Medicaid still taking toll on state budgets

Even as state revenues are showing signs of recovering, health costs remain a budget drain, according to a new report.

The Washington Post: As State Revenues Recover, Health Costs Remain A Burden
State revenues are finally returning to pre-recession levels, but the growing cost of providing health care for the poor is leaving most governments in dire fiscal straits, according to a report to be released Tuesday. The biggest culprit has been Medicaid. State spending on the joint federal-state health-care program for the poor surged by 20 percent this year, following a rise of 23 percent in fiscal 2011 (Fletcher, 6/12).

Reuters/Chicago Tribune: Revenues Recover But States Still Tight-Fisted
Medicaid, the healthcare program for the poor, is consuming larger shares of the increased spending by states. As part of the 2009 economic stimulus plan, the federal government pitched in extra funding for the program, which the states operate with partial reimbursements from the U.S. government. Now, that money is gone and states are having to cover more of the program's costs. State spending on Medicaid rose 20.4 percent in fiscal 2012, and federal spending dropped 8.2 percent. The projected rate of growth for states is much slower for fiscal 2013, 3.9 percent (Lambert, 6/11).

The Associated Press: US States Forecast Highest Tax Revenue In 5 Years
Even as tax receipts at the state level have recovered, states are facing greater demand for services. That means budgets will remain tight and hiring isn't likely to pick up. Dan Crippen, executive director of the NGA, said high unemployment is forcing millions of people to join or remain on Medicaid, the joint federal-state health care program for the poor. That's placing big demands on states, which boosted Medicaid spending 20 percent this year (Rugaber, 6/12).