The 23rd annual survey of state Medicaid directors finds that states expect national Medicaid enrollment will decline by 8.6% in state fiscal year (FY) 2024 as state Medicaid agencies continue to unwind pandemic-related continuous enrollment protections. After reaching record high enrollment, these estimates reflect a dramatic year-over-year decline in program enrollment from that high.
Driven by anticipated changes in enrollment, total Medicaid spending growth (federal and state spending combined) is expected to slow in FY 2024 to 3.4%; however, the state (non-federal) share of Medicaid spending is expected to increase by 17.2% in FY 2024 primarily due to the phase out of enhanced federal Medicaid matching funds (set to expire December 31, 2023.) State spending on Medicaid declined in FY 2020 and FY 2021 due to the pandemic-era enhanced FMAP. Most officials indicated that their projections reflect what is assumed in their states’ adopted budgets, though estimates of both enrollment and spending are uncertain and the effects of unwinding are evolving, with significant variation across states. Enrollment change estimates for FY 2024 reflect new enrollments as well as coverage losses due to unwinding, but they also assume some “churn” – that is, that some individuals losing coverage will re-enroll within the year.
While the unwinding of the continuous enrollment provision and enhanced federal match rate were dominant policy issues at the end of FY 2023 and headed into FY 2024, states were also focused on an array of other policy responses. A companion survey report highlights key policies that state Medicaid programs implemented in FY 2023 or planned for FY 2024. Some notable findings include:
Managing Provider and Managed Care Payment Rates
The number of states implementing fee-for-service provider rate increases outpaces rate restrictions in both FY 2023 and FY 2024. States reported more rate increases for nursing facilities and home and community-based services (HCBS) providers than for other provider categories, with several states reporting substantial increases – likely in response to ongoing workforce or staffing-related challenges. The majority of states were also implementing rate increases for behavioral health (mental health and substance use disorder) providers and primary care providers.
Nearly two-thirds of states that contract with managed care plans reported implementing pandemic-related “risk corridors” to manage utilization and managed care plan rate setting uncertainty. Risk corridors allow states and health plans to share profits or losses if spending falls above or below specified thresholds. Most states that implemented COVID-19 related risk-corridors have recouped or expect to recoup funds from managed care plans as a result.
Expanding Benefits
Mental health and/or substance use disorder (SUD) services continue to be the most frequently reported category of benefit expansions. States also continue to expand and enhance pregnancy and postpartum services, to improve maternal and infant health outcomes. States dramatically expanded the use of telehealth during the pandemic, and while telehealth coverage policies have now largely stabilized, states continued to report telehealth coverage expansions in FY 2023 and FY 2024.
Sixteen states reported fee-for-service coverage of weight-loss medications for the treatment of obesity for adults as of July 1, 2023. States can decide whether to cover weight-loss drugs under Medicaid, leading to variation in coverage policies across states. Some states may be re-evaluating their coverage of anti-obesity or weight-loss drugs due to the emergence of a new group of highly effective weight-loss agents, including Ozempic, Rybelsus, Wegovy, and Mounjaro.
Addressing Social Determinants of Health and Health Disparities
A number of states are expanding or enhancing Medicaid coverage to help address social determinants of health or associated health-related social needs (e.g., housing instability, homelessness, nutrition insecurity). States are also implementing strategies to reduce racial and ethnic health disparities, including through expanding benefits (e.g., adding/enhancing pregnancy and postpartum services) and adding manage care plan financial incentives tied to reducing health disparities and other plan requirements.
These and other survey findings will be discussed today, November 14, at noon EST during a web briefing with KFF and national Medicaid experts. Register here.
The two new reports released today include:
The 23rd annual budget survey of state Medicaid officials was conducted by KFF and Health Management Associates (HMA) in collaboration with the National Association of Medicaid Directors (NAMD). This year, 48 states (including the District of Columbia) responded to the survey, although response rates for specific questions varied. States completed the survey in the summer of 2023.
