For years, Medicaid costs have advanced robustly, at roughly 7% per year which is a big number given that it’s building on a base of billions.
So, what do the budget forecasters in the Governor’s office and the House project for next year? Growth of only $100m in Medicaid — growth of 1% or less.
That will require the state to drive down its per Medicaid enrollee costs by 3.5% next year. How have we done at that recently? On average, per enroll costs have gone up by 5% per year and it has never been negative over the past seven years.
To provide some context for the per enrollee cost reduction projection, take a look at the assumption for cost increases in our health insurance program for retired state employees — +8% this calendar year and +7.5% next year. (see pg. 28) Big difference.
So what is the current trend holds and we can’t reverse the trend of Medicaid cost increases? The result is $912 million deficit. Here’s hoping for a miracle.