On this episode, four experts on Medicaid discuss how the program is financed, how states are handling some new challenges in the post-pandemic world and changes the new federal administration may bring.
Medicaid is a program jointly funded by the federal and state governments. It provides health care coverage to nearly 80 million people, primarily those with low incomes, people who are living with disabilities or are in long-term care.
On this episode we discussed the nuts and bolts of how Medicaid is financed and how states are handling some new challenges in the post-pandemic world. The pandemic affected both who Medicaid covered and the share paid by the federal and state governments.
In the first segment, NCSL’s Kathryn Costanza was joined by Akeiisa Coleman from the Commonwealth Fund to break down the details of how the program is funded, including how the federal-state share is determined for each state. They also discussed the key drivers of cost in the Medicaid system.
On the second segment, guests Neda Jasemi from the National Association of Medicaid Directors, and Robin Rudowitz from KFF talk about what they are hearing from Medicaid officials around the country. They discussed how the post-COVID unwinding of patients who had remained on the rolls during the pandemic had significant effects on the program. They also discussed steps states are taking to try to ensure access for Medicaid patients and how states are preparing for any changes in the program at the federal level.
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Ed: Hello and welcome to “Our American States,” a podcast from the National Conference of State Legislatures. I’m your host, Ed Smith.
KS: The total number of people enrolled in the program affects program costs and we saw this change dramatically during the pandemic when Medicare folks reached over 94 million at their peak and have since dropped down to about 79 million people post-pandemic.
Ed: That was Kathryn Costanza who tracks Medicaid for NCSL. She is one of four guests on this podcast focusing on Medicaid in the post-COVID era. Medicaid is jointly funded by the federal and state governments and provides health care coverage to nearly 80 million people primarily those with low incomes, people who are living with disabilities or are in long-term care. On this episode, we are going to discuss the nuts and bolts of how Medicaid is financed and how states are handling some new challenges in the post-pandemic world. The pandemic affected both who Medicaid covered and the share paid by the federal and state governments.
We will also get into how states are coping with Medicaid-related financial pressures and the uncertainty over what changes the federal government may make in the program. For our first segment, NCSL’s Kathryn Costanza is joined by Akeiisa Coleman from the Commonwealth Fund to break down the details of how the program is funded including how the federal state share is determined for each state. They also discussed the key driver’s cost in the Medicaid system.
On our second segment, guests Neda Jasemi from the National Association of Medicaid Directors and Robin Rudowitz from KFF talk about what they are hearing from Medicaid officials around the country. They discussed how the post-COVID unwinding of patients who remained on their rolls during the pandemic had significant effects on the program. They also discussed steps states are taking to try to ensure access for Medicaid patients and how states are preparing for any changes in the program at the federal level. Here is our discussion starting with Kathryn and Akeiisa.
Kathryn, Akeiisa, welcome to the podcast.
KS: Thanks for having us. Nice to be here, Ed.
AC: Nice to be here as well.
Ed: Well today, we are going to get into some details about Medicaid, which is such a large part of state budgets. And to start, I think our listeners know as a baseline that Medicaid is jointly funded by the federal government and the states and territories. But they may not know the details. So, Kathryn, why don’t you start off and just kind of explain how that works.
KS: Sure. Thanks, Ed. So, first off, it’s important to know that this looks different in the states and the territories. So, let’s go ahead and start off with the states. States receive federal funding to cover the actual costs of the program and the state’s share of program costs is updated every year based on the state economic conditions. So, what that means is that each state has a unique share of costs. That share in Alabama looks different than it does in New Mexico than it does in Massachusetts than it does in Wisconsin. But by law, the state’s share can’t be more than 50%. So, to say that in another way, the federal government must pay at least 50% of the program’s costs. So, let’s provide an example here. If a state has a 40% share, the federal government is going to make up the difference and pay the remaining 60%. The challenge here is designing a payment system when you don’t know in advance how many people are going to enroll in the program, the types and kinds of services that they are going to use and the volume of services that they are going to use. State Medicaid agencies report estimated costs to the state legislatures and to the regulating federal agency, which is the Centers for Medicare and Medicaid Services or CMS. And that state and federal governments pay the agency for those estimated costs in accordance with that determined share. So, in our example, the state is going to pay 40% of the estimated costs and the federal government is going to pay 60% of the estimated costs.
