According to a study by the Government Accountability Office (GAO) – a congressional watchdog tasked with reporting on government programs for Congress – a small subset of Medicaid beneficiaries account for a disproportionately large share of Medicaid expenditures. Medicaid covers the very vulnerable populations of low-income people – many with disabilities – with high health needs and high medical expenses who would otherwise not be able to afford necessary health care. Even so, high utilizers in the program are a very small minority of enrollees overall.

What the GAO Found

According to the aptly titled report, A Small Share of Enrollees Consistently Accounted for a Large Share of Expenditures:

In each fiscal year from 2009 through 2011, the most expensive 5 percent of Medicaid-only enrollees accounted for almost half of the expenditures for all Medicaid-only enrollees. In contrast, the least expensive 50 percent of Medicaid-only enrollees accounted for less than 8 percent of the expenditures for these enrollees.

This work builds upon previous studies (see GAO’s Demographics and Service Usage of Certain High-Expenditure Beneficiaries, Kaiser Family Foundation’s Medicaid Moving Forward, and MACPAC’s Report to the Congress on Medicaid and CHIP) reporting that a small share of enrollees in each state account for a disproportionally large share of Medicaid expenditures. The latest GAO report focuses on beneficiaries who are only enrolled in Medicaid – excluding populations who are dually eligible for both Medicaid and Medicare.

GAO examined spending on the high expenditure enrollees, defined as those Medicaid-only enrollees who were among the 5 percent with the highest expenditures in each state by:

• Eligibility group (child, aged, disabled, unknown);
• Chronic condition (asthma, diabetes, HIV/AIDS, mental health condition, substance abuse);
• Service (child birth or long-term care residence); and
• Category of service (institutional care, non-institutional services, prescription drugs, and managed care and premium assistance).

In general, GAO observed similar trends with respect to high-expenditure Medicaid-only enrollees over time (2009-2011) and wide variation across states among enrollees and selected services (check out the Appendix for state-specific data).

The following findings are illustrative of spending trends for Medicaid enrollees from 2009 to 2011:

• About 12 percent of enrollees had no expenditures
• The least expensive 50 percent of Medicaid enrollees accounted for less than 8 percent of expenditures
• Disabled enrollees make up less than 10 percent of all Medicaid-only enrollees yet make up 64 percent of the high-expenditure Medicaid-only enrollees
• Children constituted about half (50 percent) of all Medicaid enrollees and 16 percent of the high-expenditure group

Clearly, reviewing these data points indicates that a small percentage of Medicaid enrollees are responsible for a large percentage of state spending. Those most in need of care – the very poor who are sick and disabled – have the ability to access care, including long-term care residence and hospital care. But this data also tells us that a significant percent of Medicaid enrollees actually do not access services and account for no state spending. In these cases, Medicaid acts as a health insurance program – financial protection against unpredictable medical expenses for those living in poverty – but may also suggest that managed care companies may need to step up their game to ensure that necessary preventive are is being delivered.