The booming U.S. economy appears to be reducing dependence on federal health insurance for the poor.

Medicaid enrollment fell for the first time since 2007, declining by about 0.6 percent in fiscal year 2018, and states don't expect to see much growth in enrollment next year, according to a Kaiser Family Foundation report released Thursday.

States are budgeting for a "minimal" increase of 0.9 percent in 2019, Kaiser said in its annual 50-state survey of Medicaid.

"States largely attribute the enrollment slowdown to a strengthening economy, resulting in fewer new low-income people qualifying for Medicaid," said Kaiser, a nonprofit group that focuses on health care and health policy.

While crediting the strong economic growth during the Trump presidency, the report also pointed out that the administration is urging states to "add work requirements to Medicaid that are likely to result in enrollment declines." Some of the work requirements approved by the administration have resulted in some Medicaid recipients losing coverage.

Federal and state Medicaid spending still grew despite the drop in enrollment. Combined federal and state spending rose by 4.2 percent in fiscal 2018, similar to the previous year's increase, Kaiser said. States expect a 5.3 percent jump in spending for 2019.

"The gap between enrollment and spending growth in part reflects lower enrollment growth for children and adults, who are relatively inexpensive to cover, compared to seniors and people with disabilities, who have more expensive needs," Kaiser said.

The report also listed other factors that contributed to the rise in spending, including more expensive prescription drugs and states spending more money to treat substance abuse and mental health.

The Labor Department nonfarm payrolls report for September showed the unemployment rate fell two-tenths of a percentage point to 3.7 percent for the month, the lowest level in nearly 50 years. Average hourly earnings showed a 2.8 percent year-over-year increase, in line with estimates.

Medicaid enrollment saw sharp increase in 2013, which coincided with the launch of the Obamacare exchanges, as well as the expansion of eligibility for Medicaid in many states as part of the Affordable Care Act.

President Donald Trump has threatened to repeal ACA.

— CNBC's Bertha Coombs contributed to this article.

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