So, once the state agency pays for the actual services the beneficiaries use, it reports those actual costs to CMS and they true up the balance at the end. So that’s the states. That’s how the states are funded. How are the territories different? Well, the first thing and the important thing is that the territorial share is set by congress and doesn’t change based on economic conditions and territories are paid as a block grant. So, the total spending for the territorial Medicaid program is capped by congress. So, when the territory runs out of federal funding, they are 100% on the hook for the program’s cost for things like provider payments and the program operations and for example in 2024, we know that the Virgin Islands legislature appropriated money from their emergency services fund to pay providers once federal funding ran out.
Ed: Akeiisa, what would you add to that?
AC: So, I would add that to further complicate things, there are different federal matches for different types of services. The administrative cost, the day-to-day operation of the Medicaid program is matched is set at a 50% match. The federal government pays 50% and states pay 50%. There are different matches for specific populations. So, Kathryn mentioned the federal match can vary from state to state. There is a specific federal match set in statute for the Medicaid expansion group, so those individuals making up to 138% of the poverty level as described in the Affordable Care Act. The federal government will pay 90% of those costs. States will pay 10% of the costs. There is some additional variation in federal match for things like IT upgrades so those operating systems that manage the eligibility systems, the enrollment systems there can be additional federal match available for those specific services. There are a lot of nuances in terms of what that federal match. In general, when we talk about the federal match, we are talking about, sometimes we are talking about that administrative piece, which is again set at that primarily set at that 50% level. And then the traditional Medicaid population, which has that variable federal match based on how the state economy is doing. There are times when we know that there are additional financial pressures on states that are outside of their control. The great recession in 2008. The COVID-19 pandemic and then sometimes just an individual or select number of states like Hurricane Katrina where there are additional federal pressures on states, the federal government may step in and say because of this situation and the fact that more people are relying on Medicaid, we are going to increase the federal match because we know more people are utilizing those services. The states don’t have the incoming revenue to continue to maintain their programs as they otherwise would.
Ed: Yeah, that’s probably a good thing for people to keep in mind is that Medicaid is a countercyclical program so when times are bad, usage goes up. When times are good, presumably usage goes down somewhat. Akeiisa, let me stick with you for a minute. So, if I’m a legislator and I want to know like how do they figure out what the share my state pays. What are like the key factors and where can the states pay their share from? What revenue can they use to pay that?
AC: The formula that’s used for determining match is based on per capita income at the state level compared to the national average. That’s kind of the base formula for that federal match. So, if incomes are higher in that state, their federal match will be lower. If incomes are lower, their federal match will be higher. In terms of where the state dollars can come from to pay for the state’s share of Medicaid, the primary source is general revenue. That’s the taxes, sales taxes, other monies collected by the state is the primary source for funding for Medicaid at the state level. States can also use dollars from their counties or cities or other localities in the state that contribute to health care services. At least 40% of the state share of Medicaid costs needs to come from the state government. Up to 60% of the state share can come from those other funds like intergovernmental transfers. Those dollars come in from counties or other localities as well as what we call certified public expenditures. Those are funds of essentially dollars that are spent to provide health care services in publicly run facilities. And so, they are able to say look this is how much we spent on these services and it counts towards the state’s share of Medicaid.
Ed: Really simple.
AC: There are some other streams that states may use. There are some other approaches states may use so even before Medicaid expansion was an option, states sometimes taxed assessments on different provider types whether that’s hospitals, nursing facilities or even the managed care organizations operating in their state.
