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Report: Recession Fuels $70B Jump in Medicaid Spending

Medicaid spending increased at an average annual rate of 6.6% between fiscal years 2007 and 2010, up from a 1.3% growth rate from 2005 to 2006, because of increased unemployment during the recession and shrinking incomes, according to a new report from the Kaiser Family Foundation, Reuters reports.

KFF Report Details

According to the report, Medicaid spending increased from $330 billion in FY 2007 to $400 billion in FY 2010. The report also noted that:

  • Eight million people joined Medicaid between June 2007 and June 2010;
  • Family enrollment rose by 7.2% annually from 2007 to 2010, up from 0.4% between 2004 and 2007; and
  • Spending on medical services -- which included acute care and prescription drugs -- increased by 6.9% annually over the period, totaling $358 billion in 2010.

According to Reuters, the increased costs could be particularly problematic for states that have faced revenue shortfalls because of the recession, housing downturn and financial crisis. In some states, Medicaid spending can account for up to one-third of the budget, and more than one-fifth for almost all states.

Other Findings on Medicaid, State Health Care Cuts

The National Conference of State Legislatures on Thursday released a report stating that 10 states have exceeded their annual Medicaid budget in 2012.

In addition, the Center on Budget and Policy Priorities recently found that at least 20 states in their budgets made "identifiable, deep cuts in health care." Some states, like Illinois and Arizona, have implemented measures limiting Medicaid eligibility or freezing enrollment (Lambert, Reuters, 5/4).

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