Despite help from the federal government, the number of people enrolled in Medicaid – and state spending on the program – are climbing sharply as a result of the recession, straining state budgets and pressuring officials to curb costs.
In a report, the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured says these trends are expected to continue well into the 2010 fiscal year.
“The recession has shown the importance of Medicaid as a safety net for millions of Americans who have lost health coverage when they have lost their jobs,” said Diane Rowland, executive vice president of the Kaiser Family Foundation and executive director of the Kaiser Commission on Medicaid and the Uninsured. “But it also has shown the challenges for states of maintaining coverage when state revenues drop during times of economic crisis.”
The annual 50-state survey of state Medicaid officials estimates that Medicaid enrollment grew by an average of 5.4 percent in fiscal year 2009, the highest rate in six years. This surpasses the projected 3.6 percent increase at the start of the year.
Similarly, total Medicaid spending growth averaged 7.9 percent in FY 2009, the highest rate in five years, well above the 5.8 percent projected growth. For FY 2010, states estimate Medicaid enrollment will grow by 6.6 percent over FY 2009 levels.
The survey finds that, based on initial legislative appropriations, Medicaid spending across states is expected to grow by an average of at least 6.3 percent in fiscal 2010. Officials in three-fourths of the states are concerned that those appropriations will not be enough, leading to more budget shortfalls and more pressure to trim services and spending.
The report contends that the fiscal picture would be worse if not for the availability of increased federal Medicaid funding through the American Recovery and Reinvestment Act (ARRA).
That money, which will provide an estimated $87 billion to states through enhanced federal matching funds through Dec.31, 2010, helped all states. Funds were used to address overall budget and Medicaid budget shortfalls, avoid cuts to providers, benefits and eligibility and address the recession-driven growth in enrollment.
According to the study, even with federal relief nearly every state implemented at least one new Medicaid policy to control spending. Thirty-three states cut or froze provider rates in fiscal 2009, well above the 22 that had been expected to do so, and 39 states are slated to cut or freeze rates for FY 2010, while several others are considering it.
The reliance on Medicaid during times of economic crisis, and the fiscal pressures that follow, spotlight both the challenges and opportunities for the program in health reform efforts. Several legislative proposals in Congress include measures that would expand Medicaid to cover more low-income people as a platform for larger reform.