Implications for State Budgets: The Comparison of Medicaid Spending Projections with Per Capita Cap Projections in the Current House Republican Plan

By John Hicks posted 03-13-2017 12:10

  

The Congressional Budget Office (CBO) is expected to reveal its scoring this week of the House Republican proposal to repeal and replace the Affordable Care Act. One key feature that matters greatly to state budgets will be CBO’s forecasts of the annual growth in Medicaid spending per enrollee and the annual growth in the Medical Consumer Price Index (CPI).

In the current legislation, Medical CPI is applied to 2016 spending per enrollee to establish the federal fiscal year 2019 target per capita amounts for each state’s five enrollment groups (elderly, blind and disabled, children, non-expansion adults, and expansion adults). Medical CPI is also used to determine the annual change to each state’s per capita caps for future years.

Current Forecasts

There are three entities that have recently produced forecasts analyzing Medicaid spending from all states on a per enrollee basis compared to forecasts of Medical CPI:


2014-2023 Medicaid average annual growth in spending per enrollee

MACPAC
Per Capita Projections

CMS Actuarial Report Per Capita Projections

Center for Budget and Policy Priorities Projections

Elderly

4.30%

3.00%

-

Disabled

4.20%

4.56%

-

Children

4.80%

4.79%

-

Non-expansion Adults

5.10%

 

5.32%

-

2014-2023 CPI-U Medical care*

4.00%

4.05%

-

 

 

 

 

Conclusions

MACPAC’s projections reflect that per capita spending for every group will exceed Medical CPI, ranging from 0.2% to 1.1%.

 

The actuary’s projections reflect that per capita spending from all but the elderly group will exceed Medical CPI, ranging from 0.51% to 1.27%.

 

2020-2027 Medicaid total spending per enrollee will exceed Medical CPI by an average of 0.2%.

 

 

*The medical care component of the Consumer Price Index.

How Has Past Medical CPI Stacked Up Against Medicaid Per Capita Spending?

The CMS 2016 Actuarial Report provides actual spending data from fiscal year 2000 through fiscal year 2012. For these 13 years, the annual growth rate in per capita spending by enrollment group exceeded Medical CPI as follows:

Enrollment Group

Number of Years
Annual Growth Rate in Per Capita Spending Exceeded Medical CPI

Range of Variance

Elderly

1 year

0.2%

Disabled

5 years

0.8% to 6.5%

Children

6 years

0.3% to 5.7%

Non-expansion Adults

5 years

0.5% to 6.6%

Table shows September to September data.

 

Conclusion

Moving from open-ended spending to a cap limited program involves new financial risk for states and increases uncertainty for state budgets. These organizations’ projections are for the combination of all states and do not reveal state-by-state differences, which matter more than these aggregate statistics; however, they are a reflection of the whole Medicaid program. CBO’s estimate will be the one used to score the federal impact resulting from a change to per capita caps and all states will be watching for any implications to their budgets.

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