Medicaid Spending Expected To Grow Faster Than Overall Spending in State Budgets, Report Finds

States' revenues and spending growth continue to decline, with growth in Medicaid expect to exceed overall budget increases, according to a midyear survey of state finances released on Thursday, the AP/Houston Chronicle reports. The survey was conducted by the National Governors Association and the National Association of State Budget Officers.

The survey found that state spending nationally is expected to grow by about 1% in fiscal year 2009, which begins on July 1 for most states. According to the survey, the average annual state spending growth rate over the last 30 years was 6.7%, and the growth rate last year was 5%. Eighteen states in the next fiscal year will have smaller budgets than for the current fiscal year, compared with four states that approved reduced spending plans this year. In addition, 13 states had midyear budget cuts during this fiscal year, compared with three states last year. The survey also found that the number of states with revenue shortfalls increased this year, with 15 states exceeding projections, 14 states meeting projections and 20 states falling short (Welsh-Huggins, AP/Houston Chronicle, 6/19).

The survey found that Medicaid spending accounts for 21.1% of state spending, making it "the single largest portion of total state spending." Medicaid spending in FY 2009 is expected to grow by 4.4% (Parnass, CQ HealthBeat, 6/19). Scott Pattison, executive director of the state budget officers association, said that Medicaid spending in recent years has grown at a faster rate than the general funds. Spending for the program in FY 2008 grew 6.3%. Pattison said, "There has to be an expansion of revenue in terms of either tax increases, which tend to be politically rare, or further disproportionate cuts outside of K-12 (education) and Medicaid" (Zirulnick, CongressDaily, 6/20).

The survey also found that despite the economic downturn, states and governors are still working to overhaul state health care systems. The report states, "It is clear that covering the uninsured is a high priority across many state governments, and many of the proposals have come from governors of both parties." About two-thirds of all states have proposed measures to their budgets to expand coverage, 18 of which already have enacted or implemented the measures, and 26 that have introduced proposals in their FY 2009 budgets (CQ HealthBeat, 6/19).

The report is available online.