Medicaid officials expect enrollment declines amid state spending increases

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National Medicaid enrollment is expected to decline nearly 9% in fiscal year 2024 as state Medicaid agencies continue to unwind pandemic-related continuous enrollment protections. After record high enrollment, these estimates — courtesy of KFF’s 23rd annual survey of state Medicaid directors — reflect a dramatic year-over-year decline in program enrollment from that previous high.

Driven by anticipated changes in enrollment, total Medicaid spending growth (federal and state spending combined) is expected to slow in FY 2024 to 3.4%; however, the state (non-federal) share of Medicaid spending is expected to increase by 17.2% in FY 2024 primarily due to phasing out enhanced federal Medicaid matching funds that are set to expire Dec. 31.

State spending on Medicaid declined in FY 2020 and FY 2021 due to the pandemic-era enhanced Federal Medical Assistance Percentage. Most state officials responding to KFF’s survey indicated their projections reflect what is assumed in their states’ adopted budgets — though estimates of both enrollment and spending are uncertain. Additionally, the effects of unwinding are evolving, with significant variation across states.

Enrollment change estimates for FY 2024 (which ends June 30, 2024, in most states) reflect new enrollments as well as coverage losses due to unwinding, but they also assume some “churn” — that is, that some individuals losing coverage will re-enroll within the year, according to KFF.

While the unwinding of the continuous enrollment provision and enhanced federal match rate were dominant policy issues at the end of FY 2023 and heading into FY 2024, states were also focused on an array of other policy responses. A companion survey report from KFF highlights key policies that state Medicaid programs implemented in FY 2023 or planned for FY 2024. They include:

Managing provider and managed care payment rates

The number of states implementing fee-for-service provider rate increases outpaces rate restrictions in both FY 2023 and FY 2024. States reported more rate increases for nursing facilities and home- and community-based services providers than for other provider categories, with several states acknowledging substantial increases — likely in response to ongoing workforce or staffing-related challenges.

Expanding benefits

Mental health and substance use disorder services continue to be the most frequently reported category of benefit expansions. States also are expanding and enhancing pregnancy and postpartum services in an effort to improve maternal and infant health outcomes. Additionally, states dramatically expanded the use of telehealth during the pandemic, and as of July 1, more than one-quarter of states (16) reported fee-for-service coverage of weight-loss medications for the treatment of obesity for adults. States can decide whether to cover weight-loss drugs under Medicaid, leading to variations in coverage policies across states.

Read more: Health spending expected to outpace growth in the overall economy

Addressing social determinants of health and health disparities

A number of states are expanding or enhancing Medicaid coverage to help address social determinants of health or associated health-related social needs such as housing instability, homelessness, and nutrition insecurity. States also are implementing strategies to reduce racial and ethnic health disparities.

The 23rd annual budget survey of state Medicaid officials was conducted by KFF and Health Management Associates (HMA) in collaboration with the National Association of Medicaid Directors (NAMD). This year, 48 states (including the District of Columbia) responded to the survey, although response rates for specific questions varied. States completed the survey in the summer of 2023.