Ed: Now I mentioned earlier that Medicaid accounts for a significant part of state spending. It’s about 30% with the federal dollars included and I wonder if you can talk about a piece a little bit about what factors drive the costs to states in their Medicaid budgets.
AC: I think the primary driver of costs in Medicaid are the same as they are with other insurance types. It’s the cost of care. There is an equation of you know the number of people who are enrolled in the program will impact the number of dollars that are being spent. It really depends on what dollars those services are being spent on. We know that long-term care, long-term services and supports are a major cost driver particularly institutional care is much more expensive than care in the community. There has been an effort over the last 15, 20 years to kind of rebalance the long-term services and support system so that more dollars are being spent on those lower cost services in the community for people in their homes than in institutional care. So, there’s been an effort to spend more on that HCBS--home and community-based services setting--and not push everyone into institutional care, which is effectively the most expensive type of care that can be booked.
Ed: So, Kathryn, what are your thoughts on that the drivers here of cost?
KC: So Akeiisa really kind of nailed it there like the costs are really driven by the total number of people enrolled in the program, the types of number of covered services that those people use and the payment that states pay to providers for those services. There is also the cost of administering the program, but administration costs are usually in like the 4% range for states. There are really complex information and technology systems what’s called the Medicaid Management Information System that’s still kind of a small percentage of what we are talking about in terms of the overall costs. What we know is that like the total number of people enrolled in the program affects program costs and we saw this change dramatically during the pandemic when Medicaid folks reached over 94 million at their peak and has since dropped down to about 79 million post pandemic. And we know that lower enrollment is a decreased pressure on state budgets. But enrollment doesn’t tell the whole story because different populations like Akeiisa mentioned, they need new services at different rates. So specifically, we know that like traditional Medicaid enrollees like older adults and people with disabilities are more likely to need and use those long-term services and supports. So that care that is provided either in institutional settings or in the home community and those folks account for one quarter of enrollees that are over half the program costs. And that’s because those enrollees just simply have more complex health needs. And we’ve also been hearing that since the pandemic, the people who are still on Medicaid roles need more care or are using more care than they did prior to the pandemic. So put another way, we know that the enrollees that are still enrolled in the program are costing more per person to cover than they did before the pandemic.
This may also drive increased payment rates for Medicaid managed care organizations and these are the private commercial insurers that administer the program for the majority of enrollees nationwide. Medicaid managed care accounts for over half of Medicaid program costs so any factor that increases those managed care payments broadly is going to impact state budgets. And so, all this is to say is that people using that are still enrolled in Medicaid need or are using more services than they did before the pandemic. We are still not sure why though. This could be due to the fact that people delayed or deferred care or it could just reflect the fact that healthier people hold off of Medicaid coverage post pandemic and we just don’t know what the driving factor is for that yet.
Ed: So, talking about state budgets, I know that you’ve been looking at state budgets and how they are being affected by their Medicaid budgets. I wonder if you could talk a little bit about how 2025 looks or even, I guess fiscal 2026 because that is what we will be coming into a little bit later this year.
KS: Yeah, that’s a good clarification. Well, we know that state legislators may be hearing or experiencing firsthand reports of Medicaid budget shortfalls. There’s been reports of Medicaid budget shortfalls in California, Colorado, Indiana, Pennsylvania across states. But we know that that’s not quite the whole picture. So, to understand the state-to-state budgets, we are really looking at a combination of those state revenue trends. What Akeiisa was talking about in terms of how states fund the state share of the program and then how that interacts with those increasing and decreasing Medicaid budget pressures. So, the long and short of it is that state revenue growth has been slowing, but state fiscal conditions are still solid. However, it’s really not clear where those competing Medicaid budget pressures the increased and decreased pressures are going to land across states so we are just not sure how all those factors are going to relate so let me dig into that a little more.
