Medicaid Enrollment and Spending Growth Amid the Unwinding of the Continuous Enrollment Provision: FY 2023 & 2024

Key Takeaways

For a three-year length following the onset of the COVID-19 pandemic, states equipped steady Medicaid enrollment in change for an build up within the federal proportion of Medicaid spending (referred to as the Federal Scientific Help Proportion or “FMAP”). This coverage larger Medicaid enrollment and helped decrease the uninsured price. Whilst overall Medicaid spending additionally larger all over the pandemic, a KFF analysis discovered that Medicaid spending from state and different non-federal resources remained similar to pre-pandemic ranges because of the larger federal financing. The Consolidated Appropriations Act (CAA) ended the continual enrollment provision as of March 31, 2023 and allowed states to begin disenrolling folks from Medicaid as early as April 2023. The CAA additionally levels down the improved federal matching finances via December 2023 if states agree to positive laws. Despite the fact that the month through which states started disenrollments various, maximum disenrollments will happen in state fiscal yr (FY) 2024 (which results on June 30 for many states) and millions of people have already been disenrolled. Really extensive uncertainty stays, alternatively, as to how Medicaid enrollment will alternate as “unwinding” continues and the way the ones enrollment adjustments, along side the improved FMAP phase-down, will have an effect on Medicaid spending.

This transient analyzes Medicaid enrollment and spending developments for FY 2023 and FY 2024, in line with information equipped through state Medicaid administrators as a part of the 23rd annual survey of Medicaid directors. 40-eight states (together with the District of Columbia) answered to the 2023 survey, even supposing reaction charges for explicit questions various. The technique used to calculate enrollment and spending expansion may also be discovered on the finish of the transient. Maximum officers indicated that their enrollment and spending projections replicate what is thought of their states’ followed budgets, even though estimates are unsure and the consequences of unwinding are evolving, with important variation throughout states. Key survey findings come with the next:

  • Medicaid enrollment expansion slowed to six.5% in FY 2023 (down from 8.4% in FY 2022). Even though estimates are unsure, Medicaid officers projected enrollment would decline through 8.6% in FY 2024. After attaining file top enrollment, those estimates replicate a dramatic year-over-year decline in program enrollment from that prime. Enrollment alternate estimates for FY 2024 replicate new enrollments in addition to protection losses because of unwinding, however additionally they think some “churn” – this is, that some folks shedding protection will re-enroll inside the yr. This “internet” enrollment alternate estimate differs from other unwinding projections that estimate cumulative disenrollments with out offsetting new enrollments and re-enrollments. The continual enrollment provision and its next unwinding have been probably the most important drivers of enrollment developments cited through survey respondents.
  • State Medicaid officers reported overall Medicaid spending (together with each federal and state finances) slowed to eight.3% in FY 2023 (down from a top of 9.8% in FY 2022) and projected overall Medicaid spending will gradual additional in FY 2024 to three.4%. States known adjustments in enrollment as probably the most important motive force of overall expenditure adjustments.
  • States reported that the section out and eventual finish of the improved FMAP will shift the state and federal spending stocks for Medicaid as state spending grows sooner to make up for the declining federal proportion. Responding state Medicaid businesses reported that state (non-federal) spending grew through 13.0% FY 2023 and used to be projected to extend through 17.2% in FY 2024, whilst overall spending expansion charges gradual. State spending on Medicaid declined in FY 2020 and FY 2021 because of the pandemic-era enhanced FMAP. A couple of states reported that the section out of alternative pandemic period federal investment and adjustments within the common FMAP method have been additionally contributing components to raised state spending expansion.


Medicaid represents $1 out of each $6 spent on well being care within the U.S. and is the most important supply of financing for states to supply well being protection and long-term services and supports for low-income citizens. Medicaid is run through states inside large federal laws and collectively funded through states and the government via a federal matching program without a cap. Medicaid is a counter-cyclical program, which means that extra folks transform eligible and sign up all over financial downturns. On the similar time, states might face declines in revenues that make it tough to finance the state proportion of investment for this system. After peaking following the implementation of the ACA, Medicaid enrollment and overall spending expansion slowed or declined within the resulting years, likely due to making improvements to financial stipulations and restrictions accredited below the Trump Management.

