State Budget Pressures Easing, But Medicaid Still Faces Long-Term Challenges, Surveys Show
Topic Medicaid
[Oct 20, 2005]
Sustained state cost-containment actions and a stronger economy have improved the outlook for Medicaid and SCHIP, but factors contributing to Medicaid's cost growth continue to present long-term challenges, according to a new state surveys released Wednesday by the Kaiser Commission on Medicaid and the Uninsured. According to the survey, state Medicaid officials say that rising health costs, declining employer-based coverage, demographic trends and other factors raise concerns about future Medicaid cost growth.
Budget In a survey of state officials, KCMU and Health Management Associates found that growth in Medicaid spending slowed to an average of 7.5% in fiscal year 2005, the third year of decreased growth. The survey indicates that a decline in enrollment growth in fiscal year 2005 to 4% combined with spending reduction measures taken at the state level contributed to the slowdown in spending growth. Enrollment growth is expected to slow for the fourth consecutive year to 3.1% in fiscal year 2006 (KCMU release, 10/19). The gap between Medicaid spending increases and state tax revenue growth fell to 2.6%, the lowest level since 1999. According to the survey, despite the improved fiscal outlook, states are planning new cost-control measures, such as provider rate reductions or freezes, the Washington Post reports (Washington Post, 10/20).
In addition, many states are expanding coverage (CQ HealthBeat, 10/19).
Drug Benefit In addition, KCMU and Georgetown University's Health Policy Institute surveyed state officials regarding the outpatient prescription drug benefit, finding that all surveyed states actively managed their benefits and imposed a variety of cost-control mechanisms. More than two-thirds of responding states use preferred drug lists. Sixteen of 37 states surveyed placed limits on prescription refills, but only two states automatically denied refills that surpassed limits.
Enrollment Procedures KCMU and the Center on Budget and Policy Priorities conducted a survey that focuses on state actions regarding Medicaid and SCHIP eligibility, enrollment and renewal procedures, as well as cost-sharing requirements for low-income families (KCMU release, 10/19). According to the survey, Missouri and Tennessee have made large cuts in eligibility. The survey also found that 20 states reported taking actions expand coverage by simplifying procedures and requirements for beneficiaries, expanding eligibility or reducing premiums for children's coverage (CQ HealthBeat, 10/19). However, 10 states either increased premiums or lowered the level at which they begin charging premiums for children's coverage, according to the survey.
Reaction Diane Rowland, executive director of KCMU and executive vice president of the Kaiser Family Foundation, said, "These studies affirm the basic countercyclical nature of Medicaid. Its costs increase most rapidly when it is most in demand -- in a sluggish economy," adding, "While the fiscal crisis has subsided, state budget pressure remains because the nation relies on Medicaid to forgive the failures of our larger health system." (KCMU release, 10/19). Alan Weil, executive director of the National Academy for State Health Policy, said, "We are at a turning point in how much with think of (Medicaid) as a national program," adding, "There is tension between state and federal government, ... we need to think about who the burden is going to fall upon" (CQ HealthBeat, 10/19).
Topic Medicaid
[Oct 20, 2005]
Sustained state cost-containment actions and a stronger economy have improved the outlook for Medicaid and SCHIP, but factors contributing to Medicaid's cost growth continue to present long-term challenges, according to a new state surveys released Wednesday by the Kaiser Commission on Medicaid and the Uninsured. According to the survey, state Medicaid officials say that rising health costs, declining employer-based coverage, demographic trends and other factors raise concerns about future Medicaid cost growth.
Budget In a survey of state officials, KCMU and Health Management Associates found that growth in Medicaid spending slowed to an average of 7.5% in fiscal year 2005, the third year of decreased growth. The survey indicates that a decline in enrollment growth in fiscal year 2005 to 4% combined with spending reduction measures taken at the state level contributed to the slowdown in spending growth. Enrollment growth is expected to slow for the fourth consecutive year to 3.1% in fiscal year 2006 (KCMU release, 10/19). The gap between Medicaid spending increases and state tax revenue growth fell to 2.6%, the lowest level since 1999. According to the survey, despite the improved fiscal outlook, states are planning new cost-control measures, such as provider rate reductions or freezes, the Washington Post reports (Washington Post, 10/20).
In addition, many states are expanding coverage (CQ HealthBeat, 10/19).
Drug Benefit In addition, KCMU and Georgetown University's Health Policy Institute surveyed state officials regarding the outpatient prescription drug benefit, finding that all surveyed states actively managed their benefits and imposed a variety of cost-control mechanisms. More than two-thirds of responding states use preferred drug lists. Sixteen of 37 states surveyed placed limits on prescription refills, but only two states automatically denied refills that surpassed limits.
Enrollment Procedures KCMU and the Center on Budget and Policy Priorities conducted a survey that focuses on state actions regarding Medicaid and SCHIP eligibility, enrollment and renewal procedures, as well as cost-sharing requirements for low-income families (KCMU release, 10/19). According to the survey, Missouri and Tennessee have made large cuts in eligibility. The survey also found that 20 states reported taking actions expand coverage by simplifying procedures and requirements for beneficiaries, expanding eligibility or reducing premiums for children's coverage (CQ HealthBeat, 10/19). However, 10 states either increased premiums or lowered the level at which they begin charging premiums for children's coverage, according to the survey.
Reaction Diane Rowland, executive director of KCMU and executive vice president of the Kaiser Family Foundation, said, "These studies affirm the basic countercyclical nature of Medicaid. Its costs increase most rapidly when it is most in demand -- in a sluggish economy," adding, "While the fiscal crisis has subsided, state budget pressure remains because the nation relies on Medicaid to forgive the failures of our larger health system." (KCMU release, 10/19). Alan Weil, executive director of the National Academy for State Health Policy, said, "We are at a turning point in how much with think of (Medicaid) as a national program," adding, "There is tension between state and federal government, ... we need to think about who the burden is going to fall upon" (CQ HealthBeat, 10/19).
