On September 30, 2010 the Henry J. Kaiser Family Foundation released its annual 50-state survey of Medicaid officials, this year titled: “Hoping for Economic Recovery, Preparing for Health Reform: A Look at Medicaid Spending, Coverage and Policy Trends.” The following are among the key findings:
- Most states experienced rapid growth in their Medicaid enrollment and spending, and more growth is likely in 2011.
- Medicaid spending increased by 8.8 percent in 2010, which is well above the initial projection of 6.3 percent. For 2011, states budgeted an average of 7.4 percent increased spending, which is a slightly slower rate of growth. This number is directly related to expectations that enrollment growth will slow to 6.1 percent.
- Nearly every state implemented at least one new Medicaid policy to control spending. In 2010, 39 states implemented a provider rate cut or freeze, and 37 states have planned provider rate restrictions in 2011. In 2010, 20 states also implemented benefit restrictions, the largest number in one year since the surveys began in 2001, and double the number from 2009.
The impact of the American Recovery and Reinvestment Act of 2009 (ARRA) was also included in the report. ARRA sought to ease the burden on states by increasing the federal government’s matching rate, also known as the Federal Medical Assistance Percentage (FMAP). The increased FMAP, originally scheduled to end in December 2010, was used by nearly every state to address shortfalls. The total sum of support from ARRA is estimated to be $87 billion across all states. Due to the increased and continued burden upon Medicaid, Congress enacted an extension, which will provide relief at the reduced rate of $16 billion over six months, through June 2011.
The expiration of ARRA will have a profound impact on state budgets in fiscal year 2012. State Medicaid spending will increase by as much as 25 percent or more in many states, which presents a difficult situation for state budgets. Encouraging positive economic signs are emerging, but full state revenue recovery may still be years away. State officials have expressed concerns that there will be significant state budget shortfalls in 2012 unless state revenues recover more rapidly than current projections.
The tough economy and attenuated state budgets have led to questions about whether or not Medicaid will have the resources for its forthcoming expansion as a result of federal health care reform. According to the survey, Medicaid directors reported that they are able to maintain Medicaid’s core mission and objectives while even making improvement in some cases.
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