States Expect Medicaid Enrollment and Spending to Increase by Over 8 Percent Each in FY 2021, Primarily Driven By a Slumping Economy and Federal Conditions to Maintain Eligibility to Access Enhanced Federal Medicaid Funds

After several years of declining or flat growth in enrollments, states expect the number of Medicaid enrollments and spending to increase more than 8 percent each in fiscal 2021, largely driven by a declining economy amid the pandemic and federal conditions, To Maintain Coverage for Access to Enhanced Federal Matching Funds According to New Budget Survey by KFF Medicaid.

The 20th annual survey of Medicaid state directors found that enrollment is expected to increase 8.2 percent and combined federal and state Medicaid spending is expected to increase 8.4 percent over the next fiscal year. This follows a 6.3 percent increase in total Medicaid spend for fiscal 2020, during which enrollment was essentially unchanged.

The results paint a picture of a Medicaid program that state officials are increasingly expecting to provide health coverage and help alleviate the economic blow of the coronavirus pandemic for low-income people – all at a time when the financial Ways the state governments are available such services are thinly stretched.

Earlier this year, under the Families First Coronavirus Response Act (FFCRA), Congress approved a 6.2 percentage point increase in the federal Medicaid match rate (FMAP). To be eligible for the funds, states cannot tighten Medicaid licensing standards or increase premiums beyond the January 1, 2020 guidelines, and must grant participants ongoing eligibility during the public emergency period. The FMAP increase doesn't apply to the Affordable Care Act expansion group, for which the federal government is already paying 90 percent of the cost.

Nearly all states said they are using the extra federal money to pay for the rise in Medicaid enrollment and to help ease Medicaid or general budget constraints. Around two thirds of the reporting countries stated that the tax breaks are also used to reduce provider rates and / or cut benefits.

While expected government spending for Medicaid is critical to government budgets, the projections in this year's survey don't provide a clear picture, as increased federal funding due to the recent public health emergency renewal is expected to expire in late March 2021 (PHE), later than states had generally accepted. At the time of the survey, states estimated that state Medicaid spending would decrease in FY2020 (-0.5%) and then increase sharply in FY2021 (12.2%), with most states assuming the extended matching fund would expire by December 2020.

Almost all states report significant adverse effects of the pandemic on the economy and the national budget as well as uncertainties about the future. Even with the expansion of the expanded FMAP, these funds are unlikely to fully offset the decline in government revenues and fully offset government budget deficits that are between 1 percent and 30 percent for fiscal 2021, according to the National Conference of State Legislatures.

State policy measures

The annual budget survey, conducted with Health Management Associates, provides an in-depth, country-by-country examination of the changes and initiatives taking place in Medicaid programs. This year, many are talking about responding to the COVID-19 pandemic. Notable results are:

• The states specifically support providers who are under financial strain due to the lower capacity utilization during the pandemic. More than half of the responding states said that one or more payment changes made in fiscal 2020 or 2021 were wholly or partially related to COVID-19. While at the time of the survey report, more states were targeting increases in fees for services in fiscal year 2021, some states have lowered carrier tariffs in all or nearly all carrier categories, and other states have indicated that tariff freezes or cuts are likely.
• The majority of states have also added or expanded the provision of telemedicine services, and many plan to extend these changes beyond the public health emergency period.
• The pandemic has increased the importance of eliminating long-standing disparities in health and healthcare. Twenty-seven states report implementing, expanding, or reforming a program or initiative to address the social determinants of Medicaid participant health in response to COVID-19.

While attention was paid to institutional care, the survey report finds that long-term care workers (both institutional and community-based long-term care) have been a challenge for many responding states and on many pandemic-related fronts. The majority of states reported problems with a reduction in the supply of long-term care and support (LTSS) workers as a result of the pandemic, access to personal protective equipment (PPE) and testing for direct caregivers, and infection among direct caregivers.

As states use their Medicaid programs to respond to the pandemic, the larger trend of state adoption and implementation of Medicaid expansion continues. To date, 38 states and Washington DC have taken on the ACA Medicaid expansion. Of these, 36 states and DC have implemented expansion coverage (including Idaho and Utah, which both implemented the expansion on January 1, 2020, and Nebraska, which implemented the expansion on October 1, 2020). Two more states, Missouri and Oklahoma, will complete the expansion in fiscal 2022 based on successful Medicaid expansion initiatives.

The survey results are presented in two reports: