The nearly 29% projected growth in state spending for 2012 is “by far the largest annual increase in the state cost of Medicaid in its history,” Vernon Smith, principal at management consultancy Health Management Associates, which conducted the survey with Kaiser, said during a conference call with reporters.
Forty-six states reported that they will restrict provider rates in 2012, up from the 39 states that did so in 2011. Fourteen states will increase co-payments or implement new co-payments this year, compared with the five states that increased and implemented co-payments for beneficiaries in 2011. And some states said they will cut or restrict a number of benefits for adults.
“The big question is whether states will be able to keep their rate of growth to the average rate of 2.2%,” Smith said.
Overall, Medicaid spending, which includes state and federal funding, is slated to grow by only 2.2% in fiscal 2012. Total Medicaid spending has been rising since 2006, when the study reported it grew by 1.3%. One bright spot for the states is the expected decline in enrollment growth. The study estimates that average Medicaid enrollment growth will slow to 4.1% in fiscal 2012. Average Medicaid enrollment growth hovered around 7% for two years before dropping to 5.5% in fiscal 2011.
While states are looking for ways to reduce costs, they are also seeking to increase quality, Valerie Harr, director of medical assistance and health services for the New Jersey Department of Human Services, said during the call.
Tracy Gordon, a fellow at the Brookings Institution, agreed. “States can innovate,” she said. “They can change policy a lot quicker than the federal government.”