July 16,2014

Press Contact:

Aaron Fobes (Hatch) (202) 224-4515
Noelle Clemente(Upton) (202) 226-4972

Hatch, Upton Highlight GAO Report on Medicaid Spending Variations Among States

WASHINGTON – U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, and Representative Fred Upton (R-Mich), Chairman of the House Energy and Commerce Committee, today highlighted a new GAO report entitled, “MEDICAID: Assessment of Variation among States in Per-Enrollee Spending,” which details variations in state Medicaid spending while examining the administrative and demographic factors that influence such spending.  Under Obamacare, the Congressional Budget Office (CBO) expects Medicaid spending to increase from $267 billion in 2013 to $576 billion in 2024. 

“Today’s report provides a crucial look into the different ways states use and administer Medicaid funds,” Hatch said.   “As the report notes, there are significant differences in the average Medicaid per-enrollee spending across different states.  Understanding these differences is instrumental in making real reform to this program that Obamacare has so carelessly expanded.  Moving forward, I plan to use this information to ask even more questions about how states administer Medicaid funds while working with Chairman Upton to advance our Medicaid reform proposals that make the program more effective for patients and taxpayers.  One of the things that makes the Medicaid program unique is that it gives states the freedom to test policies and to learn from each other’s successes and failures.  This report illustrates how states have experimented with very different approaches to Medicaid, and have gotten very different results.  Congress needs to use information like this to make sure this vital program actually works for those who need it and is fiscally sustainable in the long term.” 

“Medicaid is the world’s largest health insurance program, and its cost is set to more than double in the coming decade,” said Upton. “It is critical for us to understand all facets of the program, including the variation in state spending on Medicaid patients, as we continue to explore reforms to strengthen the program, making it more transparent, accountable, and financially sustainable.” 

Findings of the report include:

  • “The reasons for spending differences are not well understood, and some reasons for the differences may be within states’ control—such as the extent to which states offer optional or limited benefits to enrollees.”
  • “Spending variations may also be due to different circumstances faced by states, such as geographic cost differences or the extent of enrollee health service needs, which are largely outside of states’ control.”
  • “The variety of demographic and health status indicators that states use to predict spending per enrollee when setting Medicaid managed care rates illustrates the complex array of factors potentially at play.”
  • “The ability to reliably calculate each state’s per-enrollee Medicaid spending is a prerequisite for understanding the extent of and reasons for variation among states in such spending. Better information about Medicaid expenditures is needed in order to do so.” 

The Upton-Hatch Medicaid reform proposal includes a capped allotment for Medicaid spending on a per-enrollee basis.  The complete proposal can be found here