Despite generally improved economic conditions over a year ago, the Kaiser Commission on Medicaid and the Uninsured says that many states will continue to face huge pressure to contain Medicaid costs in the coming fiscal year – and the situation could worsen when federal relief funding expires in June.

Unemployment is still bogging down state economies, which in turn hurts Medicaid coffers, Kaiser officials said.

“State budgets are by no means out of the woods yet,” said Victoria Wachino, associate director of the commission. Medicaid enrollment has slowed to its slowest rate in three years (5.5%), but that could be due to increasing prevalence of enrollment caps and eligibility cutbacks.

One industry veteran who helped create the Kaiser reports said he has “never seen a more difficult time for Medicaid.” He added that he remains pessimistic for fiscal year 2005 since states are using up their remaining tobacco settlement and other emergency funds.

For more on Kaiser’s findings, go to www.kff.org/medicaid/kcmu012704pkg.cfm.