In fiscal year 2012, state Medicaid spending on average grew by just 2%, the lowest recorded growth rate since 2006, primarily because of the improving economy and states' cost-cutting efforts, according to an annual report by the Kaiser Commission on Medicaid and the Uninsured, Kaiser Health News reports (Galewitz, Kaiser Health News, 10/25).
By comparison, Medicaid spending in FY 2011 grew by 9.7% (Barr, Modern Healthcare, 10/25). The report also found that Medicaid enrollment grew by 3.2%, which was down for the third straight year after a 4.4% increase in FY 2011 and a 7.2% increase in FY 2010 (Kaiser Health News, 10/25).
According to the report, states expect spending and enrollment growth in FY 2013 to increase only slightly to 3.8% and 2.7%, respectively.
Possible Contributing Factors
Researchers attributed the lower rate of spending to a slowly improving economy, according to Modern Healthcare (Modern Healthcare, 10/25).
In addition, states have adopted "aggressive" cost-cutting measures, such as expanding managed care programs, placing caps on coverage for certain medical services and lowering reimbursement rates to some health care providers, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 10/25).
- 45 states froze or reduced provider rates in 2012, and 42 states have signaled that they plan take those same steps in 2013;
- 18 states in 2012 eliminated or restricted benefits, such as dental and vision services, and eight states have included such measures in their FY 2013 budget plans; and
- 20 states in 2012 reported expanding the use of managed care, and thirty-five states have said they plan to expand managed care in FY 2013; 10 of those states have indicated that they plan to implement managed long-term care (Kaiser Health News, 10/25).
Report's Potential Influence on Reform Argument
According to "Healthwatch," the Kaiser report could challenge one of the main arguments by Republicans that the Obama administration has "fostered a culture of dependency while the economy has languished," ("Healthwatch," The Hill, 10/25).
Judith Solomon, vice president for health policy at the liberal Center on Budget and Policy Priorities, said the report shows that the Medicaid program "is not out of control" and is growing more slowly than Medicare and private coverage over time.
However, Michael Cannon, director of health policy studies at the conservative Cato Institute, said that the program is "inefficient" and that the Kaiser report does not reduce the need to turn Medicaid into a block-grant system. He added, "In the past, the rate of spending growth has slowed even more than this, only to surge again" (Kaiser Health News, 10/25).