The onset of the COVID-19 pandemic and its financial have an effect on had important implications for Medicaid enrollment and spending. As in previous financial downturns, the government equipped further monetary help to states all over the pandemic to lend a hand them take care of their Medicaid methods. Federal law prohibited states from disenrolling folks from Medicaid in change for enhanced federal matching finances, and because of this, Medicaid enrollment grew to 94.5 million, an build up of 23.1 million or 32.4% between February 2020 and April 2023. General Medicaid spending reached $804 billion in federal fiscal yr 2022, with 29% financed through states and 71% paid through the government – a rather upper federal proportion than in recent times because of the pandemic-related enhanced FMAP.

State financial stipulations worsened unexpectedly when the pandemic hit in March 2020 however recovered briefly in comparison to previous recessions. Nationwide financial signs comparable to preliminary unemployment claims and the unemployment rate spiked early within the pandemic however returned to pre-pandemic ranges through 2022. State income collections adopted a identical development, declining early within the pandemic after which rebounding. Maximum states noticed strong income collections in FY 2021 and FY 2022, with income growth within the double digits jointly throughout states. Many states took the opportunity to make one time investments, enact tax cuts, construct reserves, and pay down money owed, with wet day finances attaining historical levels. Those favorable state fiscal stipulations blended with federal fiscal reduction mitigated the will for the standard state spending cuts that occurred in prior recessions.

Fiscal stipulations in maximum states remained strong in FY 2023, however expansion in income collections slowed and states expressed issues relating to their longer-term fiscal outlook. After adjusting for inflation, FY 2023 state normal fund spending grew 4.4% in comparison to 8.1% in FY 2022. Even though states had projected that income collections would decline in FY 2023, income collections outperformed projections in maximum states. Heading into FY 2024, many states appear be in robust fiscal positions and feature constructed up reserve finances, however inflationary pressures, changes in shopper intake, inventory marketplace volatility, tapering federal fiscal reduction, and the impact of tax cuts on income collections have all added power and uncertainty to the state budgeting procedure. Whilst there was contemporary optimism {that a} recession might be have shyed away from as inflation cools and task signs stay robust, state income collections have began to slow or decline, and a few states can have to cope with funds gaps within the coming years. In step with governors’ proposed budgets for FY 2024, states in combination are expecting state normal fund spending expansion to gradual (2.5% expansion) and income expansion to say no (through 0.7%).

Tendencies in Enrollment Expansion FY 2023 and FY 2024

Medicaid enrollment grew extra slowly in FY 2023 and is anticipated to say no in FY 2024 because of the unwinding of the continual enrollment requirement (Determine 2). Following the onset of the COVID-19 pandemic and get started of the Medicaid steady enrollment provision, enrollment rose sharply in FY 2021 (11.1%) and persevered to develop, even though extra slowly, in FY 2022 (8.4%) and FY 2023 (6.5%). The continual enrollment provision ended March 31, 2023, and maximum states began Medicaid disenrollments in past due FY 2023 (even though some didn’t get started till FY 2024). During the unwinding, states will redetermine eligibility for all Medicaid enrollees and can disenroll those that are not eligible or who might stay eligible however are not able to finish the renewal procedure. Responding state Medicaid businesses challenge overall Medicaid enrollment will decline through 8.6% in FY 2024. After attaining file top enrollment, those estimates replicate a dramatic year-over-year decline in program enrollment from that prime. The FY 2024 projection displays the internet Medicaid enrollment alternate from FY 2023 to FY 2024 together with new enrollments, protection losses because of unwinding, and a few “churn” when those that lose protection re-enroll inside the yr. Estimates of each enrollment and spending are unsure, and the consequences of unwinding are evolving, with important variation throughout states.

Whilst the most important motive force of enrollment developments continues to be the continual enrollment provision and its next unwinding, state Medicaid businesses additionally reported eligibility coverage adjustments as an upward power. Whilst unwinding used to be anticipated to lead to enrollment declines, many states (nearly a 3rd of responding states in FY 2023 and just about three-quarters in FY 2024) discussed eligibility expansions have been striking upward power on enrollment. Lots of the reported expansions, alternatively, are slim in scope and no longer anticipated to totally offset the magnitude of enrollment declines anticipated all over unwinding. Probably the most continuously reported adjustments have been the adoption of a brand new approach to lengthen Medicaid postpartum coverage to twelve months and the new federal requirement, starting January 2024, for all states to undertake 12-month steady eligibility for Medicaid and Kids’s Well being Insurance coverage Program (CHIP) kids. (About part of states provide 12-month steady eligibility already.) A small collection of states additionally famous adopting the ACA Medicaid expansion or adjustments in eligibility coverage for justice-involved populations, lawfully provide or state-funded protection of undocumented immigrants, and foster care early life who age out of foster care. A couple of states reported {that a} robust economic system put downward power on enrollment.

