Medicaid Enrollment Declines For First Time In Nearly 10 Years; 42 States Plan To Expand Coverage For Uninsured

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Health Insurance / Medical Insurance
Article Date: 12 Oct 2007 - 8:00 PDT

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Medicaid enrollment in fiscal year 2007 declined for the first time in nearly a decade, according to an annual survey conducted by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured and Health Management Associates and released on Wednesday, the AP/Houston Chronicle reports (Freking, AP/Houston Chronicle, 10/10). The survey of Medicaid directors in all 50 states and Washington, D.C. -- conducted for the seventh consecutive year -- found that Medicaid enrollment declined by 0.5% in FY 2007.

According to the survey, the decline was driven primarily by two factors: new Medicaid proof-of-citizenship rules that have caused significant delays in processing applications and a strong economy with lower unemployment. Medicaid spending in FY 2007 increased by 2.9% after record-low spending growth in FY 2006 (Reichard, CQ HealthBeat, 10/10). State Medicaid directors attributed the slow spending growth to the decline in enrollment and the continued transition of prescription drug costs from Medicaid to Medicare for beneficiaries dually eligible for the programs, according to the survey.

The survey found that in FY 2007, more states than in previous years were planning to lift program restrictions imposed during poor economic conditions. Forty-two states in FY 2008 expect to expand coverage to uninsured residents, with almost all relying on Medicaid for these expansions (Kaiser Family Foundation release, 10/10). In addition, for the first time since FY 2003, no state is planning to cut benefits next year, the survey found (Kenen, Reuters, 10/10).

States expect Medicaid enrollment and spending to increase in FY 2008 as they move forward with program changes (Kaiser Family Foundation release, 10/10). According to the survey, state legislatures have authorized total Medicaid spending growth that averaged 6.3% for FY 2008.

Additional Medicaid Policy Initiatives
All states and Washington, D.C., in FY 2007 implemented at least one provider payment increase, and 49 states adopted an increase for FY 2008 (CQ HealthBeat, 10/10). In addition, more than half of all states expanded eligibility for FY 2007 and FY 2008, including increases in income limits, expansions of benefits to new populations, and streamlining the application or renewal process.

Thirty-five states in FY 2007 expanded long-term care services provided under Medicaid, and 46 states plan to expand such services next year. In both years, the most commonly reported expansions were for widening existing home and community-based waivers or adopting new waivers. In addition, 44 states by FY 2008 will require health plans to submit performance measures in an effort to improve care and achieve better value.

Twenty-seven states will implement pay-for-performance systems that provide incentives for programs such as smoking cessation and payments linked to hospital readmission rates for chronic health conditions.

Deficit Reduction Act of 2005
Three out of four states reported that Medicaid proof-of-citizen requirements included in the Deficit Reduction Act of 2005 contributed to slower enrollment growth in FY 2007. States reported that the rules mostly affected individuals already eligible for the program (Kaiser Family Foundation release, 10/10). The rules require that individuals applying for or renewing Medicaid coverage provide documentation -- such as a driver's license or birth certificate -- to prove their U.S. citizenship. According to the survey, 45 states said the rules increased administrative costs, including the need to train workers and set up computer systems to verify beneficiaries' documents. State Medicaid directors said they believe the rules have had little impact on the number of undocumented immigrants enrolled in the program.

Connecticut Medicaid Director David Parrella said, "There's a lot of effort to slow what I think has been a pretty small problem."

Kansas Medicaid Director Andrew Allison said the documentation requirements were "a tremendous administrative burden on us, and it was certainly a burden on consumers" (AP/Houston Chronicle, 10/11). Allison said his staff found that in Kansas, "the primary impact of these new requirements was on eligible citizens, and in particular on African-American citizens whose citizenship in this country I'm not sure has ever been questioned to the same extent." He added, "I am hoping we are not seeing a permanent impact, which would simply dissuade eligible American families from applying for coverage" (CQ HealthBeat, 10/11).

However, Dennis Smith, director of the Center for Medicaid and State Operations, said, "As far as we can see through reviews with the states, the documentation requirement has had no impact" on enrollment in the program. The AP/Chronicle reports that CMS saw a decline in enrollment before the new rules took effect and attributed the decline to a strong economy (AP/Houston Chronicle, 10/10).

The DRA also had other impacts on state Medicaid programs. Seven states have received federal approval to use new options under the DRA to change benefits and cost sharing. Kentucky, West Virginia and Idaho implemented comprehensive redesigns of their Medicaid benefits, and Kansas, Virginia, Washington state and South Carolina received approval for more targeted flexibility. Wisconsin in FY 2008 plans to seek federal approval to offer a modified benefits package for an expansion population, according to the survey. In addition, 24 states said they had plans to implement a Long-Term Care Partnership in FY 2008 under provisions of the DRA to help increase the role of private long-term care coverage.

Comments
Diane Rowland, Kaiser Family Foundation executive vice president and executive director of the Kaiser Commission on Medicaid and the Uninsured, said, "In hard economic times, states are under incredible pressure to restrain Medicaid spending growth, but when fiscal conditions improve, states look to restore some cuts and really focus on improvements. States are turning to Medicaid to address the rising number of uninsured to help fill in the gaps for low-income families" (Kaiser Family Foundation release, 10/10).

Survey co-author Vernon Smith of HMA said, "There are states thinking big thoughts" (Reuters, 10/10).

The survey and related resources are available online.

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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