Kaiser Reports Slowdown in Medicaid Growth

Nov. 2, 2012

Following a 50-state survey of state Medicaid programs, the Kaiser Family Foundation has issued a report, Medicaid Today; Preparing for Tomorrow: A Look at State Medicaid Program Spending, Enrollment and Policy Trends (PDF), that shows a slowdown in the annual growth in spending on Medicaid.

One reason for the spending decrease was enrollment in Medicaid grew modestly as the economy began to show slow improvement. Enrollment growth was 3.2 percent compared with 4.4 percent in 2011 and 7.2 percent in 2010. In the fiscal year that ended for most states in June, total Medicaid spending grew by only 2 percent, down from the nearly 10 percent increase in 2011 as Americans lost jobs and health insurance during the recession.

Facing serious financial challenges during the economic downturn, states have continued cost-cutting efforts to lower reimbursement rates for hospitals and doctors, and scaled back optional benefits like dental, vision and drug coverage. Forty-five states cut or froze reimbursement rates last year while 18 reduced benefits. Others expanded the use of managed care programs.

Despite the slowdown in the growth rate, more than one-third of states indicated they could experience a Medicaid budget shortfall, down from more than half of states predicting a shortfall a year ago.

More states are moving to better coordinate care for Medicaid enrollees, particularly those with expensive chronic conditions. Thirty states started or expanded such programs last year and 45 are doing so this fiscal year.