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Trends in State Medicaid Programs: Looking Back and Looking Ahead

Medicaid is the nation’s primary public health insurance program covering over 70 million Americans with low incomes. Each year, states make a range of policy changes to Medicaid to comply with new federal rules and to address an array of policy goals. Medicaid programs also operate within state budgets, requiring a constant focus on cost control that is heightened during economic downturns. For 15 years, the Kaiser Commission on Medicaid and the Uninsured (KCMU) and Health Management Associates (HMA) have conducted annual surveys of Medicaid programs across the country. The National Association of Medicaid Directors (NAMD) has formally collaborated on this project since 2014.  A look back at this work shows three key findings:

Economic changes have significant effects on Medicaid programs. During economic downturns, program spending and enrollment rise as demand for Medicaid coverage increases and declines in state revenue growth slows result in additional pressure to control costs. States often turn to provider rate cuts and benefit restrictions to control Medicaid spending. Federal fiscal support during the last recession helped states mitigate some program cuts; maintenance of eligibility provisions helped protect eligibility as demand peaked.

States have generally moved to expand Medicaid eligibility and streamline enrollment processes over time. Even before the Affordable Care Act (ACA), several states implemented coverage expansions through demonstration waivers as well as enrollment simplifications, which helped states reduce the uninsured and later became the foundation for coverage expansions under the ACA. Over time, states have also adopted more targeted expansions, some as a result to changes in federal law.  Federal fiscal relief during the last recession was tied to Maintenance of Eligibility requirements that were extended under the ACA.  The ACA expanded Medicaid to nearly all non-elderly adults with income at or below 138% of the federal poverty level (FPL) with 100% federal funding through 2016 phasing down to 90% in 2020 and beyond.  The Supreme Court ruling on the ACA in June 2012 effectively made the Medicaid expansion optional for states; to date 32 states including the District of Columbia have adopted the expansion. In addition, the ACA required all states to simplify, modernize and coordinate their enrollment processes.

Medicaid is a dynamic program, with states constantly implementing initiatives to transform how care is delivered and to increase value. Over time, there has been a dramatic shift in how care is delivered from primarily fee-for-service systems to predominantly managed care. States continue to expand the use of managed care as well as implement a range of emerging payment and delivery system reforms. The ACA also provided new options to better coordinate care for high need populations, to better integrate physical and behavioral health and to help states rebalance their long-term care programs in favor of community-based services and supports. In addition, states have focused on efforts to control pharmacy costs.

This brief provides a look back at the enrollment and spending trends as well as the multitude of policy actions taken by states across key areas: eligibility and application processes; provider rates and taxes; benefits, pharmacy and long-term care since as well as highlighting more recent data on managed care and delivery system reforms collected as part of this annual survey. Looking ahead, the survey will continue to capture the evolution of the Medicaid program with a focus program changes during economic cycles as well as innovations in payment and delivery system reform.

Introduction

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.