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Drug costs, opioid crisis drive higher Medicaid spending

Adapted from KFF; Chart: Axios Visuals 

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.
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