| States See Rising Enrollment In Medicaid As Economy Falters
With states confronting a weakening economy, enrollment
in Medicaid began to rise with states expecting even larger increases
for fiscal year 2009, according to a new 50-state survey released 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.
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:
Documentation Requirements
Most states reported continuing problems related to the
implementation of new documentation requirements for Medicaid enrollees
and applicants to demonstrate their citizenship and identity, as
required by the Deficit Reduction Act of 2005 (DRA). Overall, 30 states
reported that the requirements significantly increased the time needed
to determine eligibility; 24 states reported increased backlogs of
applications; and 22 states reported an increase in the number of
application denials.
DRA Authority on Benefits, Cost-sharing
A small number of states continue to make use of new
approaches to alter Medicaid benefits, impose new cost-sharing
requirements and permit certain providers to deny services to enrollees
who fail to pay their co-payments, as authorized by the DRA. By 2008,
eight states used this authority to modify benefits, four states used
it to allow providers to deny services to some who did not make
co-payments, and one state (Wisconsin) used it to impose nominal
copayments to some enrollees in managed care.
Use of Managed Care
In fiscal year 2008, nearly one third of states expanded
their managed care programs. The most significant trends involved
including people with disabilities in managed care, expanding managed
care service areas and requiring enrollment into managed care when it
had previously been voluntary. States continue to focus on quality
efforts such as pay-for-performance and implementation of new
information technology initiatives.
Uncertainty about Children’s Coverage
A number of state reported that they limited their
expansion of coverage of children due to the new federal State
Children’s Health Insurance Program requirements or the
uncertainty of ongoing funding, given Congress has only reauthorized
the program through March 2009. Budget constraints resulting from the
weakened economy add to this uncertainty.
Looking Ahead
When asked about the most significant issues facing the
Medicaid program, Medicaid directors cited financing issues and the
economy, the current status of the federal-state partnership around
Medicaid, and the challenge of implementing new initiatives ranging
from new information technology systems, quality initiatives or efforts
to cover more of the uninsured. With a new administration and Congress,
the prospect of a broader discussion around national health reform and
the trajectory of the economy are also expected to have implications
for the Medicaid program over the next year or two.
Address: Kaiser Family Foundation, 2400 Sand Hill Road, Menlo Park, CA 94025; (650) 854-9400, www.kff.org.
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