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Recent Medicaid Surge Projected to Wane, Report Says

By Marissa Evans, CQ Roll Call

October 15, 2015 -- Every state experienced an uptick in Medicaid spending and enrollment during fiscal 2015, but that growth is expected to slow down in the next year, according to a report the nonpartisan Kaiser Family Foundation released Thursday.

"This is an extraordinary time in Medicaid," said Vernon Smith, principal for Healthcare Management Associates, one of the researchers who conducted the state-by-state survey of Medicaid officials. "The program has expanded its role in every state."

The 2010 health care law allowed states to accept federal funds to expand eligibility for the health program for the poor to individuals with incomes up to 138 percent of the federal poverty level starting in 2014. So far, 30 states, and the District of Columbia have broadened the program.

States experienced growth, regardless whether they expanded their programs. Nationwide, the number of people enrolled in Medicaid increased on average by 13.8 percent in fiscal year 2015, following enrollment growth of 8.3 percent the year before.

Spending increased on average by 13.9 percent during fiscal year 2015. The previous year, spending climbed an average of 14.3 percent nationwide. Medicaid officials attributed the increase to a bump up in provider payments and the cost of prescription drugs.

But researchers said enrollment will taper off next year. An improved economy will mean less people applying for Medicaid. Researchers also said that the ways states choose to renew Medicaid benefits for individuals whose coverage is expiring will have an effect.

In fiscal 2016, Medicaid enrollment across all 50 states and the District of Columbia is projected to increase on average of 4 percent. Spending is expected to increase an average of 6.9 percent.

Expansion States

Growth is projected to rise most in those states that expanded eligibility, continuing a recent trend. In the states that expanded Medicaid, enrollment is projected to increase on average by 4.5 percent in fiscal 2016.

Meanwhile, non-expansion states are expected to continue to see some increased participation among those previously eligible but not enrolled. Enrollment in those states will rise an average of 2.8 percent, according to the study.

During fiscal 2015, states that expanded saw enrollment and spending growth that outpaced the 22 non-expansion states, according to the report.

In the 28 states and District of Columbia that had expanded by then, beneficiary enrollment rose on average by 18 percent and Medicaid spending increased on average by 17.7 percent.

In the states that did not expand Medicaid at the time of the study, enrollment grew by 5.1 percent, thanks in part to an influx among parents and children who were previously eligible but did not know about the program until publicity about the law got their attention. Non-Medicaid expansion state spending increased by 6.1 percent, according to the report.

Justin Senior, deputy secretary for Florida’s Medicaid program, said at a briefing about the report that his state had anticipated an enrollment bump due to residents finding out through, the federal health exchange, that they qualified for the program.

While the state’s monthly cost per member fell, the overall spending increases are still "putting pressure on other budget priorities," Senior said.

Robin Rudowitz, associate director for the Kaiser Commission on Medicaid and the Uninsured, said that expansion states are seeing savings in areas like behavioral health, uncompensated medical care and criminal justice health care costs as well as an increase in revenue. She said those savings could help states as they shoulder more Medicaid costs starting in 2017. The federal government is covering all the costs of newly eligible people through 2016 but in 2017, the subsidy begins to decline, falling to 90 percent by 2020.

The annual Kaiser study on Medicaid enrollment and spending focuses primarily on fiscal years 2015 and 2016. At the time the survey was conducted, only 29 states and the District of Columbia had expanded programs.

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