Medicaid Growth Slows; Medicaid Directors’ Innovative Efforts Expand – Say Ahhh! A Children’s Health Policy Blog

Overall, the economic conditions surrounding state
Medicaid budgets are continuing to improve, even as states make their way
through the first full budget year after the American Reinvestment and Recovery Act enhanced FMAP funding
expired.  In January 2012, unemployment hit a three year low of 8.3
percent, down from 9.4 percent a year earlier.  Expected growth in Medicaid spending slowed to 2.2 percent –
one of the lowest rates on record – and the assumed growth in Medicaid
enrollment declined to 4.1 percent on average, compared to 6.6 percent in FY

While things are looking up, The Kaiser Commission on
Medicaid and the Uninsured’s Mid-Year State Medicaid Budget Update for FY 2012 does point to some sizeable discrepancies between state budgets. As of
mid-year, 10 states specified that they have to make Medicaid budget cuts, on
top of the cost containment measures already reported at the beginning of the
budget year.  This is only one less
state when compared to last year’s mid-year update. 

It is not completely surprising, given the differences in
budgetary certainty that states reported in Kaiser’s Annual 50-State Medicaid
Budget Survey
.  Some
states were quite confident, as 11 states had predicted negative growth in
Medicaid spending, and five assumed zero growth.  Yet, other states felt more precarious about their financial
outlook.  Almost half of the states
suggested a 50 percent chance that they would have to make mid-year Medicaid
budget cuts, while a quarter of states were certain that they would face
mid-year Medicaid budgets gaps.

A number of states are showing interest in taking
advantage of new opportunities in providing care for those with dual
eligibility. The options offered by the Medicare-Medicaid Coordination Office
have opened up the possibility for better integration between the two programs,
and Medicaid directors hope that it will lead both to better health care
outcomes and shared savings for each program.

Finally, the report notes that the majority of Medicaid
directors (38) have announced plans to take advantage of the 90/10 federal
matching funds available for states to update their eligibility systems in
preparation for the Medicaid expansion required under health care reform. 

The slow and steady recovery of the economy has lead to
the gradual increase in state revenues and a decline in Medicaid enrollment and
spending.  At the same time that
states are still in recovery, they are covering a greater share of
Medicaid costs, due to the expiration of enhanced FMAP funds.  Given limited means in which they
control costs, states are becoming more savvy; examining how they can better
coordinate the care of the their most expensive Medicaid enrollees, and how
they can use federal funds to make their eligibility systems work smarter. 

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