Mid-Year Report Shows Medicaid Spending and Growth at or Below Projections

States continue to experience high unemployment and low state revenue collections as a result of the Great Recession, but there are some signs of improvement, and for fiscal year (FY) 2012 the majority of states are predicting Medicaid spending and enrollment growth that is equal to or below their original estimates. This is just one of the findings from a new issue paper released from the Kaiser Commission on Medicaid and the uninsured. The paper, Performing under Pressure: Annual Findings of a 50-State Survey of Eligibility, Enrollment, Renewal, and Cost-Sharing Policies in Medicaid and CHIP, 2011-2012, was based on discussions from a November 2011 meeting of the Executive Board of the National Association of Medicaid Directors (NAMD) and survey results from all 50 states and the District of Columbia. It provides a mid-year update on state Medicaid budgets for FY 2012 as well as a look toward the future. When preparing the budget for FY 2012, states were forced to increase funds for Medicaid budgets by 28.7%. This increase was mostly to replace temporary federal stimulus money. However, the adopted budgets for FY 2012 assumed total Medicaid spending growth of only 2.2% compared with 2011. The annual Medicaid budget survey found that states were projecting Medicaid enrollment to increase by 4.1% on average in FY 2012, but according to the mid-year update not all states have seen the expected growth. Based on the results of the mid-year survey, 24 states reported that their enrollment growth for the current fiscal year was about the same as projected, whereas 19 states reported that it was lower than predicted. The majority of states also reported in the mid-year update that their spending trend for the current fiscal year was about the same as they had anticipated or below their estimations, despite the fact that more than half of the states reported at the beginning of the fiscal year that there was a 50% chance of a budget shortfall for FY 2012. But not all states were in better financial positions than they had hoped. Ten states in the mid-year update reported that they planned to make additional Medicaid cuts in FY 2012 beyond those they were originally anticipating. Some of these cuts include additional benefit and provider rate restrictions, along with changes to business practices, such as the elimination of hard copy versions of health plan provider directories. States are also beginning to prepare for the years ahead. In the earlier annual budget survey, 38 states reported that they planned to take advantage of federal funding to update or purchase new Medicaid eligibility systems. In addition, 28 states are qualified for Exchange Establishment grants and 18 states have either passed legislation or plan to do so to set up a state exchange. In the mid-year update discussion with NAMD board members, board members said states were moving forward with plans to set up eligibility systems, but fewer states were reporting that they had taken action to set up the exchanges in part because some states were waiting to find out how the Supreme Court would rule on pending litigation surrounding the constitutionality of aspects of the Affordable Care Act.