So, on the revenue trend side, as Akeiisa mentioned, the majority of state’s spending on the Medicaid program comes from the state general fund revenues. And state revenues in recent years have been strong due to a combination of better-than-expected economic conditions and enhanced federal funding that states received during the pandemic. And in response to that, most states shored up their rainy-day funds and also cut taxes for their constituents. So, according to an NCSL report on state tax actions in 2024, all but two states have really cut taxes since 2021. And this means that in today’s environment states are experiencing slower revenue growth and smaller surpluses heading into the 2025 legislative session so the 2026 budgets. Notwithstanding that, states are still on pretty solid fiscal footing so far.
So, then that turns us to Medicaid budget pressures. And as I’ve mentioned, states are experiencing a combination of those increased and decreased budget pressures. So decreased enrollment following the end of the pandemic. That’s a decrease budget pressure. The increased need for services for people still enrolled in the program, increased per person cost and increased managed care rates. Those are increase budget pressures obviously. And legislative policy trends may also be contributing to both kind of increase and decrease budget pressures. According to NCSL tracking, we know that state legislatures passed at least 250 Medicaid related bills in 2024. And more than half of those bills increased eligibility and benefits particularly for pregnant women and for behavioral health services. And this reflects and potentially increased pressure on state Medicaid budgets. But the budget impact of benefit changes can be tricky to track out because we know that new benefits and increased access to certain services can increase costs in the short term. It costs money to cover services. But some benefits can have positive long- term budget effects. For an example of how this might play out, in 2024 five states including Connecticut and Florida enacted legislation to cover biomarker testing and biomarker testing can be used to help cancer patients and doctors choose the most effective treatment for that patient’s specific cancer. So, it costs more to cover in the short term, but it may help treat that patient’s cancer more effectively, which could decrease costs in the long term. It’s just really hard to track out and like tease out these specific effects.
We also know that in 2024 over 20 bills increased payment rates for providers particularly providers experiencing significant health workforce shortages particularly in the field of long-term care, home pedi based services, behavioral health and maternal health and this is obviously an increased budget pressure. We know that at least 15 bills in 2024 created new provider taxes where we can figure existing provider taxes and these are those like hospital taxes or assessments or fees that Akeiisa mentioned earlier. So, we know that provider taxes can decrease pressure on the Medicaid budget because it helps the state leverage increased federal funding without increasing general fund revenue. And states often use these funds from provider taxes to reinvest in the Medicaid program to improve outcomes and support safety net providers. For example, in 2024, South Carolina created a provider tax for private ambulance services and Nevada, the Nevada legislature dedicated a portion of hospital provider taxes for services for serious behavioral health conditions. The only thing that is clear here really is that states are navigating conflicting pressures and priorities that are going to impact state budgets in both the short and the long term and there are no easy tradeoffs. Short term cuts can impact long term spending and impact policy priorities like shoring up health workforce or improving health outcomes. But states also can’t make money up here out of thin air. And unlike the federal government, states have obligations to balance their budgets. So, where it comes out in the wash is really going to depend on meek circumstances in each state.
Ed: Well, it sounds like uncertainty is the word of the day here and adding to that uncertainty is whatever metaphor you want to pick – the elephant in the room, the 800 lb. gorilla which is what is the federal government going to do on its end for Medicaid. I don’t think any of us know exactly what that’s going to be, but I am wondering what people at the state level whether it is legislators or finance directors, others in state government think might be coming down the road and how they are thinking about dealing with this level of uncertainty. And that of course could be an entirely other podcast, but why don’t we try and give the short version here and Kathryn why don’t you start. I want to ask Akeiisa about this as well.
KC: Well as you mentioned Ed, there is just a lot we don’t know specifically where things are going to come out with the proposals in congress at the end. What we do know is that congress has proposed changes to several parts of Medicaid funding that we just talked about specifically lowering the federal share by changing how the state share is calculated for those states and those enhanced services that Akeiisa mentioned where states get enhanced federal funding for some populations. And also changing how states make up their share of costs through those provider taxes that we talked about. What we know is that these changes would have significant impacts on state budgets overall. It’s really hard to say exactly what those impacts would be, but they would be significant across state red, blue regardless of partisan composition there. Really what it comes down to is at NCSL, we are here to serve you no matter what changes come down the pipeline in congress or at the federal level.
