Managed Care Outlook

Smaller cost increases for states expanding Medicaid under ACA


One place the Affordable Care Act (ACA) is being keenly felt is in Medicaid, where delivery-system improvements occur as enrollment grows, according to a study by the Kaiser Commission on Medicaid and the Uninsured (KCMU). Under the ACA, 27 states and the District of Columbia have expanded Medicaid, and it seems to be making fiscal sense.

Even the 23 states not signed up with Medicaid expansion under the ACA are implementing ACA-related changes that require states to “streamline Medicaid enrollment and renewal processes, transition to a uniform income eligibility standard, and coordinate with new ACA insurance marketplaces,” the study says. “State Medicaid officials reported continued growth in managed care initiatives and other delivery-system reforms, including the implementation or expansion of Medicaid health homes, patient-centered medical homes, and initiatives to integrate care and financing for the dual-eligible beneficiaries.”

As the report was released, Diane Rowland, KCMU’s executive director, observed, “Whether a state elected to expand or not, Medicaid programs across the nation are being transformed with new enrollment procedures and outreach efforts combined with increased emphasis on delivery-system reforms.”

Medicaid programs focus on delivery-system reforms
Number of states expanding programs, by fiscal year 2014 2015
Managed care expansions 22 23
Other delivery-system expansions 30 40
Home and community-based service expansions 42 47

The 28 states participating in Medicaid expansion will see increases of 18% in enrollment and 18.3% in total Medicaid spending in fiscal 2015, which for most states ends in July. “The spending growth is mostly driven by the boost in new enrollment that is financed by 100% federal funds,” says the study. The states will spend only about 4.4% more of their own money.

Meanwhile, the 23 states that are not implementing Medicaid expansion can expect state spending to rise 6.8%.

Expansion states to see higher enrollments

Expansion states to see higher enrollments

Source: Kaiser Family Foundation Commission on Medicaid and the Uninsured, October 2014

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