The Continuing Medicaid Budget Challenge: State Medicaid Spending Growth and Cost Containment in Fis

1
The Continuing Medicaid Budget Challenge State
Medicaid Spending Growth and Cost Containment in
Fiscal Years 2004 and 2005Results from a
50State SurveyPrepared by Vernon Smith,
Rekha Ramesh, Kathleen Gifford, Eileen Ellis
HEALTH MANAGEMENT ASSOCIATESAndRobin Rudowitz
and Molly OMalleyKaiser Commission on Medicaid
and the UninsuredOctober 2004
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Medicaids Role in the Health System, 2002
Medicaid as a share of national personal health
care spending
Total National Spending (billions)
1,340
486.5
501.5
103
162
SOURCE Levit, et al, 2004. Based on National
Health Care Expenditure Data, Centers for
Medicare and Medicaid Services, Office of the
Actuary.
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Medicaid Enrollees and Expendituresby Enrollment
Group, 2003
Elderly 9
Elderly 26
Disabled 16
Adults 27
Disabled 43
Children 48
Adults 12
Children 19
Total 52.4 million
Total 235 billion
Expenditure distribution based on CBO data that
includes only federal spending on services and
excludes DSH, supplemental provider payments,
vaccines for children, administration, and the
temporary FMAP increase. Total expenditures
assume a state share of 43 of total program
spending. SOURCE Kaiser Commission estimates
based on CBO and OMB data, 2004.
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State Medicaid Spending as a Percent of General
Fund Expenditures, 2002
Total State General Fund Spending 496 billion
SOURCE National Association of State Budget
Officers, 2002 State Expenditure Report, November
2003.
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Average Annual Growth Rates of Total Medicaid
Spending
Annual growth rate
SOURCE For 1992-2002 Urban Institute estimates
based on data from Medicaid Financial Management
Reports (HCFA/CMS Form 64) For 2003 and 2004
Health Management Associates estimates based on
information provided by state officials.
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Increases in Health Insurance Premiums Compared
to Other Indicators, 1988-2004
13.9
2.3
2.2
Estimate is statistically different from the
previous year shown at plt0.05. Estimate is
statistically different from the previous year
shown at plt0.1. Note Data on premium increases
reflect the cost of health insurance premiums for
a family of four. Source KFF/HRET Survey of
Employer-Sponsored Health Benefits 1999-2004
KPMG Survey of Employer-Sponsored Health
Benefits1993, 1996 The Health Insurance
Association of America (HIAA) 1988, 1989, 1990
Bureau of Labor Statistics, Consumer Price Index
(U.S. City Average of Annual Inflation (April to
April), 1988-2004 Bureau of Labor Statistics,
Seasonally Adjusted Data from the Current
Employment Statistics Survey (April to April),
1988-2004.

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Percent Change in U.S. Medicaid Enrollment, FY
1998- FY 2005
Annual growth rate
SOURCE For 1998-2003 Eileen R. Ellis, Vernon K.
Smith and David M. Rousseau, Medicaid Enrollment
in 50 States, June 2003 Data Update, Kaiser
Commission on Medicaid and the Uninsured,
forthcoming September 2004. For 2004 and 2005
Health Management Associates estimates based on
information provided by state officials.
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State Spending Growth for Medicaid vs. Nominal
State General Fund Spending
FY2005
FY2004
State General Fund Growth
State Medicaid Spending Growth (Appropriated)
State General Fund Growth (Appropriated)
State Medicaid Spending Growth
SOURCE KCMU survey of Medicaid officials in 50
states and DC conducted by Health Management
Associates, June and December 2003 and July 2004.
NGA/NASBO Fiscal Survey of the States, April 2004
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States Undertaking New Medicaid Cost Containment
Strategies FY 2002 FY 2005
SOURCE KCMU survey of Medicaid officials in 50
states and DC conducted by Health Management
Associates, September and December 2003 and
October 2004.
10
Most States Planned Changes to Provider Rates in
FY 2005
Number of States Changing Rates
SOURCE KCMU survey of Medicaid officials in 50
states and DC conducted by Health Management
Associates, October 2004.
11
Medicaid Prescription Drug Policy Changes FY 2004
and FY 2005
SOURCE KCMU survey of Medicaid officials in 50
states and DC conducted by Health Management
Associates, October 2004.
12
States Report Use of Enhanced FMAP in FY 2004
SOURCE KCMU survey of Medicaid officials in 50
states and DC conducted by Health Management
Associates, June and December 2003 and July 2004.
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Average Annual Medicaid Growth RatesFederal
Fiscal Relief Helped States in FY 2004 and Ended
in FY 2005
State Spending Growth
Federal Spending Growth
Total Spending Growth
SOURCE Estimates based on KCMU analysis of
CMS-64 data and KCMU survey of Medicaid officials
in 50 states and DC conducted by Health
Management Associates, June and December 2003 and
July 2004.
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Average Annual Growth Rates of Total (Federal and
State) Medicaid Spending
Actual FY 2005 Expected to be Greater than
Appropriated Amounts
FY 2003
FY 2004
FY 2005
NOTE States appropriate both state and federal
Medicaid spending. SOURCE KCMU survey of
Medicaid officials in 50 states and DC conducted
by Health Management Associates, June and
December 2003 and July 2004.
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Underlying Growth in State Tax Revenue Compared
with Average Medicaid Spending Growth, 1997-2004
NOTE State Tax Revenue data is adjusted for
inflation and legislative changes. 2004 is a
preliminary estimate. SOURCE Analysis by the
Rockefeller Institute of Government of data from
the Bureau of the Census, Bureau of Economic
Analysis and the National Association of State
Budget Officers.
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Are Pressures On Your Medicaid Program Growing,
Remaining Constant, Or Subsiding?
12 States Remaining Constant
39 States Growing
NOTE No state reported pressure on their
Medicaid program was subsiding. SOURCE KCMU
survey of Medicaid officials in 50 states and DC
conducted by Health Management Associates,
October 2004.