NCPA - National Center for Policy Analysis

Medicaid is Fastest Growing Item in State Budgets

January 14, 2002

With Medicaid expenditures soaring and revenues dropping, state politicians are forced to make painful choices regarding the level of medical services they can provide to low-income workers and families.

  • The 36-year-old insurance program covers 44 million people, pays for one-third of all births and nearly two-thirds of all nursing home patients.
  • Overall, Medicaid spending grew by 11 percent last year, the fastest growing item in state budgets -- and many states report that spending on prescription drugs covered by Medicaid rose at an annual rate of more than 20 percent.
  • In 37 states, Medicaid spending exceeded budgeted amounts in the last fiscal year.
  • In 39 states, revenues for the current fiscal year have fallen short of the estimates on which budgets were based.

Governors of both parties are putting pressure on the federal government to increase its financial assistance to the states. They are also warning that Medicaid is grabbing up resources that should be used for other programs -- such as education and economic development.

The program provides health insurance for one-fifth of all children and is the largest source of federal grants to states -- accounting for nearly one-fifth of state budgets.

Source: Robert Pear and Robin Toner, "Grim Choices Face States in Making Cuts in Medicaid," New York Times, January 14, 2002.


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