WASHINGTON — Spending on Medicaid rose nearly 14 percent on average in the last fiscal year, a report has found, largely because of a tide of newly eligible enrollees in the 29 states that had expanded the program by then to cover millions more low-income adults.
But for most of those states, the cost of the new enrollees was not higher — in a few cases, in fact, it was lower — than expected, according to the report, released Thursday by the Kaiser Family Foundation. And almost all of the additional spending was covered by federal funds, which are paying the entire cost of expanding Medicaid through 2016 and at least 90 percent thereafter.
Nationally, Medicaid enrollment climbed an average of 13.8 percent, and spending on the program 13.9 percent, during the 2015 fiscal year, which for most states ended on June 30. But in the states that had expanded Medicaid, enrollment increased 18 percent on average, and spending 17.7 percent.
In states that had not expanded Medicaid, enrollment grew a relatively modest 5.1 percent, and spending 6.1 percent, during the same period. In these states, the report found, most of the growth was among parents and children who were already eligible for the program but had not previously signed up.
The Affordable Care Act gave states the option of extending Medicaid coverage to nearly all adults with incomes up to 138 percent of the poverty level, or $16,242 for a single person, starting in January 2014. But many Republican-controlled states, especially in the South, have refused. Most of them say that they already spend too much on Medicaid, which now covers 1 in 5 Americans, and that their eventual 10 percent share of expansion costs would be too burdensome.
This week, in a straw vote, Republicans in Utah’s House of Representatives rejected a second attempt by Gov. Gary R. Herbert, also a Republican, to expand the program to about 95,000 additional people. In comments to The Deseret News, of Salt Lake City, Speaker Gregory H. Hughes said, “Everybody loves expanding Medicaid until they have to pay for it.”
But the Kaiser report, based on a survey of state Medicaid directors, found that many states that had expanded the program saved on other parts of their budgets as a result. For example, it said, covering more low-income adults has led to less state and county spending on mental health services for that population, as well as on hospital care for patients who are unable to pay.
The report also found that many states were trying new ways of delivering health care to Medicaid patients, which could eventually reap savings to offset new spending because of the Medicaid expansion.
“We always think of Medicaid as lagging behind,” said Diane Rowland, executive vice president of the Kaiser Family Foundation, “but I think we see Medicaid keeping pace here with other attempts at trying to change the way health services are delivered.”
Many of the states that expanded Medicaid reported that enrollment had initially increased faster than expected. But all predicted much slower enrollment growth — 4.5 percent, on average — during the 2016 fiscal year, with spending projected to grow 8.6 percent. That is largely because officials believe that most of the newly eligible population has enrolled by now, although an improving economy may also play a role, with more people leaving the Medicaid program after getting a job or a raise.
At least two states will most likely see their Medicaid enrollment increase significantly over the next year, though: Alaska, which expanded its program in September, and Montana, which expects to do so early next year.
Medicaid is jointly financed by states and the federal government. Except for people who became eligible under the health care law’s coverage expansion, the federal share ranges from 50 to 74 percent, depending on a state’s average income. Still, many state officials complain that Medicaid eats up ever-increasing portions of their budgets, leaving less for education and other priorities.
According to the Kaiser report, nearly two-thirds of the states that expanded Medicaid found that per-member, per-month costs for their new enrollees were at or below projections.
Rowland said the newly eligible population tended to be younger and healthier than traditional Medicaid enrollees, many of whom are older, disabled or both.