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Medicaid Spending Growth in the Great Recession and Its Aftermath, FY 2007-2012

Executive Summary
  1. See e.g.,R Kronick and D Rousseau. “Is Medicaid sustainable? Spending projections for the program's second forty years.” Health Affairs, 26.2 (2007): w271-87.

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  2. Unless otherwise noted, all years in this brief refer to the federal fiscal year (FY), which runs from October 1 through September 30.

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  3. VK Smith, K Gifford, E Ellis, R Rudowitz, and L Snyder. “Medicaid Today; Preparing for Tomorrow: A Look at State Medicaid Program Spending, Enrollment, and Policy Trends.” Kaiser Family Foundation, October 2012. Available at http://www.kff.org/medicaid/report/medicaid-today-preparing-for-tomorrow-a-look-at-state-medicaid-program-spending-enrollment-and-policy-trends-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2012-and-2013/.

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Introduction
  1. “American Recovery and Reinvestment Act (ARRA): Medicaid and Health Care Provisions.” Kaiser Family Foundation, March 2009.  Available at http://www.kff.org/medicaid/fact-sheet/american-recovery-and-reinvestment-act-arra-medicaid/.

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  2. “Status of State Action on the Medicaid Expansion Decision, 2014.” Kaiser Family Foundation. Available at http://kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/#note-2.

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Issue Brief
  1. 2010 MSIS data is available for use, but because data is missing in several states, and because of remaining data quality issues, we opted to use the FY 2009 MSIS.

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  2. J Yellen, “A Painfully Slow Recovery for America’s Workers: Causes, Implications, and the Federal Reserve’s Response,” Delivered at the “A Trans-Atlantic Agenda for Shared Prosperity,” February 2013. Available at http://www.federalreserve.gov/newsevents/speech/yellen20130211a.pdf.

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  3. HS Kaye. “The Impact of the 2007–09 Recession on Workers with Disabilities.” The Monthly Labor Review, U.S. Bureau of Labor Statistics, 133.10 (2010). Available at http://www.bls.gov/opub/mlr/2010/10/art2exc.htm.

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  4. This explanation is supported by the enrollment trend in Supplemental Security Income (SSI), which is an eligibility pathway to Medicaid. From 2006 through 2012 (calendar years), the number of blind and disabled enrolled in SSI grew most quickly between 2009 and 2010 and then slowed in 2011 and 2012. See “SSI Annual Statistical Report, 2012.” Social Security Administration, July 2013. Available at http://www.ssa.gov/policy/docs/statcomps/ssi_asr/.

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  5. The CMS-64 includes a category of spending for payments to managed care plans for delivery of benefits to Medicaid enrollees. We classify these payments as acute care spending since the majority of managed care plans in Medicaid cover acute care (versus long-term care) benefits.

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  6. VK Smith, K Gifford, E Ellis, R Rudowitz, and L Snyder. “Medicaid in a Historic Time of Transformation: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2013 and 2014.” Kaiser Family Foundation, October 2013. Available at http://www.kff.org/medicaid/report/medicaid-in-a-historic-time-of-transformation-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2013-and-2014/.

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  7. J Holahan, A Yemane, and D Rousseau. “Medicaid Expenditures Increased by 5.3% in 2007, Led By Acute Care Spending Growth.” Kaiser Family Foundation, September 2009. Available at http://www.kff.org/medicaid/7978.cfm.

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  8. The combined total growth rate for hospitals and physicians and other acute care more closely mirrored overall acute care (and enrollment), with an initial low growth rate from 2007 to 2008 of 1.1 percent, a jump to 8.4 percent between 2008 and 2009, and a steady growth rate between 8 and 9 percent in 2010 and 2011.

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  9. In November 2010, the Secretary of Health and Human Services approved California’s “Bridge to Reform” 1115 Medicaid Demonstration Waiver, which extended Medicaid coverage and provided billions of federal dollars over a five-year period to public hospitals. However, in 2012, hospital and physician spending in California fell dramatically, which is reflected in the drop in the national hospital and physician growth rate. In 2011, California spent $7.1 billion more on hospital and physician services than it did in 2010. California then spent $5.8 billion less on these services in 2012 than it had the previous year (data not shown). See “Key Facts on California’s ‘Bridge to Reform’ Medicaid Demonstration Waiver.” Kaiser Family Foundation, October 2011. Available at http://www.kff.org/medicaid/8197.cfm.   See also S Artiga. “An Overview of Recent Section 1115 Medicaid Demonstration Waiver Activity.” Kaiser Family Foundation, May 2012. Available at http://www.kff.org/medicaid/8318.cfm.

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  10. In September 2011, 19% of drugs were handled through a managed care organization; in June 2012, 46% were. See IMS Institute for Healthcare Informatics, “Shift from Fee-for-Service to Managed Medicaid: What is the Impact on Patient Care? An early review of prescription drug utilization,” April 2013. Available at http://www.imshealth.com/deployedfiles/ims/Global/Content/Insights/IMS%20Institute%20for%20Healthcare%20Informatics.

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  11. Smith, Gifford, Ellis, Rudowitz, and Snyder, 2013.

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  12. Smith, Gifford, Ellis, Rudowitz, and Snyder, 2012.

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  13. VK Smith, K Gifford, E Ellis, R Rudowitz, and L Snyder. “Medicaid in a Historic Time of Transformation: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2013 and 2014.” Kaiser Family Foundation, October 2013. Available at http://www.kff.org/medicaid/report/medicaid-in-a-historic-time-of-transformation-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2013-and-2014/.

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  14. For example, state Medicaid programs are required to pay the Part B premium on behalf of certain types of beneficiaries who are dually eligible for Medicare and Medicaid and enroll in Medicare Part B.

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  15. Dual eligible beneficiaries were not included in the groups of beneficiaries subject to the “hold harmless” provisions that protected against premium increases. See: http://www.cms.gov/apps/media/press/factsheet.asp?counter=3534 and http://www.kff.org/medicare/issue-brief/income-relating-medicare-part-b-and-part/.

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  16. A Mitchell. “Medicaid Disproportionate Share Hospital Payments.” Congressional Research Service. December 2, 2013.

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  17. Ibid.

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