Ed: And Akeiisa, tell us what your thoughts are on this. I’m sure that you’ve had a few conversations with people around the country about this.
AC: So, I think ultimately what all of the federal proposals currently on the table do is reduce federal spending on the Medicaid program. That means that there would be less federal dollars available to states to support their Medicaid programs. Given that states have to balance their budget and have limited budgets, we know that there is not as Kathryn noted, they can’t make money up here out of thin air. States will have to respond to those federal reductions in spending as best they can. It is highly unlikely that any single state will be able to fully make up the difference in the loss of any federal funds for Medicaid. And so that means they have to make hard decisions about their program whether that is to cut eligibility so that some people will no longer be eligible for the program. Whether that is cutting benefits. The other tool that states have in their tool bag is cutting provider reimbursement rates. So, lowering how much they pay to hospitals, physicians, those nursing facilities, those rates that they increased during the pandemic to shore up some of those workforce shortages. Those rates would come down which would also negatively impact people’s ability to access care. So, we are talking about some really hard choices that states would have to make about their programs if those federal dollars do decrease.
Ed: As we wrap up, I wonder Akeiisa maybe you could start and point to some resources people might be able to use to kind of get themselves up to speed on the kind of challenges they are going to face even if they are not on the committee, they may well have to vote on these issues.
AC: So, I know NCSL has a great series on Medicaid that provides healthful resources on the basics of the Medicaid program, how it operates, what some of those different financing levers are. The Commonwealth Fund also has a number of resources talking about the impacts of short-term cuts and how those may have long term impacts on the Medicaid program and on the broader economic outlook for states. I also encourage legislators and their staff to communicate with their Medicaid state agency staff. They know all of the ins and outs of the Medicaid program.
Ed: Kathryn, what would you direct people to?
KC: So, I think everything Akeiisa just said. NCSL is always tracking these federal changes and is always available to help you, the state legislatures, understand these issues and the potential impact in your state. So, in the NCSL health program, we have a Medicaid toolkit just for legislators including a Medicaid finance 101 brief and the NCSL fiscal team has resources on state revenue and budgets. And another thing I think I’ll just end on is that we also know that about 20% of our state legislators right now are new to being state legislators and that a lot of the state legislators haven’t gone through especially in this like post-pandemic world more constraint budget conditions. So, we know that this is bringing up really tough and hard conversations and NCSL is always here as a resource in case you need good, high-quality information about what your state may be facing and how other states are responding.
Ed: Well, those are all great tips I think for legislators and the staff and we will link to resources in the show notes on this podcast. This is such a complex and important program. I thank both of you for making it understandable for those of us who are not experts in Medicaid. Thanks very much and take care.
KS: Thank you, Ed.,
AC: Thank you.
Ed: I’ll be right back after this short break with Neda Jasemi and Robin Rudowitz.
Robin, Neda welcome to the podcast.
RR: Thanks for having me.
NJ: So great to be here with you, Ed and Robin. I love talking Medicaid.
Ed: Robin, in October of last year, KFF working with health management associates and the national association of Medicaid directors published the results of a nationwide survey of Medicaid officials and I wonder if you could tell our listeners what they key takeaways were from that survey.
