choice to challenge the governor in the November general election, and each of them has hammered Healey on issues of affordability and spending.

Brian Shortsleeve, a Republican running for governor who oversaw the T under former Gov. Charlie Baker, in a press release called Healey's new budget "reckless" and warned of a looming budget crisis.

“Maura Healey has perfected the art of turning a prosperous state into one families and businesses can no longer afford,” Shortsleeve said in a statement.

Howgate said Healey’s budget must “correspond to reality” even as she looks to convince voters she deserves another four years on Beacon Hill.

“ At the end of the day, they're the ones who are going to have to make sure they can also demonstrate to folks that the state continues to have a balanced budget and that we're living within our means,” Howgate said. “That can sometimes mitigate things that are done purely for rhetorical reasons.”