Dec 18 Rising healthcare costs are pushing up
the amounts U.S. states must spend on the Medicaid insurance
program for the poor, sending some scrambling to find funds,
according to a report released on Tuesday by the National
Conference of State Legislatures.
The report found that spending on Medicaid and other public
healthcare programs is currently over budget in 10 states,
compared to six states at the same point last year. In contrast,
only five states report that education, which has traditionally
taken up most spending, is over budget.
Medicaid is operated by the 50 states with partial
reimbursements from the federal government and it can take up to
a third of a state's budget. In fiscal 2012, it consumed 24
percent of total state spending.
When the 2007-09 recession struck, the newly jobless and
homeless turned to the program for healthcare, with annual
enrollment growth peaking at 7.8 percent. The demand has slowed
but not abated - the National Governors Association and National
Association of State Budget Officers recently reported
enrollment likely grew 3.2 percent in fiscal 2012, which ended
in June for most states, from the year before.
In Texas alone the program is underfunded by $4.3 billion
for the 2012-2013 biennium, according to the NCSL. West
Virginia, meanwhile, must find $180 million more for it in
fiscal 2013. Iowa faces an estimated $61 million Medicaid
shortfall it will address in its upcoming legislative session
and Georgia has a deficit, as well.
The Conference, which represents members of statehouses from
across the country, found that Maine's Medicaid spending
continues to increase despite declining caseloads. The shortfall
caught Maine by surprise: the state had projected spending on
the program to drop, but costs have shot up.
Nevada says a larger number of caseloads than expected
accompanied by rising costs drove up its Medicaid expenditures,
creating a shortfall. In nearby California, the Medicaid
overspending includes its Children's Health Insurance Program.
Maryland does not list Medicaid as an overrun, but it does
say that it is short $9 million for community health and mental
hygiene payments. Neighboring Virginia must put more funds
toward Medicaid and toward employee health insurance.
Connecticut will also have a shortfall.
A growing number of states are concerned that increased
Medicaid demand will pull funds from other areas, especially
because all states except Vermont must end their fiscal years
with balanced budgets.
Last week's report from the National Governors Association
and National Association of State Budget Officers found that 32
states increased spending on Medicaid in their fiscal 2013
budgets. Excluding Texas, total state spending on the program
will likely rise $4.1 billion from last year.
Outside of growing costs, there are two other factors why
states are expanding spending: less federal funding and changing
The 2009 federal economic stimulus plan included roughly
$100 billion in extra funds for Medicaid. That money has run
out, and states are having to cover a larger share of the costs.
The NGA and NASBO found that in fiscal 2011 state funds for
Medicaid increased by 20.3 percent and federal funds rose 4.1
percent from the year before. The next year, state funding
continued to grow by 16.2 percent, but federal money for the
program fell 7.8 percent.
The Affordable Care Act, also known as Obamacare, expanded
eligibility for Medicaid and provided for 100 percent
reimbursement for all new enrollees for a few years. That
proportion tapers off to 90 percent in 2020.
The Supreme Court, though, has decided states can opt out of
Virginia and other states with Republican leadership have
said they will not participate. Many cite the costs of
overseeing the bulked up program and the uncertainty in federal
guidance. Others intend to participate in Obamacare, which also
relies on the states to create health insurance exchanges, as
little as possible.
On the other side, some states have already covered people
whose incomes are just above the threshold to qualify for
Medicaid. The additional funds from Obamacare will help them pay
for their already-expanded programs. Some states say they will
save money from the expansion, expecting the amounts they must
spend on uncompensated care for the uninsured to drop.
Regardless, most states are not primed to cover any new surge
in spending demands that could spring from a fresh economic
The NCSL found states' revenues are only slowly growing
after collapsing in the 2007-09 recession. Two-thirds of states
and the District of Columbia told NCSL their revenues are stable
and likely to meet projections used in drafting their budgets.
Many are hunkering down and keeping spending low in case their
revenues again plummet in the face of federal deficit cutting,
international debt crises, or a new recession.
"Three and a half years following the official end of the
recession, state officials face the prospect that slow and
steady growth may be the 'new normal,'" NCSL said. "With the
unpredictability of recent fiscal years, stable is not
necessarily a bad position for states but enough uncertainty
lingers on the horizon to create a fragile situation for state