Health insurance

State Medicaid spending fell below pre-pandemic levels during continuous enrollment

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Dive Brief:

  • State spending on Medicaid fell below pre-pandemic levels even as enrollment in the public health insurance program soared during the COVID-19 pandemic, according to an analysis by KFF. 
  • During the public health emergency, states kept beneficiaries continuously enrolled in Medicaid in exchange for enhanced federal funding. The report estimated states received more than $117 billion from the increased Federal Medical Assistance Percentage, or FMAP, during this three-year period.
  • But the time of expanded federal funding is drawing to a close. States could begin disenrolling people from Medicaid at the beginning of April, and federal payments will steadily phase down through the end of the year. Though it’s still early and the size of the decrease is still unclear, KFF predicts enrollment will significantly decline, though state spending will likely increase. 

Dive Insight: 

The number of people covered by Medicaid and the Children’s Health Insurance Program skyrocketed during the pandemic, contributing to record-low uninsurance rate projections this year. But that rate could rise again as states begin determining who is still eligible for Medicaid after the continuous enrollment period.

Medicaid enrollment could decrease by 18% from March 2023 to May 2024, though that number may vary among states as they take different approaches to redeterminations. Some states haven’t begun disenrolling beneficiaries yet, though an ongoing KFF analysis has found 1.3 million people have been removed from the program across 22 states.

The HHS recently raised the alarm about the number of people losing coverage, particularly those who were disenrolled for administrative reasons. In a letter to governors, HHS Secretary Xavier Becerra offered new flexibilities to states during Medicaid redeterminations, including allowing managed care plans to help people complete renewal forms or holding off on disenrollment to allow for more targeted outreach. 

A KFF survey from May found many Medicaid beneficiaries were unaware of the redeterminations process, and 27% who used the program as their sole source of coverage reported they wouldn’t know where to look for insurance if they were deemed ineligible. 

State spending will likely increase as the FMAP expires. The latest analysis found state Medicaid spending decreased from $231 billion in 2019 to $214 billion in 2020, while federal spending rose from $444 billion to $481 billion. In 2022, states spent $224 billion, while the federal government shelled out $538 billion. 

Enrollment in the program reached 84.1 million in 2022 compared with 64.8 million in 2019. In FY 2023, which reflects enrollment through March, 87.5 million were enrolled in Medicaid. 

KFF found states that haven’t expanded Medicaid received 27% of the expanded federal funding even though they only make up 22% of overall Medicaid spending, as the enhanced FMAP didn’t apply to spending for people who were eligible through an Affordable Care Act expansion.

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