RR: Headed into fiscal year 2025, state Medicaid officials were focused on continued efforts to address key priorities, but they were also dealing with state budget and administrative issues and challenges. So, I think in terms of policy priorities, states highlighted continued efforts to expand access to behavioral health services and long-term care particular a focus on addressing workforce shortages in those areas. They were also working to implement payment and delivery system reforms and advance key initiatives related to addressing social determinants of health and help individuals transition from incarceration. Tackling these issues is often pretty complex so it happens over a number of years and with sustained efforts. I think states were also dealing with a number of challenges including rising health care costs, uncertain trajectory of state budgets which I know we will talk a lot more about, limited administrative capacity to handle all of the many issues that they were working on and increased demands both for services as well as administrative issues. So, there was a lot going on and there continues to be a lot going on facing states at the Medicaid and their Medicaid programs.
Ed: Yeah, uncertainty seems to be the word of the moment when it comes to Medicaid from the conversations I have had and Neda I know you’ve been talking to state Medicaid finance officers. What’s on top of their minds going into 2025 and into the new 2026 fiscal year.
NJ: I’m going to talk a little bit about unwinding which is the nationwide mandate to resume normal eligibility processes coming out of the COVID 19 pandemic so that has had considerable fiscal impacts to state Medicaid budgets and it is driven primarily by one kind of this reduction of enhanced federal financial pandemic assistance associated with the public health emergency which is now shifting costs from the federal government to states. And to accounting for the increase in average per member costs for those who stayed on the program after the unwinding. So, there is that part, but it’s also all the things that Robin mentioned. It’s looking ahead from the pandemic and responding to the changing needs of the population like children and youth behavioral health. It’s grappling with workforce shortages. It’s maternal health. It’s reentry. It’s improving managed care oversite so doing all of that in the context of a tight budget environment. Importantly for the first time since the start of the pandemic, Medicaid’s budget pressure may be more likely to influence the overall state budget and the Medicaid program.
It’s been five years since many of these state policymakers had to go through this kind of belt tightening so that’s just the muscle that does take time to warm up. I would even suggest that many state policymakers started their current post within the last five years and so for many of them it is the first time navigating a tighter budget environment in their current position. And so, because they are limited levers that exist in the federal Medicaid framework to find savings, it often comes down to tough choices that legislatures have to make in collaboration with their Medicaid agencies. So that’s why sharing of institutional knowledge between policymakers and deficit planning to know which levers to pull during a tight budget cycle is so important because it allows state policymakers to have the time, expertise and strategy behind making these decisions so that we can continue to control costs, promote access to care and deliver high quality services.
Ed: Well, you’ve really hit on probably the main reason we’re doing this podcast which is the fact that we’ve just had an election. There’s a whole lot of new legislators and as you point out over the last five years, it has been a significant turnover in legislators and Medicaid is almost as far as state legislatures go been on ice until this enrollment that has taking place. Robin, let me ask you a little bit about that this change in continuous enrollment and what are some of the effects that you are seeing.
RR: Yeah. I mean I could just pick up a little bit on what Neda had mentioned that during the three-year period during the pandemic, states were providing continuous enrollment in exchange for enhanced federal matching funds so the federal government was paying an increased share of the cost of Medicaid. The period of the continuous enrollment resulted in the largest ever number of enrollees on the program. That increase along with enhanced subsidies in the marketplace resulted in the lowest ever uninsured rate in the country. When the continuous enrollment provisions ended, states were required to start this process of conducting redeterminations for all enrollees. Millions were disenrolled. I think the people who were left on the program you know changed a little bit of the characteristics of people who were on the program and it also phased out this enhanced matching funds. So, as you know we talked about this uncertainty being the word of the day, certainly at the end of unwinding states were left with a great deal of uncertainty about what this new normal will look like following the pandemic so what it looks like in terms of enrollment levels and what types of enrollees are going to retain coverage and also coming out of the pandemic a lot of uncertainty about implications for Medicaid spending. So while enrollment was going down and that’s typically a driver that would put downward pressure on Medicaid spending, there were a number of other factors that were increasing pressure on Medicaid spending like the higher acuity and increased utilization of individuals on the program, inflation, efforts to expand access so you know expanding services related to long term care and mental health in particular and raising provider rates to try to increase access that way. While enrollment was going down, a decreasing overall spending pressures there were all these other pressures that were causing upward pressure on Medicaid spending.
