It’s true of most states that Medicaid enrollment has slowed and state revenues are steadily increasing.  Yet, as governor’s prepared their budgets for fiscal year 2013, enough uncertainty lingered that when budgeting for Medicaid, there continued to be a focus on cost containment.

Key findings from the Kaiser Commission on Medicaid and the Uninsured’s (Kaiser) “Governors’ Budgets for FY 2013 – What is Proposed for Medicaid?” reveals that 30 states are still anticipating budget shortfalls.  Governors’ proposals for closing those gaps mostly include spending reductions, while those states that are experiencing fiscal improvements are now looking to make investments in health care, which along with areas like education, had previously been the target of tightened purse strings.

For the report, Kaiser examined budgets from the 42 states that prepare them on an annual cycle. Noted Medicaid policy changes include provider payments, which 13 states are looking to enhance, while 11 plan to implement reductions.  Six states are proposing eligibility and enrollment enhancements, while the same number plan to cut back in those areas.  Five states are planning enhancements to benefits, while a dozen are seeking curtailments.  Additionally, three states are seeking to decrease cost-sharing for beneficiaries, while nine states are pursuing increases for beneficiaries.  These changes are limited, as stability protections built into the ACA restrict changes that states can make to eligibility and Medicaid rules limit cost-sharing and limitations on benefits.

Three areas where states are targeting investments in Medicaid include: management, program integrity efforts, and information technology.  States hope to foster better management of beneficiaries with complex health needs through increased funding for community based long-term care.  States hope to strengthen program integrity through new data mining activities.  Investments in health information technology are important for reinforcing program integrity, but it is also an integral component of preparing states for health care reform.

Until the Supreme Court rules on the ACA in June, the law will continue to be tinged with unpredictability.  However, many states are taking advantage of federal funding to upgrade their eligibility and enrollment systems. In fact, seven states incorporated funding for systems upgrades into their FY 2013 budgets.

As of the report’s printing, just 10 states had passed their FY 2013 budgets.  Maine approved a number of cuts limiting adult access to Medicaid, although some of the governor’s more severe suggestions were defeated. In contrast, legislators in Alabama and Iowa adopted more restrictive legislation than was originally proposed by the governor. In most states, FY 2013 budgets go into effect on July 1, 2012.