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

Source: Katherine Young and Lisa Clemans-Cope and Emily Lawton and John Holahan, Kaiser Family Foundation, Issue Brief, July 3, 2014

from the summary:
The 2007 to 2012 period encompasses one of the worst economic downturns since the Great Depression, as well as the start of a slow recovery that is still in progress. Although the Great Recession technically ended in 2009, its effects have been felt much longer, with unemployment levels and household incomes slow to return to pre-recession levels. In large part due to this environment, Medicaid enrollment has increased rapidly over the FY 2007 to 2012 period. Throughout its history, the Medicaid program’s spending patterns have nearly always tracked enrollment growth, and the FY 2007 – 2012 period is no exception. During this period, Medicaid enrollment rose from 42.3 million to 54.1 million and spending on medical services (that is, excluding administrative and other non-service spending) rose from $292.7 billion in FY 2007 to $383.6 billion in FY 2012– an average annual increase of 5.6 percent. As states expand their Medicaid programs as part of health reform, we can anticipate that both spending and enrollment will jump in the next few years, although the spending jump will mostly be at the federal level. In this paper, we use CMS administrative data to track Medicaid spending by service or category from FY 2007 through FY 2012. We then use enrollment data to calculate the spending per enrollee growth by service during this period. Finally, we calculate spending by eligibility group over this period, and in the process deconstruct spending growth into enrollment growth and spending per enrollee growth. Details on the methodology are available in the “Data Sources and Methods” text box in this brief and Appendix B at the end of the brief.