Medicaid enrollment decreased as the economy gained strength in fiscal year 2018, which curbed spending within the program as well, according to new research from the Kaiser Family Foundation (KFF).
The enrollment growth rate fell to -0.6% in 2018 from 2.8% in 2017. Total Medicaid spending hovered just above 4% both years, but state spending leapt from 3.6% in 2017 to 4.9% in 2018.
Enrollment generally drives spending, but Medicaid expenditures remained steady overall and increased for states due, in part, to higher costs of prescription drugs, long-term services and supports (LTSS), and behavioral health services.
Some of these issues are critical and cannot be avoided. For instance, states are working to improve care for beneficiaries suffering from opioid use disorder and implementing wage increases to bolster the Medicaid-reimbursed LTSS workforce shortage.
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But states are also taking steps to address those costs. The results of KFF’s annual 50-state Medicaid budget survey, released the same day, pointed to efforts to, for instance, contain rising drug costs.
Policies to increase provider rates, which are more commonly seen during economic upturns, also contributed to spending. Forty-nine states reported at least one provider rate increase in FY 2018, and 47 said the same for FY 2019 as well.
Only 31 states said they would restrict at least one provider rate in 2019, the lowest number that have said so since 2008. Most rate increases will occur among nursing facilities, while inpatient hospitals will receive the most rate restrictions.
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States also expect Medicaid spending to grow at an increasing rate as the federal match rate declines. This year, states paid 6% of expansion costs, which most financed with general fund dollars. A few, however, used provider taxes or fees, and others even used savings from the expansion itself.
Regardless of the condition of the economy, states are shifting their focus toward preventive health in an effort to curb costs, the budget survey found. Starting in FY 2019, 19 states will require Medicaid managed care organizations to screen beneficiaries for social service needs, and another 16 will encourage MCOs to do so.