Ed: Yeah Robin. Let me just dive in a little bit more on this increase in rates for providers and hospitals payments and I’m sure it is probably obvious to you why states did this, but for the rest of us explain why they did that even in a period of uncertainty and maybe fiscal pressure.
RR: So, increasing rates is one lever that states have to help ensure access to services so states were and have been throughout the pandemic and you know in our survey from last year implementing a wide range of rate increases across various provider types and they were implementing very few rate restrictions. And again, some of the drivers that were pushing states to look at rate increases were related to inflation, workforce shortages and that was driving up labor costs so that was resulting in pressure to increase provider rates across a range of provider types. I would say in our survey there were also particular focus on rate increases in nursing facilities and homecare so home and community-based services because there have been particularly acute workforce shortages in those areas. So again, addressing rates has been one lever to help ensure access in those areas.
Ed: Yeah Neda, let me ask you to dive a little more into the workforce issue. This of course is an issue not just in the health care workforce. It’s really across the economy. I know that we see it in education and in law enforcement. Name your area, but what are the Medicaid finance officials, what are they saying about this workforce issue and how are they trying to address it?
NJ: Health care workforce shortages compounded by inflation does really pressure Medicaid budgets. Medicaid accounts for a fifth of all health care spending in our country so it plays a vital role in the overall viability of the health care system. For example, when a provider has half their nurses’ physicians vacant, they may need to pay their nurses more to maintain them and they may need to increase pay to attract more nurses to their clinic. So that increase in pay in salary is also translated into higher reimbursement rates for the Medicaid program. But I really want to touch on this point that both Robin and you made around workforce shortages among direct care workers, home health aides, nursing facilities and other long term care providers because it uniquely impacts Medicaid. So, the thing is Medicaid is the largest single payer for nursing facilities and home and community-based services in our country which is vital to the health and well-being of older adults and people with disabilities. Workforce shortages in this part of the health care sector is a longstanding challenge but has been exacerbated by recent labor market dynamics and demographic trends so that is contributing to upward pressure on Medicaid rates. So, for example, home health agencies and nursing facilities that employ low wage workers must now pay more to compete with other sectors like fast food and retail not to mention inflationary rates among nursing homes are considerably higher than general goods and services. These providers disproportionately rely on Medicaid to keep their doors open. Medicare and commercial insurance do not pay for long term services and supports in that way and so as the population gets older, that need is only going to grow to meet that rising demand. So, you know with limited funds, I think states are thinking about prioritizing investments into parts of the health care delivery system where Medicaid has an outsized role so that’s behavioral health. It’s long-term care like we talked about. Its maternal health. So those are just a few examples.
Ed: Robin, you mentioned this before, but one area where states are trying to enhance benefits at least some states is mental health and substance abuse disorders. What do Medicaid officials say about that effort and how uniform is that around the country?
RR: Yeah, that’s a great question. And I think we’ve seen this for the last several years and it continued in our survey from last year that most states reported some initiative to expand benefits particularly in the area of mental health and substance use disorder treatment. And that was across the behavioral health continuum so I would say there were a number of things going on so there was the implementation of the 90-day suicide and crisis lifeline and there was a particular along with that there was a particular focus on enhancing crisis services. And that includes mobile crisis, crisis services for youth and other areas on the crisis continuum so states were really investing in those areas as well as more coordinated and integrated physical and mental health care. So those were some of the things that I think stood out in terms of where states were investing in those areas. I would also say that there were a number of investments to increase service and benefits around pregnancy and postpartum services. Things like expanding coverage of doula services and other initiatives that were aimed at reducing maternal morbidity and mortality as well addressing racial and ethnic health disparities in those areas. So, I think those were two particular areas where states were investing in terms of additional benefits.
