Survey of State Medicaid Programs Finds Program Spending at Near-Record Low, Slowing Enrollment and Provider Payment Cuts Cited As Causes

October 25, 2012

A Kaiser Family Foundation survey of Medicaid programs in all 50 states and the District of Columbia found that overall Medicaid program spending is nearly at a record low in 2012. State Medicaid programs also expect similar spending figures in 2013. The survey cites two chief reasons for the reduced overall spending totals: slowing enrollment and cuts in health care provider payments.

While overall program spending is down, the survey found very different trends in the levels of federal and state Medicaid spending. Over the past three years, the states received a temporary increase in federal Medicaid funding through the stimulus program; this funding provided financial support for the increase in enrollment resulting from the recession. However, this funding has ended, and states increased their spending by 27.5% in 2012 to replace the temporary federal financial support. This sizable shift was a unique product of the federal stimulus program, and states expect their funding increases to be much smaller (2.3%) in 2013.

With regard to the causes of falling Medicaid spending overall, enrollment figures were a major factor. While enrollment increased 3.2% in 2012, this increase was a considerable decline from the 7.8% increase in 2009. This trend is a product of the ongoing economic recovery as fewer families seek coverage through states’ Medicaid programs.

States also took many actions to constrain program spending after the end of the temporary federal stimulus funding, and these actions have included some considerable cuts to health care provider payments. The District of Columbia cut rates by 20%; California by 10%; and South Dakota, Illinois, and Tennessee by single digits. While lower spending is positive news in the context of continuing budget deficits both among the states and at the federal level, provider payment reductions have an adverse effect on program beneficiaries’ access to care. These cuts can be particularly problematic in Medicaid because many states’ provider payment rates are already quite low, lower than both commercial insurance and Medicare rates. Additional payment reductions only make providers less likely to accept Medicaid patients. This effect could translate into beneficiaries having greater difficulty finding primary and specialty care providers, as well as longer wait and travel times for appointments.

Nevertheless, the states did offer one piece of positive news about provider payments: Many officials reported that they plan to increase these rates in 2013. Additionally, the Affordable Care Act will raise Medicaid primary care provider payment rates to Medicare levels during 2013 and 2014.


The full results of the survey are available at: