Medicaid Enrollment, Spending Set to Swell

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In FY 2008, state Medicaid rolls increased by 2.1 percent as states began experiencing the effects of a weakening economy. With a deteriorating economy, unemployment rises and people face the loss of both employment-based coverage and wages, making them more likely to be eligible for public programs such as Medicaid. As a result, Medicaid enrollment is expected to jump even higher (by 3.6 percent) in FY 2009.[i]

Total Medicaid spending increased by 5.3 percent in FY 2008; for FY 2009, state legislatures adopted Medicaid appropriations that are 5.8 percent higher than Medicaid expenditures in FY 2008.[ii] Increases in Medicaid enrollment and spending combined with budget constraints raise the strong possibility of Medicaid program cuts as states try to manage growth in their public programs with fewer resources. In fact, two-thirds of Medicaid directors project Medicaid budget shortfalls, which could translate into decreased eligibility or provider payments or both.[iii]
A recent analysis found that a 1 percentage point uptick in the nation’s unemployment rate would result in 1.1 million additional uninsured and would increase Medicaid and State Children’s Health Insurance Program (SCHIP) enrollment by 1 million adults and children, resulting in an additional $1.4 billion in state Medicaid spending.[iv] Given that the unemployment rate increased by 1.5 percentage points from June 2007 to August 2008, analysts expect to see an increase in Medicaid and SCHIP coverage of approximately 700,000 adults and 900,000 children, barring cuts in eligibility.[v]

Figure: Percent Change in Medicaid Enrollment, FY 1999-2009


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[i] Smith, V. et al. “Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an Economic Downturn, Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2008 and 2009,” Kaiser Commission on Medicaid and the Uninsured, September 2008.
[ii] Ibid.
[iii] Ibid.
[iv] “Unemployment’s Impact on Uninsured and Medicaid,” Data Spotlight, Kaiser Commission on Medicaid and the Uninsured, 2008.
[v] Holahan, J. and A. Cook. “The Decline in the Uninsured in 2007: Why Did It Happen and Can It Last?” Kaiser Commission on Medicaid and the Uninsured, October 2008.