A Look at Variation in Medicaid Spending Per Enrollee by Group and Across States

Medicaid is the primary program that provides comprehensive health and long-term care insurance to approximately one in five low-income Americans. Although states administer their Medicaid programs within extensive federal regulations, there is flexibility in the design of the program, leading to variation in spending and enrollment, and in spending per enrollee, across eligibility groups and states. Understanding variation in Medicaid spending per enrollee can help determine the impact of various policy proposals supported by the Biden-Harris Administration, such as expanding insurance coverage and closing coverage gaps for Medicaid enrollees, or restructuring Medicaid funding into block grants or per capita caps and limiting Medicaid eligibility and benefits, policies that former President Trump supported in the past.

This data note provides an overview of total Medicaid spending (state and federal share) per full-benefit Medicaid enrollee by eligibility group and state in 2021. The 2021 data are the latest and final version of Medicaid data as of the time of this analysis. Full-benefit Medicaid enrollees are enrollees who are eligible for all Medicaid services, including physician visits, hospitalizations, prescription drugs, and home health services. A small portion of all enrollees (9% of all enrollees in 2021) are eligible for only limited Medicaid benefits, such as family planning and treatment for emergency medical conditions, and are not included in this analysis. References to Medicaid enrollees in this data note refer to full-benefit enrollees. For more information, see Methodology. Detailed state-level data are also available in State Health Facts.

Nationwide Medicaid spending in 2021 was $7,593 per enrollee but varied widely by eligibility group ( Figure 1 ). Overall, children accounted for 37% of full-benefit enrollees but 15% of expenditures. Meanwhile, the elderly and disabled accounted for 21% of enrollees but 52% of expenditures (data not shown). The disparity in expenditures for certain eligibility groups is due to differences in per enrollee expenditures across eligibility groups. Per enrollee expenditures were highest for the elderly, those aged 65 and older ($18,923), and those with disabilities ($18,437) (Figure 1). Per enrollee expenditures for these groups were approximately six times higher than for child enrollees ($3,023), who had the lowest expenditures of any eligibility group (Figure 1). The differences in per enrollee expenditures reflect differences in health care need and utilization. For example, the elderly and those eligible based on disability had High incidence of chronic diseases, More complex medical needs They are also more likely than other enrollees to use long-term services and supports (LTSS). Most older adults and some people with disabilities who are enrolled in Medicaid are also dually eligible for Medicare. For dually eligible people, Medicare is the primary payer for acute care services, and Medicaid pays for services that Medicare does not pay for, such as vision, dental, and most LTSS. Medicaid spending per enrollee is less than half of the total spending for full-benefit dually eligible people age 65 and older.

Because Medicaid programs allow states flexibility in determining eligibility levels, benefits, and provider payments, spending per enrollee varies widely across states (Exhibit 2). Other factors contributing to the variation in per enrollee spending include variation in state population and demographics, ability and effort to raise revenue, and variation in health care costs and markets. Across states, Medicaid spending per enrollee ranged from $3,750 to $12,425, with a median of $7,784 (Figure 2). Tennessee, Florida, Oklahoma, and Nevada had the lowest per enrollee spending, while Washington, DC, Virginia, Massachusetts, and Minnesota had the highest per enrollee spending. Nearly one-fifth of states had per enrollee spending above $9,000 (Figure 2).

Even within each eligibility group, there is considerable variation in per enrollee spending across states (Figure 3). Spending per member for persons with disabilities varied the most among states, ranging from $4,602 in Florida to $52,602 in Connecticut (Figure 3). States have considerable flexibility in determining which populations and services are covered under LTSS, resulting in wide variation in spending per member for older and disabled persons who are more likely to use LTSS. In contrast, spending per member for children ranged from $1,958 in Tennessee to $6,012 in Kentucky (Figure 3). Because all states must provide comprehensive coverage for children through early periodic screening diagnostic treatment (EPSDT), the variation in spending per member for children is somewhat smaller.

Many states with relatively high or low per enrollee spending tend to show the same patterns across eligibility groups within the state, but not all. (Figure 3). Some of the states with the lowest total spending per enrollee (e.g., Tennessee, Oklahoma) are among the states with the lowest spending per enrollee across all eligibility groups (Figure 3). Other states, such as Florida and Nevada, differ across eligibility groups. For example, Florida has low spending per enrollee across all eligibility groups except for children, where it has one of the highest spending per enrollee. Similarly, some of the states with the highest total spending per enrollee (e.g., Washington, DC, Virginia) are among the states with the highest spending per enrollee across all eligibility groups, although states such as Minnesota and Massachusetts are not consistently higher across all eligibility groups (Figure 3).

Even within specific states and eligibility groups, there is wide variation in spending (Table 1). For example, 25 percent of disabled persons in Virginia spent less than $16,051 and 5 percent spent more than $127,703, eight times the amount (Table 1). Additionally, 25 percent of Alabama seniors spent less than $2,061 and 25 percent spent 14 times the amount ($28,761) (Table 1). Despite generally lower costs for nondisabled adult and child enrollees, there was also wide variation in spending for these eligibility groups in Washington state, Colorado, and North Carolina.

In states that expanded Medicaid, spending per enrollee was higher across all eligibility groups than in non-expansion states ( Figure 4 ). Expansion states spent an average of $8,116 per enrollee, more than $2,000 more than non-expansion states, spending $5,988 per enrollee (Figure 4). Claimed We find that the adoption of Medicaid expansion redirects funds from non-expansion enrollees (e.g., children, people with disabilities) to enrollees who are only eligible after Medicaid expansion (e.g., ACA-expansion adults). However, average spending per enrollee is higher in expansion states across all categories. For example, expansion states spend an average of $25,170 per enrollee eligible based on disability, whereas non-expansion states spend an average of $10,494 per enrollee in the same eligibility group. Similarly, expansion states spend $19,783 per elderly enrollee, whereas non-expansion states spend $15,915 (Figure 4). These spending differences likely reflect state policy choices regarding benefits and eligibility, as well as payment rates, regional differences in health care spending, and state demographics.