States’ total Medicaid spending grew slightly in the fiscal year 2019, even though program enrollment fell off amid a strong economy with low unemployment, according to a survey of state Medicaid directors released Friday by the Kaiser Family Foundation.
The report found that overall Medicaid spending growth fell to 2.9% in 2019 thanks to a drop off in enrollment, but state officials expect that number to climb back up to 6.2% in 2020. State Medicaid spending grew slower than total spending in 2019. That trend will probably continue in 2020 because of help from federal money and savings from provider taxes or other budget offsets.
Medicaid directors contend that growing prescription drug costs (especially specialty drugs), provider rate hikes and an aging population with increasing long-term care costs are driving total Medicaid spending.
States think that the 1.7% drop in enrollment in 2019 and projected 0.8% growth in 2020 is mostly due to a robust economy. But they say a few state-level initiatives may have played a role as well, including changes in renewal practices, upgraded eligibility systems and better verification and data matching efforts.
The percentage of uninsured people in the United States increased in 2018, mainly because of a decline in Medicaid coverage. That suggests some people who lose Medicaid coverage might not have access to employer-based insurance and aren’t buying coverage for themselves.
The Kaiser Family Foundation found many states continue to pursue work or community engagement requirements to limit Medicaid eligibility. Kentucky, Arkansas and New Hampshire have had their work requirements put on hold by the courts, and Indiana is in the middle of a lawsuit related to its pending work requirement waiver.
States are also trying to tackle drug costs through their Medicaid programs by pursuing more value-based contracts, increasing transparency requirements for pharmacy benefit managers and instituting prior authorization for costly drugs.
Officials said they’re looking to address the opioid crisis through prescribing guidelines, drug utilization reviews, prior authorization and monitoring programs for prescription drugs. Several states are also trying to expand access to medication-assisted treatment.
West Virginia has taken several measures to address opioid substance use disorders. While the state experienced an overall decline in Medicaid enrollment in the past couple of years, it has seen alarming growth in the number of foster kids enrolled because of their parent’s opioid use, according to Cindy Beane, commissioner for the West Virginia Bureau for Medical Services. Parents are more likely to lose custody of their children if they suffer from substance use problems.
Medicaid and the Children’s Health Insurance Program cover roughly 72 million people or about one in five Americans. Medicaid also accounts for 1 in 6 dollars spent on healthcare and more than half of long-term services and support spending.
Most states’ improving economy since the end of the Great Recession has reduced unemployment and propped up state budgets as their revenue grows. That has helped keep Medicaid enrollment in check and allowed states to expand or improve their Medicaid programs by increasing the number of people who are eligible for Medicaid or raising provider rates.
Implementation of the ACA’s coverage expansion has also affected Medicaid spending and enrollment, as 36 states and Washington, D.C., have expanded Medicaid under the ACA with three more—Idaho, Nebraska and Utah—expected to join them in 2020 or 2021.
The economy and political elections will decide the future of Medicaid after 2020, as debates about Medicaid expansion, demonstration waivers, the Affordable Care Act and Medicare for All rage on among voters and lawmakers.