Ed: Neda, going back to the great uncertainty we are facing maybe what the federal government is going to do is one of the great questions that people are talking about. When you talk to these Medicaid finance folks around the country, what are they telling you? What are their concerns? How are they planning for what the federal government might do? Of course, we don’t know for sure, but.
NJ: We know that Congress and the administration are considering federal reforms to the Medicaid program. Those proposals have significant fiscal implications for state Medicaid budgets and so Medicaid leaders are projecting those state fiscal impacts associated with these reforms so that policymakers have the data and operational insights to make informed decisions. State Medicaid leaders have unique operational, technical and fiscal insights that can be really helpful to policymakers in this process.
Ed: I would like to ask you both kind of a wide-open question and that is what do you think the key challenges are that Medicaid officials are going to be looking at in the coming year particularly as they try to enhance benefits in some areas and also are concerned about the federal move. So, this is really your opportunity to tell me and tell the listeners what else we probably should be thinking about factors about Medicaid in the coming months. And Robin why don’t you take a first crack at that.
RR: I think at the state level it’s a combination of factors so it is still dealing with the outcomes of unwinding and the end of the enhance match and other budget pressures as we discussed coming from inflation and workforce shortages as well as increased demand that are putting pressures on the Medicaid program and those are exacerbated by some uncertainty in the trajectory of state revenue growth which has already been slowing. They were very robust economy for states and now revenues are starting to slow. So, I think it was already shaping up to be a difficult year for states in terms of dealing with their budgets. And then I think we are adding to that uncertainty of a lot of investments that have been made over the last several years could be bolstered and maintained. And then I think at the same time as you mentioned, there are these proposals that are under consideration at the federal level that could really exacerbate some of these challenges that states are already facing with reductions and federal Medicaid cuts that are under debate and those as Neda said could have enormous consequences for state budgets and for Medicaid in terms of enrollees and coverage as well as what Medicaid pays for in terms of services and plans and providers. And I would just as a reminder Medicaid does provide coverage for 1-in-5 people in the country and when you look at Medicaid spending and enrollment, we know that most of the people on the program are really kids and adults, but the large majority of spending on the program is for people who qualify on the basis of disability or age and often need long term services and supports. So, if there are cuts at the federal level again this leaves states with just hard choices about how to accommodate and respond with less federal dollars available.
Ed: Neda, you are going to get the last word here on looking down the road and what you think the peak concerns are going to be for the people in the state who have to manage Medicaid programs.
NJ: Robin really highlighted some of the same items we have been hearing so Medicaid is very effective at controlling costs actually cost growth trends in Medicaid remains in the single digits and grows at a slower rate than Medicare and commercial insurance. Budget pressures within Medicaid still play a significant role in the viability of the health care sector and the health of state budgets. And so, we know for certain that in the next few years Medicaid programs will continue to grabble with budget pressures including one the unwinding and the COVID 19 pandemic. Two, the rise of high-cost drugs. Three, the cost and demographic changes contributing to the rising need for long term services and supports. Four, health care workforce shortages contributing to higher reimbursement rates and finally investing in state IT systems to be more efficient, effective and nimble. Now looming over all of that is the uncertainty associated with recent congressional dynamics and what it means for state budgets and state spending on Medicaid.
Ed: Well, I want to thank both of you for filling us in not only on your perspective on this, but I know that you both have talked with people out in the states surveying and talking with finance officials and I think that’s really helpful for legislators and legislative staff to hear. I think we’ve given them a lot of good information in this podcast, but I have a feeling we will be back talking about Medicaid a little bit later this year when things develop in terms of the state/federal relationship. So, thank you again both for your information and your expertise and sharing with us. Take care.
AC: Thanks.
KC: Thank you.
Ed: I’ve been talking with Kathryn Costanza from NCSL, Akeiisa Coleman from the Commonwealth Fund, Robin Rudowitz from KFF and Neda Jasemi from the National Association of Medicaid Directors about Medicaid in the post COVID year. Thanks for listening.
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