CT Medicaid costs stable but hospital spending needs monitoring
Connecticut Medicaid per member costs are stable and growing slower than other states. CT Medicaid per member costs are lower than all but 27 other states, just below the median. But hospital spending increases could erode that progress. Medicaid is not the driver of rising state budgets, growing less than state employee benefits or the General Fund. Connecticut Medicaid is very efficient with lower administrative costs than other states or private insurance plans. COVID’s financial impact is easing.
Since switching from managed care organizations in 2012 to focus on care management, Connecticut Medicaid spending has stabilized while enrollment has expanded significantly, according to the state’s latest financial report.
Per member spending in Connecticut’s Medicaid program dropped significantly from 2013 though 2015, after switching from managed care. However, per member spending slowly increased for five years after that. When COVID hit, health care spending dropped, as it did across the US. Per member spending increased last year, but still below pre-COVID levels.
At $8,405 in 2019, Connecticut Medicaid per member costs were just below the median for all states. According to CMS, in 2019 Connecticut ranked 28th highest in per member costs, down from 19th the year before.
Between 2012 and 2022, the largest share of Medicaid spending was on hospital services, both inpatient and outpatient care.
While physician costs grew faster than other services from 2012 to 2022, hospital costs were the largest contributor to rising Medicaid spending.
Medicaid is not the driver of rising state spending. Between 2014 and 2022, Connecticut Medicaid spending grew less quickly than state employee/retiree health benefit spending or the total General Fund.
The federal share of Connecticut Medicaid spending rose to 65% last year, up from 55% in 2014. Variations were due to the stepped reduction in the expansion population match rate under the Affordable Care Act and the COVID match increase.
Our state consistently spends less of our state budget on Medicaid than other states. Last year, Medicaid comprised 24% of Connecticut’s state budget compared to the 28% average for all states.
At 2.8%, Connecticut Medicaid’s administrative burden is well below other state Medicaid programs, averaging 4.2%, while Connecticut commercial insurers had 11.1% median administrative costs.
Financial Trends in the Connecticut HUSKY Health Program, DSS presentation to MAPOC, 2/10/2023
Consumer Report Card On Health Insurance Carriers In Connecticut, CT Insurance Dept., October 2021
2022 State Expenditure Report, NASBO
Medicaid per capita expenditures, Medicaid.gov, accessed 3/4/2023
Comprehensive Financial Status Reports, DSS