Healthcare Financial News

Across the country, states estimate Medicaid enrollment grew by an average of 5.4 percent in state fiscal 2009, the highest rate in six years, according to a survey released today by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured.

This surpasses the projected 3.6 percent increase at the start of the year. Similarly, total Medicaid spending growth averaged 7.9 percent in FY09, the highest rate in five years, well above the 5.8 percent projected growth. For FY10, states estimate Medicaid enrollment will grow by 6.6 percent over FY09 levels.

Increases in the number of people on Medicaid and state spending on the program are attributed to the recession, which strains state budgets and pressures officials to curb costs despite increased financial help from the federal government. The annual 50-state survey of state Medicaid officials finds that these trends are expected to continue well into the 2010 fiscal year.

Because many states have already used Medicaid as a vehicle to expand health coverage, Medicaid officials expressed general support for an expanded role for the program in health reform. Even in these tight fiscal times more than half of the states in FY09 and FY10 are moving forward with efforts to improve eligibility standards or the streamline application processes in a bid to cover more people. Among the states implementing the broadest reforms and eligibility expansions are Colorado, Maryland, New York, Oklahoma, and Wisconsin.

However, state Medicaid officials did register concerns about health reform, too, reflecting current state budget situations. Three-quarters of states expressed concern that Medicaid eligibility expansions, mandated minimum provider rates, and new administrative costs–depending on how they were financed–could add to state fiscal woes.

If federal reform efforts are not enacted, the costs would be substantial, according to a new report commissioned by the Robert Wood Johnson Foundation. In every state, the number of uninsured will increase, employer-sponsored insurance coverage will continue to erode, spending on public programs will balloon, and out-of-pocket healthcare costs for individuals and families could increase by more than 35 percent over the next decade, the authors say. While all income levels would be affected, middle-class working families would be hardest hit.

Researchers from the Urban Institute used a simulation model to estimate how coverage and cost trends would change between now and 2019 if the health system is not reformed. The analysis examines best, intermediate, and worst-case scenarios. In the worst-case scenario:

• In 29 states, the number of people without insurance would increase by more than 30 percent.
• Businesses would see their premiums continue to increase—more than doubling in 27 states.
• Every state would see a smaller share of its population getting health care through their job.
• Every state would see their Medicaid/Children's Health Insurance Program spending rise by more than 75 percent.
• The amount of uncompensated care in the health system would more than double in 45 states.