NCPA - National Center for Policy Analysis


February 14, 2005

To see how Medicaid is devouring state budgets across the country, take a look at Mississippi. Over the past five years, state and federal spending in Mississippi on Medicaid -- the health program for the poor and disabled -- has doubled to $3.5 billion.

This has put tremendous pressure on the state budget, say observers:

  • Fully one-quarter of the state's residents are on Medicaid.
  • Medicaid is projected to cost Mississippi $268 million more than the state budgeted; the program will run out of money by the end of February 2005.
  • The state has slashed road construction and may delay plans to raise the salaries of public school teachers to raise funds for Medicaid.
Medicaid was originally created to help pay the medical bills of 4 million low-income people, but as benefits have expanded, the program has become unwieldy, say observers:
  • Today, Medicaid serves some 53 million of America's poor, or about one in every six Americans.
  • The program costs $300 billion a year in state and federal funds; in some states, Medicaid accounts for one-third of the budget.
  • Medicaid pays 60 percent of the nation's nursing-home bill.

Observers say a state versus federal battle may be looming. Federal rules often frustrate cost-cutting since they require that the states cover many types of services such as pregnancy care for certain low-income women.

Source: Sarah Lueck, "Surging Costs for Medicaid Ravage State, Federal Budgets," Wall Street Journal, February 7, 2005.

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