State Budget Deficits Put Pressure on Medicaid Spending Nationwide
States faced with declining revenue are cutting overall spending for the first time since 1983, and Medicaid funding could face serious shortfalls in some states if the federal government does not provide relief, according to a survey released Monday by the National Association of State Budget Officers and the National Governors Association, CQ HealthBeat reports (Weyl, CQ HealthBeat, 12/15).
According to the report, states have cut general fund spending by $380 million to $689 billion in the current fiscal year, which began in July for 46 states. Medicaid accounts for 17% of state general fund budgets, according to the report (Selway, Bloomberg, 12/15).
The survey was conducted in the fall comparing the actual FY 2007 state budgets to preliminary FY 2008 budgets.Â It found that 31 states are projecting budget shortfalls totaling at least $30 billion.
Raymond Scheppach, NGA executive director, said more states "will probably announce shortfalls as they go into their legislative sessions in January."
The survey found that spending by states in FY 2009 likely will decline by 0.1% -- an "extremely significant" drop, according to NASBO Executive Director Scott Pattison (Sanchez, CongressDaily, 12/15).
Implications for Medicaid
"The downturn in the economy is expected to result in significant increases to Medicaid enrollment as it has in previous recessions," the report found.
NGA has recommended an increase in the Federal Medical Assistance Percentage, which determines the amount of federal matching funds for Medicaid programs, of between $66 billion and $100 billion.
NGA has asked that the funding be included in the economic stimulus package expected to be signed shortly after President-elect Barack Obama takes office in January 2009 (Bloomberg, 12/15).
In an interview on Monday, House Speaker Nancy Pelosi (D-Calif.) said that she expects a two-year economic stimulus plan worth between $500 billion and $600 billion to be approved in the House before Obama's inauguration, USA Today reports (Kiely, USA Today, 12/16).
The report is available on NGA's Web site (.pdf).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.