Medicaid enrollment and spending slowed dramatically in FY 2012 as the nation’s economy began to improve, according to a new 50-state survey from the Kaiser Family Foundation, and those trends are expected to continue in FY 2013.
Total Medicaid spending growth dipped to 2 percent in FY 2012, one of the lowest marks on record and down from 9.7 percent in FY 2011. Enrollment growth fell to 3.2 percent, receding from a near-record high of 7.8 percent in 2009 at the height of the economic crash. States expect that movement to generally continue: spending is projected to increase 3.8 percent in FY 2013, up from FY 2012, but still one of the lowest rates in the last 15 years, and enrollment growth is expected to drop to 2.7 percent.
FY 2012 wasn’t all roses for state Medicaid programs: states’ share of spending increased by 27.5 percent as enhanced federal matching, part of the 2009 stimulus package, expired. That has forced states to pursue a variety of cost containment strategies: 45 cut provider payments and 18 reduced benefits. Those trends are expected to continue in FY 2013: 42 states expect to reduce provider payments and eight project cutting benefits.
But the improved economic outlook is starting to allow states to experiment with reforming long-term care delivery, one of the oft-cited causes for Medicaid’s ballooning costs. According to Kaiser, 29 states expanded or enhanced their long-term care coverage in FY 2012, and 34 states are planning to do so in FY 2013. As Governing has previously reported, states like Massachusetts and Tennessee have been cited as leaders in reforming long-term care to reduce costs and improve care quality.
Most analysts agree that, even if the economy improves, the struggles of the last few years demonstrate that Medicaid needs fundamental reforms. According to Kaiser, states seem to agree: 20 expanded their managed-care programs in FY 2012, and 35 are planning to expand managed care in FY 2013, including 10 who will focus on managed long-term care. Other care coordination efforts are underway: 31 states have started a health home initiatives, 32 are establishing patient-centered medical homes and 13 have authorized accountable care organizations.
Dual eligibles (those who qualify for Medicare and Medicaid, and account for 40 percent of Medicaid spending despite making up only 15 percent of enrollment) have been targeted for reform. The survey found that 34 states are developing new payment or delivery system options for dual eligibles, though Massachusetts remains the only one to reach a memorandum of understanding with the Obama administration for a duals demonstration as outlined in the Affordable Care Act (ACA).
Kaiser also gauged states’ reactions to the Supreme Court’s decision this June to make the law’s Medicaid expansion (expected to add 17 million to state rolls) optional instead of mandatory. The majority of states (30) said that their plans to implement the ACA had been affected by the Court’s decision, while 16 said it had not and they were moving forward with implementation. Only a few have actually said that they will not expand, according to Kaiser, while the remainder said that the expansion was simply uncertain until the legislative sessions begin in January.
States were also asked about their status in developing a health insurance exchange under the law: 17 said they would have a state-based exchange, eight said they would have a federal-run exchange, one (Arkansas) said it would have a partnership exchange and 25 said their exchange model was still undetermined. Of the 17 states planning a state-based exchange, seven intend for the exchange to make all of its Medicaid eligibility determinations.