Tendencies in Spending Expansion FY 2023 and FY 2024

After peaking in FY 2022 at 9.8%, overall Medicaid spending expansion slowed to eight.3% in FY 2023 and is anticipated to gradual additional to three.4% in FY 2024 (Determine 2). Spending expansion larger sharply when the pandemic started in FY 2020 and persevered to extend in FY 2021 and FY 2022. Maximum responding states (8 in 10) famous that Medicaid projections (for FY 2024) replicate the assumptions used within the state’s followed funds; alternatively, a couple of states famous projections replicate more moderen assumptions and others discussed out of date assumptions (e.g. from governor’s funds) or that their funds had no longer but been authorized. State Medicaid businesses reported enrollment adjustments as probably the most major factor using adjustments in overall Medicaid spending. For FY 2024, the full spending expansion price is projected to gradual additional, and nearly all of states pointed to declines in enrollment all over unwinding as probably the most important downward power. Past enrollment expansion, about part of the responding states cited supplier price will increase as an upward power on spending in FY 2023 and FY 2024. States famous that inflation and personnel shortages have been using upper hard work prices, leading to power to extend supplier charges. A couple of states additionally famous expanded eligibility or advantages, usage will increase, house and community-based services and products (HCBS) spending, directed or supplemental bills, and/or expanding pharmacy prices have been striking upward power on overall spending. Conversely, a couple of states reported diminished nursing facility usage, decrease according to member prices all over the continual enrollment length, pharmacy rebates, and/or MCO chance corridors as downward pressures on overall spending.

State Medicaid spending expansion larger in FY 2023 and is projected to extend additional in FY 2024 as the improved FMAP expires (Determine 3). The state proportion of Medicaid spending generally grows at a identical price as overall Medicaid spending expansion until there’s a alternate within the FMAP. All through the Nice Recession, state spending for Medicaid declined in FY 2009 and FY 2010 because of fiscal reduction from a short lived FMAP build up equipped within the American Restoration and Reinvestment Act (ARRA). State spending larger sharply when that fiscal reduction ended. This development has repeated all over the pandemic, with state Medicaid spending declining in FY 2020 and FY 2021, then expanding however at a slower price than overall spending in FY 2022 because of the pandemic-era enhanced FMAP. The speed of state spending expansion in FY 2023 (13.0%) surpassed the velocity of overall spending expansion (8.3%), with states noting the continuation of increased enrollment whilst the improved FMAP section out started on the finish of the fiscal yr. A couple of states additionally reported further power on state spending from adjustments of their common FMAP method and/or the tip of the enhanced FMAP for HCBS carried out as a part of the American Rescue Plan Act (ARPA). Because the pandemic linked enhanced FMAP levels utterly out in FY 2024, the velocity of state spending expansion is anticipated to extend additional (to 17.2%) as overall spending expansion continues to gradual (3.4%).

What to look at?

The unwinding of the Medicaid steady enrollment provision and phase-down of the improved FMAP are anticipated to have an important have an effect on on Medicaid enrollment and spending in FY 2024. Whilst quite a lot of uncertainty stays associated with how Medicaid enrollment will alternate over the process the unwinding, KFF analysis of state information unearths that thousands and thousands of folks have already been disenrolled from Medicaid. Virtually three-quarters of disenrollments to this point were for forms or procedural causes, elevating issues that many of us who stay eligible for Medicaid could also be shedding protection. As famous above, state Medicaid businesses reported enrollment adjustments as probably the most major factor using adjustments in overall Medicaid spending. States additionally discussed demanding situations expecting the acuity of participants that can stay at the program after the unwinding and the percentage of people that can churn again at the program after disenrolling. As well as, CMS oversight that has ended in reinstatement of protection for some enrollees as neatly pauses in procedural disenrollments might have an effect on the tempo of unwinding and the magnitude of disenrollments. Important variation in state unwinding insurance policies (together with the adoption of federal unwinding waivers) in addition to diversifications in state administrative capacities and programs boundaries also are more likely to give a contribution to differing state enrollment and spending effects associated with unwinding.

