Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an Economic Downturn

Source: Vernon Smith, Kathleen Gifford, Eileen Ellis, Robin Rudowitz, Molly O’Malley and Caryn Marks, Kaiser Family Foundation, September 2008

From the press release:
With states confronting a weakening economy, enrollment in Medicaid began to rise last year with states expecting even larger increases for fiscal year 2009, according to a new 50-state survey released today 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.
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