As Medicaid enrollment growth slows, spending is set to rise

Medicaid
While Medicaid enrollment growth peaked at 13.2% in FY 2015, enrollment grew just 3.9% in 2016 and 2.7% in 2017. (Getty/juststock)

While Medicaid enrollment growth is slowing down, spending growth is expected to climb in the coming year, according to a survey of state Medicaid directors.

The survey, conducted by the Kaiser Family Foundation, found that states predict Medicaid spending to rise 5.2% in fiscal year 2018, compared to a 3.9% increase in FY 2017.

Medicaid directors pointed to increases in payment rates for provider groups—with the exception of inpatient hospitals—as well as rising costs of prescription drugs and long-term care services as the reason for the expected uptick in spending.

Still, the projected Medicaid spending growth next year is half what it was in FY 2015, right after the Affordable Care Act was implemented.

RELATED: Medicaid spending growth, payment rates relatively low

Medicaid enrollment growth is also coming down from the spike it experienced thanks to the ACA. While it peaked at 13.2% in FY 2015, enrollment grew just 3.9% in 2016 and 2.7% in 2017. That trend is expected to continue in FY 2018, with the survey predicting average enrollment growth of just 1.5%.

Reasons for the slower growth—other than the tapering of ACA-related enrollment—include the stable economy and states’ processing of delayed eligibility redeterminations, Medicaid directors said.

The survey also noted that nearly all states are counting on Congress to reauthorize the Children’s Health Insurance Program to avoid budget shortfalls that could have implications for their Medicaid programs. Lawmakers missed the Sept. 30 deadline to reauthorize federal funding for CHIP, and a reauthorization measure has stalled in the House amid partisan disagreements about how to pay for it.

States are also worried about facing budget challenges related to planned changes to disproportionate share hospital payments, or resulting from Congress enacting legislation to restructure Medicaid financing.

Indeed, some of Republican proposals to repeal and replace the ACA would have converted Medicaid’s financing structure to a block grant or per capita cap system, with the effect of drastically curtailing federal spending on the program relative to the current level of spending.

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