States bracing for higher Medicaid enrollment, spending in 2021

Dollar bill with a hole in Washington's face on it and the word "Medicaid" in its place
Kaiser Family Foundation surveyed state Medicaid directors about their expectations for fiscal year 2021. (zimmytws/GettyImages)

States are expecting are a pretty significant jump in Medicaid enrollment and spending for 2021, according to a new analysis.

Researchers at Kaiser Family Foundation surveyed Medicaid directors in 43 states, and found that they're expecting enrollment to grow by 8.2% in fiscal year 2021, on the back of a pandemic-fueled economic downturn and a new maintenance of eligibility requirement linked to increased federal aid.

Enrollment growth for fiscal year 2020 was flat, increasing by 0.04%, according to the report.

"States anticipate that groups more sensitive to changes in economic conditions (e.g., children, parents, and other expansion adults) will grow faster than the elderly and people with disabilities; however, an aging state population was also identified as a key factor driving enrollment in almost half for reporting states," the researchers wrote.

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States are also planning for notable growth in Medicaid in tandem, projecting an 8.4% increase for 2021 compared to an increase of 6.3% in fiscal year 2020.

Medicaid spending growth spiked following the mid-2000s recession and the rollout of the Affordable Care Act's expansion, but had dipped due to strong economic performance in the past several years, according to the report.

In 2021, nearly all states are expecting the likely higher enrollment to drive up spending, but just under half said utilization would exert downward pressure, reflecting decreased service use due to the pandemic.

The report found that states are facing plenty of uncertainty moving forward as the pandemic and resulting economic downturn continue. The election also looms large, according KFF, as which administration sits in the White House could have significant impacts on relief funding and regulation of the Medicaid program.

"Beyond the presidential election, the outcome of state elections (both governors and the make-up of state legislatures) will be important to watch," the researchers wrote.