MANAGEMENT UPDATE.

MEDICAID COSTS: CLIMBING ALREADY

Even as the massive new budget bill makes large cuts in the support of state/federal Medicaid programs, a recent report from the Pew Charitable Trusts demonstrates that, even without upcoming cuts, the states were already having difficulties paying for their Medicaid bills.

According to the report, “In fiscal year 2023, the combination of expiring federal COVID-19 pandemic aid, slowing tax revenue growth and rising costs for Medicaid led to an increase in the share of state revenue dedicated to Medicaid of 17.8%, or $44.4 billion, over the previous year – the largest single-year rise in at least two decades. States spent 15.1% of every state-generated dollar on Medicaid, up 2.2 percentage points from the previous year, though still about half a cent less than the 15-year average.

A few of the report’s most significant findings:

“Alaska, Hawaii, New Mexico, South Dakota, and Wyoming were the only states where Medicaid spending decreased as a share of state-generated revenue from fiscal 2022 to fiscal 2023, and in all cases, the declines were less than 1 percentage point. The steepest increases were in Colorado (5.1 percentage points), New York (4.2 percentage points), and California (4.1 percentage points).”

“17 states spent a greater share of their own dollars on Medicaid than they had, on average, over the previous 15 years. Colorado was furthest above its long-term trend at 3.3 percentage points, as state Medicaid spending outpaced growth in own-source revenue. Maryland and Pennsylvania were next highest at 1.9 percentage points and 1.6 percentage points, respectively.”

“Two states spent more than one-fifth of their own revenue on Medicaid in fiscal 2023. New York spent the largest share of any state at 23.5%, followed by Pennsylvania (22.7%) and Colorado (19.6%).”