CMS Releases Medicaid Spending Report

February 2017 ~

According to the recently released the annual report(pdf) from CMS, in fiscal year 2016 states and federal government grew 4.3% to $575.9 billion and federal Medicaid spending grew 4.5% to $363.4 billion for the program to cover low income and disabled people. The report states Medicaid spending has increased in recent years and is expected to continue to rise, potentially reaching levels that could “displace spending on other important programs.”

For the report, CMS analyzed prior Medicaid trends and 10-year projections of expenditures and enrollment under current law, including the impact of the 2014 eligibility changes under the ACA. According to CMS, the Medicaid expenditure and enrollment projections in the report are consistent with current legislation and administrative policy regarding Medicaid as of December 1, 2016, and do not take into account any future changes to policy or legislation.

Within the report’s findings, CMS estimated that per enrollee costs for newly eligible adults decreased from $6,365 in FY 2015 to $5,926 in FY 2016 (6.9%), according to the report. CMS says it expects per enrollee costs for newly eligible adults to decrease by 6.3% in 2017 and 3.3% in 2018.

The average Medicaid enrollment during FY 2016 was estimated to have increased 3.1% to 72.2 million enrollees. CMS states nearly all of the growth in enrollment (2 million of the 2.2-million increase) is estimated to have been among newly eligible adults. Enrollment is projected to increase at an average annual rate of 1.5% over the next decade and reach 81.6 million in 2025, CMS predicts.

Medicaid spending is projected to increase at an average annual rate of 5.7% and to reach $957.5 billion by 2025, according to the report. Medicaid spending for adults newly eligible under the ACA is projected to amount to $806 billion by 2025. CMS said most of this spending ($741 billion, or about 92%) is expected to be paid out by the federal government.

Moving forward, CMS expects enrollment and expenditures to steadily increase, with total Medicaid expenditures growing to a projected $957.5 billion by 2025. The projected annual average growth rate of Medicaid expenditures from 2016 to 2025 is 5.7%, which, as stated in the report, is “notably faster than the projection of average annual GDP growth of 4.8% over the same period.”

Source(s): CMS 2016 Actuarial Report; Becker’s Hospital CFO, January 31, 2017; American Health Line, February 2, 2017; Modern Healthcare, January 30, 2017;