KFF: Medicaid enrollment down in 2019 and expected to be flat in 2020

Enrollment in Medicaid in 2019 declined by nearly 2% and is expected to be largely flat, with an increase of 0.8%, next year due in part to the economy and stringent eligibility rules, according to a new survey.

The survey of Medicaid directors in all 50 states and the District of Columbia was released Friday from the Kaiser Family Foundation. States attributed the enrollment decline to a strong economy and administrative changes to the renewal process.  

Total spending growth on Medicaid was also low at nearly 3%. However, states are projecting that growth will return to more traditional levels in 2020 at a rate of 6.2% because of higher costs for prescription drugs, provider rate hikes and costs for treating the elderly and disabled.

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The enrollment declines come as the U.S. Census Bureau recently showed an increase in the U.S. uninsured rate in 2018, which suggests that “some people losing Medicaid coverage may not gain access to employer-based health benefits and are not buying their own insurance,” the report said.

The most frequently cited eligibility restriction for fiscal 2019 was work requirements. So far, six states got federal approval for a work requirement program and another nine states have pending applications, Kaiser said.

However, a federal judge has struck down the work requirement programs for New Hampshire, Arkansas and Kentucky. The judge argued that the programs don’t meet the objectives of Medicaid, which are to expand coverage for low-income eligible people.

A three-judge panel heard an appeal from the Trump administration to reinstate the work requirements, but the judges were skeptical of the program.

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But states also sought to take on more measures to contain prescription drug costs, a major driver of Medicaid spending growth in recent years.

There were 24 states this year that implemented or expanded a program to rein in drug costs, and 25 states plan to implement similar programs in state fiscal year 2020.

These strategies included value-based contracts that link payment to health outcomes and prior authorization of high-cost drugs. The Trump administration also finalized a rule to add the formulary management tool step therapy to Medicare Part B to contain costs.

States are also expected to shoulder more Medicaid spending in 2020. In federal fiscal year 2018, state Medicaid spending accounted for 37.5% of the $593 billion spent overall on Medicaid, with the federal government picking up the rest of the tab.

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“Reported data for this survey shows that average state Medicaid spending is budgeted to increase by 5.7% in state fiscal year 2020, after rising 1.1% in 2019,” Kaiser’s report said. “State Medicaid spending growth, which typically moves in the same direction and at a similar rate to total Medicaid spending, was lower than total Medicaid spending growth in FY 2019 and is expected to be lower again in FY 2020.”

But spending growth varied significantly across the states. For instance, eight states had flat or negative revenue growth in fiscal 2019, and 11 states had growth of 5% or more.