The Numbers Are In: LFA Releases the 2022 Medicaid Consensus Forecast

December 9, 2022

Background

Medicaid is a federal and state program that pays for medical services for low-income, disabled, and elderly individuals. In order to qualify, individuals must meet specific eligibility requirements. Officially, Medicaid is an “optional” program, meaning it’s one that a state can elect to offer. However, if a state chooses to offer Medicaid, then it must adhere to strict federal regulations. Utah (having chosen to offer Medicaid) established an “entitlement program” for qualified individuals, so that anyone who meets specific eligibility criteria is entitled to Medicaid services. An accurate forecast is essential to adequately funding that entitlement. The Medicaid consensus forecast team includes the Legislative Fiscal Analyst, Governor’s Office of Planning and Budget, and the Department of Health and Human Services. The team uses employment, labor force participation, population, and other demographic and economic indicators to forecast enrollment. Total cost for the program includes enrollment as well as the per-member per-month (PMPM) cost, which is the monthly payment received by enrolled Medicaid members. The team compares models and outputs in an attempt to produce the most well-rounded forecast which incorporates the best available information.

In FY 2021, nearly three in every ten General Fund dollars went to Medicaid ($634 million), yet this still represented only a fraction of the nearly $3.9 billion that was used for Medicaid statewide. (Utah’s General Fund contribution in FY 2021 was lower than usual due to increased federal funding associated with the pandemic). From 2000 to 2012, Utah’s Medicaid enrollment grew from 121,300 clients to 252,600 clients, an increase of 108%. Over the same period, the percentage of the State’s population on Medicaid grew from 5.4% to 8.8%. According to statute, a portion of Medicaid expenditures are included in the Social Services base budget (S.B. 7), including growth rates for Accountable Care Organization contracts and behavior health services (UCA 26-18-405.5), and mandated Medicaid program changes (UCA 26-18-405).

Current Budget Cycle Cost Estimates

Since the last consensus forecast, estimates for FY 2023 have decreased ($42.0) million, while FY 2024 estimates have increased by $21.1 million one-time and $44.3 ongoing for Medicaid and the Children’s Health Insurance Program (CHIP). A variety of factors contributed to these changes:

— the extended Federal requirement to keep everyone on Medicaid is projected to through February 2023;

— the one-time federal match for rate enhancement is forecasted to last through March 2023 which will provide one-time reductions of ($147.2) million in FY 2023;

— Medicaid caseload is forecasted to increase by 9,600 or 2.8% in FY 2023 and decrease by (65,000) or (18.2%) in FY 2024, (this assumes 12 months to review all cases after the conclusion of the maintenance of effort requirement which begins in February 2023);

— the increased payments to the federal government for Clawback (the state contribution for outpatient prescription drugs) and Medicare buy-in; and

— Utah’s statutorily required 2% inflationary rate increases for accountable care organizations and behavioral health plans.


The team estimates that the Medicaid Expansion Fund’s ending fund balance will increase by $63.5 million due to:

— forecasted caseload increases of 26,300 or 23.1% in FY 2023 and decreases of (7,700) or (5.5%) in FY 2024;

— federal approval of housing supportive services; and

— the statutorily-required 2% inflationary rate increases for accountable care organizations and behavioral health plans.


For more information on this year’s Medicaid Consensus Forecast, please see this issue brief prepared by the Office Legislative Fiscal Analyst.