By Tara Mancini

Earlier this month, the Office of the Actuary at the Center for Medicare and Medicaid released its annual data on national health expenditures, finding that growth remained constant for a third consecutive year. Medicaid spending growth slowed, in contrast to spending by Medicare, private health insurers, and consumers’ out-of-pocket, all of which gained momentum.

In 2011, overall growth in Medicaid spending (2.5%) declined for a second year in a row, and is less than half the rate of growth (5.9%) in 2010. Medicaid per capita spending actually decreased by almost one percent, after having experienced declines in growth from 2008-2010.

The decline in the average annual growth of Medicaid expenditures is attributed to a decrease in federal spending as well as tight cost controls imposed by states. In 2011, the expiration of ARRA enhanced FMAP funding for states led to a 7% decline in federal spending. However, the end of that enhanced funding required states to increase their Medicaid spending, as the recession fueled enrollment. States dealt with this added financial pressure by cutting Medicaid costs where they were able, mainly provider-rates, as well as some restrictions on eligibility and benefits. The decline in Medicaid per capita spending is due in part to healthier enrollees (who lost their private health insurance coverage during the recession.)  Even with cost-cutting and lower per enrollee costs, growth of state and local Medicaid expenditures increased substantially from 2010 to 2011.

Yet, the financial pressure states feel from Medicaid may be letting-up, as Medicaid enrollment growth continues to decelerate and enrollment in private insurance begins to up-tick. In 2011, the annual Medicaid enrollment growth rate (3.2%) was down for a second year in a row, half of what it was in 2009, while enrollment in private insurance coverage expanded (.5%) for the first time since 2007.