Sept. 24, 2018
Dive Brief:
- A new HHS Office of the Actuary
report on Medicaid projected the program's expenditures
will increase at an average annual rate of 5.7% over the next decade.
- That's faster growth than the gross domestic product
(4.1% predicted annual increase). The report warned Medicaid's expenditure
growth could strain federal and state budgets as the program is expected
to grow from 3.1% of GDP in 2016 to 3.7% in 2026.
- HHS forecasted annual per enrollee costs will increase by 4.1% in
the same period — slightly slower than 2017, which saw 4.2% growth.
Dive Insight:
The report analyzed Medicaid trends and
provided 10-year projections of expenditures and enrollment under existing law.
It found that expenditures increased 2.6% to $592.2 billion in 2017 and average
enrollment grew 2.1% to 73.8 million. Most of that growth came from Medicaid
expansion states.
Since the Affordable Care Act allowed
states to expand Medicaid, the federal-state program has become an even more
important safety net for Americans. The ACA allowed states to expand Medicaid
coverage to lower-middle-class people, which has provided coverage for about
12.2 million people.
In its report, HHS predicted that Medicaid
expansion will continue to drive enrollment numbers and account for 13.3
million beneficiaries by 2026. Medicaid expansion alone will account for $938
billion in expenditures in the 10-year period. More than 90% of that money will
come from the federal government.
Another significant shift in Medicaid is
states moving the program to managed care organizations. More than three dozen
states have implemented Medicaid managed care programs as a way to control
costs, lower utilization and improve quality. They've moved more than 74
million Medicaid beneficiaries into a managed care plan. That's 80% of
Medicaid's enrollment, and some states have more than 90% of their Medicaid
population in managed care plans. The report predicted that states moving
Medicaid to managed care organizations will play a major role in the program’s
future.
"States have continued to expand the
use of managed care to cover aged enrollees and persons with disabilities and
to provide for long-term care services through managed care programs. Thus,
understanding how the use of managed care in Medicaid will affect future
expenditure growth — and how fee-for-service expenditures for acute care and
long-term care will also be affected — will be an important consideration for
Medicaid programs in the future," according to the report.
It's not all good news about Medicaid
managed care though. Another recent report found that Iowa Health Link reportedly saw almost three times higher Medicaid
costs after moving to managed care.
In addition to managed care organizations,
states have sought other ways to bend the Medicaid cost curve. One avenue is
limiting coverage, including creating work requirements for Medicaid expansion
recipients.
CMS has made work requirement
implementation a priority. Kentucky led the way on the
initiative and was joined by three other states in receiving waivers to
implement work requirements. A federal judge spiked Kentucky's plan,
but the CMS is reviewing comments about the proposal. Eight other states are
looking at similar waivers.
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