Medicaid leaders buckle up for more rocky times
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After weathering the pandemic, purging their rolls and coping with inflationary pressures, state Medicaid offices see more upheaval on the horizon, including a presidential election that could bring enormous changes to the safety-net program.
The big picture: A KFF survey of state Medicaid directors released Wednesday paints a picture of a health program serving nearly 73 million Americans that's beset by budgetary shortfalls and higher demand for behavioral health and long-term care.
- That could just be the beginning. Conservative think tanks and GOP lawmakers have plans that would reduce the federal share of program costs and add work requirements if former President Trump is elected.
Driving the news: Medicaid directors told KFF they see intensifying financial pressures ahead, despite a relatively stable fiscal landscape heading into 2025.
- Medicaid spending growth slowed in fiscal 2024 to 5.5% and is expected to continue on that downward slope in 2025 as enrollment continues to fall, per KFF.
- But states also are projecting flattening revenue growth from tax collections and economic fluctuations, to the point where more than half of state Medicaid directors surveyed said they see at least a 50% chance that they'll have a budget shortfall next year.
- The Medicaid programs already are raising their payments to providers for long-term care, outpatient behavioral health, primary care and dental services. About half of states said they increased inpatient and outpatient hospital payments this year.
- Nearly three-quarters of states said they're grappling with rising prescription drug costs. And many states also reported growing per-enrollee costs from beneficiaries who have greater health needs, KFF said.
It all could eventually lead to more benefit cuts or coverage restrictions if the numbers don't add up.
- "This issue of state budgets and fiscal conditions for the states is ... a big area of uncertainty," said Robin Rudowitz, who directs KFF's program on Medicaid and the uninsured.
- Most Medicaid leaders also reported continued administration challenges, like workforce shortages within their own staff.
- "These are all things that underpin the operations of state Medicaid programs — you really need workforce and systems," she said. "There's a lot of challenges there."
Zoom out: The presidential election is perhaps the biggest X factor.
- If Trump wins and Republicans control Congress, major changes would be almost a given. And, regardless, Medicaid waiver priorities are sure to change in a GOP administration, Rudowitz said.
- A second Trump presidency could bring back work requirements and emphasize other program changes that restrict eligibility.
- On the other hand, a Kamala Harris administration would likely keep the focus on expanding continuous enrollment policies to keep people from churning in and out of Medicaid as their incomes fluctuate and broadening social determinants of health coverage.
The challenges of implementing federal regulations in the wake of the Supreme Court decision that made it easier to challenge executive branch agency actions also came up as a frequent concern of Medicaid officials, Rudowitz said.
- Major Medicaid rules can take years — and significant resources — to implement. "That's hard for states to manage, if they think there might be changes in the rules," Rudowitz said.
Reality check: Despite uncertainty, states are still working to expand coverage. 41 states reported new or enhanced benefits in 2024, and 38 states said they plan to add or boost benefits in 2025. Many expanded behavioral health coverage.
- Just Texas and Nevada reported reducing benefits in 2024.
