2019 Will Be ‘Year to Watch’ for Medicaid as Long-Term Care Drives Spending

Increases in long-term care costs contributed to an overall boost in Medicaid spending during fiscal 2018, and a leading health policy non-profit warns that 2019 could be a pivotal year for the program.

“FY 2019 will be a year to watch how Medicaid’s role evolves on the ground in the 50 states and D.C.,” the Kaiser Family Foundation (KFF) wrote in its annual report on Medicaid enrollment and spending, released Thursday.

Overall Medicaid spending growth in the previous fiscal year — which ended on September 30, by the government’s calendar — clocked in at 4.2%, nearly in line with fiscal 2017’s figure of 4.1%, but KFF projected that figure will rise at a faster 5.3% in the coming year.

“Medicaid officials identified increasing costs for prescription drugs (particularly for specialty drugs), long-term services and supports and behavioral health services, and policy decisions to increase payment rates to specific provider groups as factors putting upward pressure on total Medicaid spending,” KFF analysts Robin Rudowitz, Elizabeth Hinton, and Larisa Antonisse wrote in the non-profit’s findings.

Part of that spending boost has come from a shift in the demographics that make up the Medicaid program. Older adults represented the second-highest growth cohort in fiscal 2018, lagging behind so-called “expansion adults” — enrollees who took advantage of expanded Medicaid coverage under the Affordable Care Act — while the proportion of children and non-expansion adults slowed in many states.

“Lower enrollment growth for children and adults (lower-cost populations) relative to the aged and persons with disabilities (more costly groups) changes the case mix of the overall Medicaid population with implications for spending growth,” the researchers noted.

Medicaid plays a vital role in the long-term care space: According to a separate KFF report from 2017, the program covers 62% of all nursing home residents, making it easily the single largest payor in the industry. While Medicare covers skilled nursing care for the first 100 days after a qualified hospital stay, many residents who need longer-term attention in nursing homes receive Medicaid coverage after exhausting their Medicare eligibility and personal resources.

That’s why leaders in the skilled nursing and wider long-term care industries have taken threats to Medicaid coverage seriously. Last year, an effort by Congressional Republicans to significantly overhaul the way the federal government funds Medicaid as part of ACA reform — which would have gutted around $800 billion from the program over the next decade — failed, but the outcome of the coming election could potentially revive that fight.

Speaking at his organization’s annual conference and expo in San Diego earlier this month, American Health Care Association executive vice president of government relations Clifton Porter sounded the alarm.

“If Republicans were to win and hold, Medicaid could be a threat again,” Porter said. “2017 was not fun. It was probably the most difficult lobbying we’ve ever had.”

The Kaiser Family Foundation issued a similar warning.

“Looking ahead, federal and state elections in November 2018 are likely to have important implications for Medicaid,” the researchers noted. “The outcome of federal elections could determine whether Congress takes up legislation to make further changes to the ACA or to reform and cap Medicaid financing.”

And it’s not just Washington that providers should be watching, according to KFF. While the federal government funds Medicaid, states have final say over the way funds are disbursed; multiple states, for instance, declined to pursue Medicaid expansion efforts as allowed under the ACA.

State legislatures also play a role in the development of Section 1115 waivers, or special exemptions to Medicaid rules that state governments can use to explore new care models that could potentially reduce costs while improving care.

“State-level gubernatorial and legislative elections could have implications for states considering Medicaid expansion or Section 1115 demonstration waivers,” KFF concluded.

Written by Alex Spanko

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Alex Spanko
Alex covers the long-term health care industry for Aging Media Network, with a specific interest in the intersection of finance and policy. Outside of work, he reads nonfiction, experiments in the kitchen, yells at Mets games, and enjoys pretty much any type of whiskey or scotch — often all at the same time.

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