Drug costs, opioid crisis drive higher Medicaid spending

Medicaid spending is rising even though enrollment is flat, according to the Kaiser Family Foundation’s annual survey of state Medicaid directors.

Why it matters: This is unusual. Historically, enrollment is the key driver of overall Medicaid spending, and the two have tended to rise or fall roughly in tandem.

Why it’s happening: Enrollment is flat largely because the economy is doing well. Medicaid’s rolls generally swell during a recession; low unemployment keeps the program steady.

• Spending growth is outpacing enrollment growth because of high prescription drug costs, Kaiser says, particularly drugs to treat hepatitis and HIV.
• Many states have also bolstered their coverage for mental health and addiction treatment services, in light of the opioid crisis.

What we’re watching: Enrollment is being pulled in both directions.

• Red states’ embrace of work requirements will shrink their Medicaid programs.
• But a combination of ballot initiatives and competitive governor’s races this year could bring more states into the Affordable Care Act’s Medicaid expansion, potentially causing an enrollment bump in 2019 or 2020.