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Better Care Reconciliation Act (BCRA): State-by-State Estimates of Reductions in Federal Medicaid Funding

Methodology
This analysis is based on Kaiser Family Foundation estimates using data from the Medicaid Statistical Information System (MSIS), Medicaid Budget and Expenditure System (MBES), CMS-64, and CMS Office of the Actuary (OACT) and Congressional Budget Office (CBO) projections about future Medicaid spending. We combined these data sources to develop a baseline of future Medicaid enrollment and spending by state under current law; we then applied the policy changes proposed in BCRA—specifically, the phase-down of the enhanced match for expansion enrollees and the use of a per enrollee cap on federal funds for all beneficiaries—to project future spending. Last, we compared estimates for the baseline to the BCRA to estimate changes in federal spending under the bill. These estimates assume that states make no other policy changes to their Medicaid programs other than those explicitly modeled. They therefore differ from estimates from other groups such as the Congressional Budget Office (CBO), which assumes a behavioral response from both states and individuals as a result of the law. Additional details on the methods are provided below.

Baseline Medicaid Enrollment and Spending. We generated estimates of Medicaid enrollment and spending for full-benefit enrollees in FY2016 based on Kaiser Family Foundation analysis of the FY2015 MSIS. We adjusted MSIS spending to CMS-64 spending to account for MSIS undercounts of spending. Because FY2015 MSIS data was missing some or all quarters for some states, we also adjusted the enrollment data using secondary data to represent a full fiscal year of enrollment. We accounted for a state’s expansion status, the number of quarters of missing data, and the state’s historical patterns of spending and enrollment in making state-by-state adjustments, using similar methods we used for estimates for earlier years. Because MSIS does not identify adults who are eligible through the ACA expansion versus pre-ACA pathways, we used the FY2015 MBES data to break out enrollment and spending for Group VIII (ACA expansion) enrollees. We then inflated to FY2016 based on the OACT estimates of annual changes in enrollment and spending by eligibility group, with the exception of enrollment for Group VIII, which was obtained from the available FY2016 MBES data. In some cases (e.g., states that expanded after FY2015), we made state-specific adjustments to the data.

We used the FY2016 base year data to project future Medicaid enrollment and spending by eligibility group. Because there is uncertainty around future growth rates in Medicaid and estimates vary widely, we used the average of OACT and CBO predictions of future growth in Medicaid enrollment and spending per enrollee by eligibility group. We applied the same growth rates to all states. We calculated the federal/state split in spending by enrollment group for each year based on the relevant FMAP for the eligibility group and year. For non-expansion groups, we used the most recent FMAPs available (FY2018) for all years; for expansion groups, we used the FMAPs for each year as specified under current law, though we did not account for differential match rates for Group VIII enrollees who are not newly eligible and may qualify for a different match rate. Since these projections use national data and uniform growth rates, individual state estimates may be based on state specific data.

Medicaid Spending Under BCRA. Our estimates of spending under BCRA first inflate FY2016 per enrollee spending to FY2019 based on CPI-M as specified in the bill. For FY2020 and on, we apply limits in growth in per enrollee spending as specified in the bill: from FY2020-2024, per enrollee growth is limited to CPI-M for adults and children and CPI-M+1 for aged and disabled; from FY2025 on, per enrollee growth is limited to CPI-U. We use estimates of CPI-M and CPI-U from the CBO.1,2 We calculate the federal/state split in spending by eligibility group for each year based on the FMAPs specified in the bill. For non-expansion groups, we use the most recent FMAPs available (FY2018) for all years; for expansion groups, we used the FMAPs for each year as specified under the bill, which phases down the enhanced matching rate for expansion enrollees over time. We assume no changes in Medicaid enrollment as a result of BCRA other than those explicitly modeled (i.e., some states dropping their ACA Medicaid expansion) and calculate the difference in federal spending compared to the baseline.

 

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