Immediate State Fiscal Crisis Subsides, But Medicaid Still Faces Long-Term Budgetary Challenges

State Medicaid Officials Attribute Much of Medicaid’s Cost Growth to Factors Broader than the Medicaid Program

WASHINGTON, DC – After several years of extreme fiscal stress, state budgetary pressures are easing as the gap between Medicaid spending growth and state tax revenue growth declined to 2.6 percent, its lowest level since 1999, according to a new state survey released today by the Kaiser Commission on Medicaid and the Uninsured (KCMU).

The survey – along with two others released today by KCMU – finds the economic recovery combined with sustained state cost containment actions has contributed to the improved outlook for Medicaid and the State Children’s Health Insurance Program (SCHIP). However, state Medicaid officials expressed concern that much of Medicaid’s cost growth is due to rising health costs, declining employer-based coverage, demographic trends, and other factors beyond Medicaid’s control.

“These studies affirm the basic countercyclical nature of Medicaid. Its costs increase most rapidly when it is most in demand—in a sluggish economy,” said Diane Rowland, executive director of KCMU. “While the fiscal crisis has subsided, state budget pressure remains because the nation relies on Medicaid to forgive the failures of our larger health system.” ...

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The Kaiser Family Foundation

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