Just Released

Monday, October 7, 2013

As the Affordable Care Act Takes Effect, Medicaid Enrollment and Spending Are Set To Increase in FY 2014, Driven By More Coverage and Additional Federal Funding

New Survey Also Looks at Delivery and Payment System Reforms to Improve Care and Quality

Nearly all states expect to see Medicaid enrollment and spending growth in fiscal year 2014 as implementation of the Affordable Care Act increases the number of low-income Americans who will get health coverage through Medicaid, according to the 13th annual 50-state Medicaid budget survey by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured, conducted with Health Management Associates.

While enrollment is expected to rise everywhere, the magnitude of the increases will be much greater in states that chose to expand their Medicaid programs for low-income parents and childless adults under the ACA than in those that are not moving forward with the expansion. Medicaid enrollment is projected to increase an average of nearly 12 percent in the 25 states (including the District of Columbia) moving forward with the expansion, the new report finds. The 26 states not moving forward with the expansion expect to see Medicaid enrollment rise by an average of 5.3 percent. Their enrollment increase is triggered, in part, by elements of the ACA that will lead more people who are currently eligible for Medicaid to enroll. All states are required to streamline Medicaid application, enrollment and renewal processes, and coordinate with the new health insurance marketplaces.

States expanding the program expect total Medicaid spending to grow by an average of 13 percent in fiscal 2014. The federal government is paying for almost all of the increase, the result of 100 percent federal financing available to cover the newly eligible Medicaid enrollees for the first few years of the ACA. States not expanding their Medicaid programs under the law expect to see total spending grow by an average of 6.8 percent and will continue to share costs with the federal government through their regular matching rate.

In addition to the ACA, which goes into full effect on Jan. 1, other dominant forces shaping Medicaid during fiscal 2013 and heading into fiscal 2014 include the continuing development and implementation of an array of delivery and payment system reforms. The slowly improving economy has reduced the fiscal pressures on state Medicaid programs, but cost containment and improving program administration remain important priorities.

Other key findings from the latest 50-state Medicaid budget survey include:

— Improvements in the economy have enabled states to implement more program restorations or improvements in provider rates and benefits compared to restrictions. A total of 40 states in FY 2013 and 44 states in FY 2014 adopted provider rate increases compared to 39 states in FY 2013 and 34 states in FY 2014 that adopted restrictions. For benefits, a number of states were able expand or restore cuts to home and community-based services, dental and behavior health; however, a smaller set of states made targeted restrictions largely in these same areas.

— Nearly all states are pursuing payment and delivery system reforms to improve quality and manage costs. Thirty-nine states reported efforts to expand managed care or improve care through a managed care focused quality initiative. Development of integrated, coordinated care to serve people dually eligible for Medicaid and Medicare continues to be a focus, with 14 states reporting plans to implement a formal demonstration.

— More states are implementing expansions in community based long-term care through PACE, home and community-based services (HCBS) and new options in the ACA. Specifically, the number of states taking advantage or planning to adopt the time-limited Balancing Incentive Program (BIP) jumped to 19 in FY 2013. And the use of the 1915(i) HCBS State Plan option is becoming more widespread, growing from 10 states in FY 2012 to an expected 16 by the end of FY 2014.

Also newly available is Managing a High-Performance Medicaid Program, conducted with researchers from the Muskie School of Public Service at the University of Southern Maine. This paper, drawing on extensive reviews of relevant laws, regulations and literature, as well as discussions with six current Medicaid directors, examines the responsibilities that the federal government and states hold for managing the Medicaid program and identifies some issues and challenges states face during this period of major change for Medicaid.

The new survey, Medicaid in a Historic Time of Expansion and Transformation: Results from a 50-State Medicaid Budget Survey for State FY 2013 and FY 2014, is available online.

The Kaiser Family Foundation, a leader in health policy analysis, health journalism and communication, is dedicated to filling the need for trusted, independent information on the major health issues facing our nation and its people. The Foundation is a non-profit private operating foundation, based in Menlo Park, California.

Contact:

Chris Lee | (202) 347-5270 |  CLee@kff.org