Whilst maximum states on the time of the survey reported favorable state fiscal stipulations, over part of responding states famous an unsure fiscal outlook. Maximum states weren’t expecting state income shortfalls and no states reported lively funds cuts on the time of the survey. Then again, some state Medicaid businesses did file being requested to concentrate on funds impartial program adjustments or to spot price containment tasks that would enhance high quality whilst lowering spending, even though that is ceaselessly regimen in lots of states irrespective of fiscal situation. Along with the unwinding, macroeconomic uncertainties (e.g., inflationary pressures and personnel demanding situations) and the lack of the improved FMAP and different expiring federal pandemic reduction all upload power and uncertainty to the Medicaid budgeting procedure, and through extension, to the state budgeting procedure as Medicaid is a significant part of state budgets as each a spending and income supply. Many Medicaid officers are due to this fact taking a look forward cautiously understanding that they will have to be ready to unexpectedly reply to worsening financial stipulations, if and after they happen.

Definition of Medicaid Spending. General Medicaid spending contains all bills to Medicaid suppliers for Medicaid-covered services and products equipped to enrolled Medicaid beneficiaries. Medicaid spending additionally contains particular disproportionate proportion clinic (DSH) bills that subsidize uncompensated clinic maintain individuals who’re uninsured and unreimbursed prices of maintain individuals on Medicaid. General Medicaid spending does no longer come with Medicaid administrative prices and federally mandated state “Clawback” bills to lend a hand finance the Medicare Phase D prescription drug get advantages for Medicaid beneficiaries who’re additionally enrolled in Medicare. States also are requested to exclude prices for the Kids’s Well being Insurance coverage Program (CHIP). General Medicaid spending contains bills financed from all resources, together with state finances, native contributions, and federal matching finances. Ancient state Medicaid spending refers to all non-federal spending, which might come with native finances and supplier taxes and costs in addition to state normal fund greenbacks.

Method. KFF commissioned Well being Control Mates (HMA) to survey Medicaid administrators in all 50 states and DC to spot and observe developments in Medicaid spending, enrollment, and policymaking. Given variations within the financing construction in their methods, the U.S. territories weren’t incorporated on this research. That is the 23rd annual survey, carried out initially of every state fiscal yr from FY 2002 via FY 2024. The KFF/HMA Medicaid survey for this file used to be despatched to every Medicaid director in June 2023. 40-eight states equipped survey responses through October 2023. The 3 states that didn’t reply through this time are Florida, Minnesota, and South Carolina.

For FY 2023 and FY 2024, annual charges of expansion for Medicaid spending have been calculated as weighted averages throughout all states. 40-eight states reported Medicaid expenditure expansion charges for FY 2023, and 47 states reported Medicaid expenditure expansion charges for FY 2024. Weights for spending have been derived from the newest state Medicaid expenditure information for FY 2022, in line with estimates ready for KFF through the City Institute the usage of CMS Shape 64 stories, adjusted for state fiscal years. Those CMS-64 information have been extensively utilized for historical Medicaid spending and come with all 50 states and DC. For FY 2018 and 2019, spending for New York used to be adjusted to replicate unexplained anomalies within the state spending at the CMS-64 information.

The typical annual Medicaid enrollment expansion price for FY 2024 used to be calculated the usage of weights in line with Medicaid and CHIP initial per month enrollment information for June 2023 revealed through CMS. For FY 2024, 40 states reported Medicaid enrollment expansion charges. The knowledge reported for FY 2023 and FY 2024 for Medicaid spending and FY 2024 for Medicaid enrollment are weighted averages, and due to this fact, information reported for states with greater enrollment and spending have a better impact at the nationwide reasonable.

Ancient enrollment pattern information for FY 1998 to FY 2013 displays the yearly share alternate from June to June of per month enrollment information for Medicaid beneficiaries gathered from all states and DC. Enrollment pattern information for FY 2014 to FY 2023 displays expansion in reasonable per month enrollment in line with KFF research of the Medicaid & CHIP Per month Programs, Eligibility Determinations, and Enrollment Experiences from CMS for all 50 states and DC. Observe that a number of states have revised per month enrollment information way back to June 2017 to higher align with reporting standards for the CMS, Medicaid & CHIP Per month Programs, Eligibility Determinations, and Enrollment Experiences. Knowledge for months previous to June 2017 have no longer been revised and might use relatively other standards for reporting per month enrollment and normally lead to greater enrollment totals.

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