This 2015 issue brief from the Kaiser Commission on Medicaid and the Uninsured reports on the wide variation in per enrollee spending in the Medicaid program among all the states. Although the current Medicaid program establishes a federal minimum for health care and services to be covered, states have significant flexibility in expanding those benefits and services, and in how much to pay health care providers (which in turn, impacts the actual availability of those services – for example, even if a state covers adult dental care, if there are insufficient numbers of dentists willing to accept Medicaid payments, then the actual availability of dental care may still be limited).
In Fiscal Year 2011, the national Medicaid spending per enrollee each year was $6,502; as expected this spending per enrollee was much higher for seniors on Medicaid ($17,522/year) and for individuals with disabilities on Medicaid ($18,518/year) than for adults under age 65 on Medicaid ($4,141/year) and for children on Medicaid ($2,492/year). These per “full-benefit” enrollee spending figures do not include individuals with only partial Medicaid coverage during the year (for example, low income seniors dually eligible for both Medicaid and Medicare, where Medicare pays for most of the health care).
Among states, the Medicaid spending per enrollee varied from $11,091/year in Massachusetts to $4,010/year in Nevada. States in the northeast tend to have higher spending per enrollee, and states in the south tend to have lower spending per enrollee.
And combining these variations, the Medicaid spending per enrollee for seniors varied from $32,199/year in Wyoming to $10,518/year in North Carolina; the spending per enrollee for individuals with disabilities varied from $33,808/year in New York to $10,142/year in Alabama; the spending per enrollee for adults under age 65 varied from $6,928/year in New Mexico to $2,056/year in Iowa; and the spending per enrollee for children varied from $5,214/year in Vermont to $1,656/year in Wisconsin.
Appendix Table 1 includes these spending per enrollee figures for each covered population in each of the 50 states and the District of Colombia.
These wide variations in spending per enrollee among Medicaid populations and among states is highly relevant to any changes in funding Medicaid, especially block grant or per capita cap formulas. If national spending averages are used, then those states that currently spend more, or have more seniors or individuals with disabilities, would be unfairly penalized (and those states that spend less, or have less expensive covered populations, would receive an unfair windfall). If current state spending averages are used, the current variations would be locked in, probably for at least a decade, without any ability to work with states to reduce spending in more rational ways.