State Medicaid Officials Predict Enrollment Declines And Higher Costs In 2023

A row of four blocks spelling out "2022" but the last block is flipping to "3" to indicate the new year.

Kaiser Family Foundation (KFF) recently published its latest state budget Medicaid survey, titled Medicaid Spending & Growth: FY 2022 & 2023. In their published press release summary of the survey, KFF highlighted two key areas: 1) how the pandemic shaped states’ priorities; and 2) what state Medicaid officials predict will occur in 2023 following the end of the COVID-19 public health emergency (PHE).

A total of 49 states participated in the 22nd annual survey, which analyzed Medicaid enrollment and spending trends for fiscal years 2022 and 2023. (For most states, FY 2023 began on July 1, 2022.) At the time of the survey, the majority of state Medicaid agencies participating assumed the PHE would end during FY 2023.

Evolving Priorities

Although the COVID-19 pandemic PHE has officially been declared at an end, states reported continued efforts to increase rates for the vaccine and boosters. Medicaid-related health needs during the pandemic yielded a 25.6% increase in enrollment between February 2020 and June 2022. At the same time, spending sharply increased as well: totaling over $728 billion in FY 2021.

The pandemic required significant adaptation, which has led many states to shift their ongoing priorities. Areas of focus for FY 2022 and 2023 noted by respondents included:

  • Advancing health equity through the use of financial incentives (e.g., Medicaid managed care) and improving data completeness for race, ethnicity and language. 
  • An expansion to benefits, including services “across the behavioral health care continuum as well as expansions of pregnancy and postpartum services.” States also reported efforts to expand preventative, dental, and social welfare services.
  • Assessing telehealth quality and access in order to determine what policy expansions or limitations should be in place. Most states reported they plan to continue offering telehealth options beyond the end of the pandemic.
  • Contracting with the managed care organizations (MCOs) in which over 75% of Medicaid beneficiaries are also enrolled.
  • Increasing provider rates to enable providers to keep up with rising inflation costs and the higher labor costs driven by workforce shortages.
  • Preparing for “the unwinding of the continuous enrollment requirements and the expiration of other emergency authorities in place during the PHE.”

2023 Predictions

The KFF survey also provided state Medicaid officials’ predictions for FY 2023, based on several factors: 1) the end of the PHE; 2) the end of the continuous enrollment requirement; and 3) loss of the temporarily enhanced federal match funding (FMAP) provided during the pandemic.

The two key takeaways highlighted in the report were:

  • Enrollment will decline. The prediction from states is that enrollment will “slow to 8.4 percent in FY 2022…before declining by 0.4 percent in FY 2023.” 
  • Spending will increase. According to the survey, federal and state spending is projected “to peak at 12.5 percent in FY 2022, before slowing to 4.2 percent in FY 2023.” Respondents noted that the nonfederal share of Medicaid spending rose by 9.9% in FY 2022, and they anticipated an even more significant increase of 16.9% in FY 2023 due to the end of enhanced federal funding.

Additional Resources

To delve more into the analysis that led to these predictions, you may find the following resources beneficial: