With states confronting a weakening economy, enrollment in Medicaid began to rise last year with states expecting even larger increases for fiscal year 2009, according to a new 50-state survey released today by the Kaiser Family Foundation's Kaiser Commission on Medicaid and the Uninsured (KCMU). With the increased enrollment, Medicaid spending is also rising more rapidly than in the recent past, raising the potential for program cutbacks as states confront the combined impact of more enrollees and fewer available resources.
The survey finds that Medicaid enrollment across the country grew 2.1 percent in fiscal year 2008, more than erasing a slight decline in enrollment experienced the previous year. States also experienced spending growth of 5.3 percent, up significantly from the previous two years. For fiscal year 2009, states expect to see even larger increases in Medicaid enrollment (3.5 percent) and spending (5.8 percent).
The survey comes as states face serious financial constraints, with 30 states having confronted significant budget shortfalls as they prepared their fiscal year 2009 budgets. Looking ahead, two thirds of state Medicaid directors say that there is at least a 50-50 chance that they will face a shortfall in their Medicaid budgets during the current year. Such shortfalls could force mid-year changes to control costs, potentially including cuts in eligibility and outreach efforts.
"We're just beginning to see the impact of the economic slowdown, as growing Medicaid enrollment and shrinking revenues pose new threats for health coverage," said Diane Rowland, executive vice president of the Kaiser Family Foundation and Executive Director of KCMU.
Medicaid directors attributed the growth in enrollment and spending to the weakened economic outlook facing their states. During economic downturn, as unemployment rises people may lose employer-based coverage and incomes decline, making them potentially eligible for a state's Medicaid program. Ongoing state efforts to address the uninsured such as expanding Medicaid eligibility, improving outreach and simplifying enrollment procedures also played a role in the growth.
Medicaid Policy Initiatives for Fiscal Years 2008 and 2009
Conducted by Kaiser researchers with the KCMU and researchers with Health Management Associates, the eighth annual budget survey of state officials found that more states made restorations, enhancements or expansions to their Medicaid programs than made cuts for fiscal years 2008 and 2009. These include changes to provider reimbursement levels, in Medicaid eligibility requirements and enrollment processes, in benefits, and in home- and community-based services for long-term care.
The changes reflect efforts that began during the favorable economic climate in 2007, as states prepared their fiscal year 2008 budgets, and continued for fiscal year 2009, though this year's expansions were fewer and smaller in scope. This pattern is similar to what occurred at the start of the last economic downturn from 2001 to 2004, when states did not immediately implement widespread actions to cut Medicaid but made significant cuts later.
Other key findings from the survey include: