Uncertainty around federal and state healthcare funding outlined by the Kaiser Family Foundation Tuesday could add to provider woes as the nation emerges from the worst of the pandemic.

While state fiscal conditions have greatly improved since the pandemic began, recent economic circumstances have raised concerns, KFF reported in its latest review of Medicaid Enrollment & Spending Growth. 

Nearly every state that has adopted a budget for fiscal 2023 generally assumed strong revenue projections. 

“However, states are beginning to contend with new challenges due to rising inflation, workforce shortages, and a slowing economy,” Kaiser said. “How these issues will impact future state budgeting is uncertain. Medicaid plays a significant role in state budgets as both a spending and revenue source and has played a key role in the COVID-19 response and recovery across states. Unlike the federal government, states must meet balanced budget requirements, so dealing with macroeconomic uncertainties make it difficult for states to develop broader revenue and spending projections.”

Several large nursing home providers have said Medicaid increases gained during the pandemic showed that states understood the pandemic’s operational demand, but whether states will maintain the investment if revenues shrink is a major concern. And providers in several states, most notably, have yet to capture any permanent boost to base rates.

Because the end of the public health emergency is unknown, so too are the implications for Medicaid enrollment and spending. When the PHE ends, states will start processing redeterminations and renewals, which will likely cause enrollment declines and lower total Medicaid spending growth, the brief said.

“The end of the PHE, however, will also lead to the expiration of the enhanced federal enhanced Medicaid match,” said the brief. “This will require increased state spending to replace the expiring federal funds. States will likely face pressure to contain growth in state spending after the enhanced FMAP ends.”

Medicaid spending growth has been driven by enrollment growth due to pandemic-related changes in eligibility rules, Brian Ellsworth, vice president of public policy and payment transformation for Health Dimensions Group told McKnight’s Long-Term Care News Tuesday. 

“On the bright side, many states have racked up budget surpluses due to enhanced federal spending, as well as economic recovery,” Ellsworth said.

“The concern for the future for long-term care revolves around workforce challenges relative to the projected growth in the age 65-plus population. The supply of available workers relative to persons in need of long-term care is imbalanced and has been worsening. This continues to make for a challenging environment for providers and policymakers, but one that can be met with the right kind of planning and strategic investments on the part of state Medicaid programs, among others, especially if such efforts are focused on bringing more workers into long-term care.”