WASHINGTON--Medicaid enrollment declined for the first time in nearly a decade, but only by a half-percent, according to a survey released last week by the Kaiser Family Foundation's Commission on Medicaid and the Uninsured.

However, state Medicare directors in 42 states said they expected to expand the coverage to the uninsured next year.

"In hard economic times, states are under incredible pressure to restrain Medicaid spending growth, but when fiscal conditions improve, states look to restore some cuts and really focus on improvements. States are turning to Medicaid to address the rising number of uninsured to help fill in the gaps for low-income families," explained Diane Rowland, executive vice president of the Kaiser Family Foundation and executive director of KCMU.

This fiscal year's decline in enrollment was driven by two factors, according to KCMU. First, states reported significant delays in processing applications because of new documentation requirements. This affected individuals already eligible for the program, they said. Second, states credited a good economy and lower unemployment for reducing enrollment.

Conversely, according to the survey, Medicaid spending grew by 2.9 percent, propelled by the decline in enrollment and the continued transition of the prescription drug costs for dual eligibles from Medicaid to Medicare. The survey said states expect enrollment and spending to increase in fiscal year 2008 as they move forward with program enhancements.