When the Kaiser Family Foundation released its new report about enrollment and spending trends in Medicaid earlier this week, the most reported on findings probably didn’t shock anyone: as a result of increased enrollment associated with the ACA, the rate of growth of overall Medicaid spending increased. We covered more people, and spending went up as a result – this isn’t a particularly interesting story. But the data actually tells a far more intriguing story, buried just a little deeper in the report.
To see it, you have to look beyond what happened to overall Medicaid spending, and dig into happened to state Medicaid spending. Remember: Medicaid is a jointly-financed program between the states and the federal government, with the federal government picking up the entire tab for newly-eligible Medicaid beneficiaries for the first three years. So while overall (federal plus state) Medicaid spending growth increased as a result of coverage gains associated with the ACA, state Medicaid spending growth didn’t, even in expansion-states. Indeed, state spending growth on Medicaid since the coverage expansions were implemented in 2014 is in line with growth levels from previous years.
An even more interesting story appears when you compare state Medicaid spending growth in states that closed the coverage gap with states that have not: in Fiscal Year (FY) 2014, states that closed the gap saw their state Medicaid spending grow at about the same rate (6.6%) as state Medicaid spending in states that didn’t close gap (6.1%). And in FY2015, states that closed the coverage gap are actually projecting less growth in state Medicaid spending (4.4%) than states refusing to close the gap (6.8%).
Let’s just review that one more time, because it’s a little counterintuitive: some states chose to accept federal dollars to provide coverage to more people. Not only did they see a significant drop in the number of uninsured residents as a result, but they also did not experience a jump in their Medicaid spending growth – and, in fact, they are projecting slower growth for this coming year than states that didn’t close the coverage gap. Other states have refused to close the coverage gap. They have higher uninsured rates – causing harm to both their economies and the health of their families – and their Medicaid spending grew at about the same rate as states that did close the coverage gap. And next year these states are projecting even faster state Medicaid spending growth than states that closed the gap.
The numbers from the Kaiser report focus only on spending and savings in the Medicaid program itself. States that closed the coverage gap have reported savings elsewhere in their state budgets as a result of the drop in uninsured residents, such as reductions in mental health, correctional health, and state-funded programs for the uninsured and uncompensated care. These savings are not accounted for in the Kaiser report, which means this report underestimates the fiscal benefits of closing the coverage gap. Indeed, the Kaiser report just added more evidence to what we already knew: closing the coverage gap is a win-win proposition for states.