Amid news that the U.S. economy grew 2 percent in the third quarter of fiscal year (FY) 2012—a higher rate than expected—a survey released on October 25 by the Kaiser Family Foundation found that improvements in the economy have had a significant impact on Medicaid over the past year.

Both Medicaid spending and enrollment rates decreased from FY2011 to FY2012, reaching their lowest levels since the economic recession late last decade, according to the survey. On average, states increased spending by 2 percent in FY2012, compared with a spending increase of 9.7 percent in FY2011, and increased enrollment by 3.2 percent in FY 2012, compared with an enrollment increase of 4.4 percent in FY2011. The survey predicted similar spending and enrollment rates for FY2013.

In addition to economic growth, the survey found, cost-containment measures kept downward pressure on Medicaid spending in FY2012. Among them, restrictions on provider reimbursement rates, which are expected to persist in FY2013, were most common. Meanwhile, the survey reported, many states continued the trend of implementing delivery system reforms, such as managed-care plans, that they hope will yield quality and cost improvements. Illinois, for example, enacted provider payment cuts and pharmacy controls while expanding managed care initiatives to new geographic areas and patient populations.

National developments will critically shape state Medicaid policy moving forward, the survey noted. As a result of the Affordable Care Act, the 2010 federal health reform law, states will have a choice in 2014 to participate in the largest coverage expansion in Medicaid history—a choice that was empowered by the Supreme Court’s recent ruling in National Federation of Independent Business v. Sebelius that the federal government constitutionally could not force the states to take part in the expansion. But whether that choice will remain in place depends largely on the outcome of the upcoming presidential and congressional races, and deficit reduction action that lawmakers must take after Election Day.