Report: Medicaid Costs Expected To Outpace States’ Revenue Growth
States' revenues are expected to increase over the next few years, but a steady increase in Medicaid costs will offset the additional income, according to a report released Tuesday by the National Governors Association and the National Association of State Budget Officers, the Wall Street Journal reports.
State budgets will increase by 2.9% to $666.6 billion in fiscal year 2012, the report found (Lahart, Wall Street Journal, 11/29).
However, because of increasing Medicaid enrollment and health care costs, state spending on the program is increasing faster than the increase in revenues. Further, extra federal Medicaid funding through the stimulus package ended this year, resulting in states spending an additional 29% on the program this year (Fletcher, Washington Post, 11/29).
As a result, rising state revenues likely will be diverted to cover Medicaid spending. According to the report, state Medicaid spending will increase to $19.4 billion in FY 2012, accounting for one-fifth of total state spending (Wall Street Journal, 11/29).
Reform Law Expected To Increase Pressure on States
Officials say the pressure on states from Medicaid is expected to increase in 2014, when the federal health reform law expands program eligibility.
Although the federal government will cover the cost of individuals who are newly eligible for the program, many state officials expect residents who now are eligible but not enrolled to begin signing up. States will be required to cover a portion of the cost of such beneficiaries (Washington Post, 11/29).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.