Medicaid spending hit $581B in 2016. Here’s how it’s projected to grow over the next decade

Medicaid spending hit $581B in 2016. Here’s how it’s projected to grow over the next decade

September 28, 2018 | Source: Fierce Healthcare

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Medicaid provided healthcare coverage to 72.2 million people in fiscal year 2016, an increase of 3.1% over 2015.

That increase corresponded with a 4.9% increase in spending over 2015, amounting to a total of $580.9 billion in spending for 2016, according to a new CMS report (PDF). The agency projected that over the following 10 years, expenditures would grow at an average annual rate of 5.7%, reaching over $1 trillion by 2026.

In a statement, CMS Administrator Seema Verma said the projected growth in spending was “simply unsustainable” and that the government should be looking for ways to slow that growth.

However, Verma did note that due to reductions in projected long-term care spending, the average annual cost per enrollee will grow at a slower rate than previously expected.

“Compared to the prior report, total projected Medicaid expenditures for benefits and administrative costs are expected to be $104.1 billion less from 2016 through 2025, or 1.4 percent lower, reflecting slower growth in benefit expenditures (particularly for long-term care services),” the report said. “Annual per enrollee costs are projected to grow by 4.2 percent, or at a 0.1-percent lower rate, over the same period.”

The federal government has a good reason to be concerned about the growth of Medicaid spending. According to CMS projections, most of the added expenditures over the next decade will be paid by the federal government. 

That’s because many of the new Medicaid enrollees came in during the Affordable Care Act’s Medicaid expansion, an expansion that was heavily funded by the federal government. Some Republican health plans have proposed simply reducing the federal share of Medicaid expenditures, which would mean states would have to cover more of the expense growth themselves.

 

That would not, however, change the overall number of enrollees in the program. And according to CMS, most of the adults added by the expansion have already been accounted for.

“An estimated 12.2 million expansion adult enrollees were covered in 2017, based on enrollment counts included in 2017 financial data reported by the States to CMS,” the agency’s actuaries wrote. “By 2026, the expansion adult population is projected to grow to 13.3 million. These estimates are based on the assumption that 55 percent of potential expansion enrollees reside in States with expanded eligibility in 2017 and after.”

1.1 million people over 10 years isn’t a ground-shaking increase. And in fact, enrollment is set to taper off by 2026 (after reaching around 82 million people) while costs continue to surge.

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