Despite improvements in state government revenues, states are still struggling with growing Medicaid spending, and the Medicare prescription drug benefit law will do little to help, officials said at a briefing sponsored by the Kaiser Commission on Medicaid and the Uninsured. Analysts said more federal funding may be needed to help states manage the burden.
"It is clear that closing the coverage gap for low-income families will require additional federal resources if states are to expand coverage," said Diane Rowland, the executive director of the commission.
The commission released two reports at the briefing. One was a 50-state survey of Medicaid directors examining Medicaid spending in the states, and the other explored barriers that prevent families from accessing government-funded health care programs.
Every state in the nation used at least one tool to hold down Medicaid costs in 2004 and planned to do so again in 2005, the survey found.
Medicaid enrollment grew 5.2 percent in fiscal 2004 and will likely grow about 4.7 percent in fiscal 2005, according to the commission. As a result of increased participation in the program, as well as higher prescription drug and overall health care costs, overall Medicaid spending rose 9.5 percent in 2004. That is similar to the 9.4 percent increase that the program experienced in fiscal 2003 but less than the recent peak of 12.9 percent in 2002.
A direct comparison with private insurance increases is difficult to calculate, but experts said Medicaid costs did not rise as much as in private insurance. The increase in Medicaid spending is less than the 11.2 percent hike in private insurance premiums during the same time period, which does not account for changes in enrollment.
Vern Smith, a principal at the consulting firm Health Management Associates, said states will continue to struggle in coming years with rising Medicaid costs. One problem for states is that Congress had provided temporary additional funding for 15 months, but that aid expired June 30, 2004. As a result, the state part of Medicaid financing rose 4.8 percent in 2004 but will rise by about 11.7 percent in fiscal 2005.
The Medicare prescription drug benefit law (PL 108- 173) will do little to provide relief to states, Smith and Rowland said. For one thing, the new law requires states to continue providing almost as much funding to low-income seniors who qualify for both Medicaid and Medicare as was provided before the law's passage. States also fear that new administrative tasks could add to their burdens. Smith said most Medicaid directors reported concerns about the implementation of the new law.
