States Continue to Struggle With Medicaid Costs
PRINCETON, N.J.--States are still struggling with Medicaid costs at the same time they are trying to expand the program's coverage, according to a report issued last week.
"State of the States," a report issued by AcademyHealth, a branch of the Robert Wood Johnson Foundation, found that states continued to try to limit health care costs in 2005 while initiating new coverage expansions.
"Times are still difficult for states and for coverage in general," said Alice Burton, director of AcademyHealth's state coverage initiatives. "No progress has been made to address the uninsured in a comprehensive way at the national level, and the numbers keep on rising. But, the silver lining is that state leaders continue to be creative in finding new opportunities to expand coverage."
Although spending for Medicaid has decreased over the last three years, growth for the health care program for the poor--funded jointly by states and the federal government--averaged 7.5 percent in 2005. Spending for Medicaid increased faster than state revenues last year, and 26 states had Medicaid shortfalls compared to 22 in fiscal 2004.
"From FY 1999 until FY 2004, K-12 education spending accounted for the largest share of state spending," the report noted. "Today, Medicaid accounts for the largest and fastest-growing category of state expenditures."
Enrollment in Medicaid continued to grow in 2005, as states faced fiscal challenges. Medicaid enrollment nationwide grew 4.2 percent in FY 2004 and increased an estimated 4.1 percent for FY 2005.
New and unexpected problems for the states last year included Hurricanes Katrina and Rita. States "face serious challenges, ranging from a backlog of expenditures and spending increases for many programs due to the uncertain economic impact" of the two hurricanes, the report said.
A federal reduction in Medicaid dollars could further exacerbate state budget problems, the report said. The 2006 federal budget reconciliation bill (see HomeCare Monday, Jan. 17), set for a House vote on Feb. 1, would cut Medicaid and the State Children's Health Insurance Program by $6.9 billion over five years.