Report: Decrease in federal funding forces more Medicaid burden on states

Scott D. Pattison

A drop in enhanced federal funding for Medicaid made states increase outlays for the program by an estimated 16.2% in fiscal 2012, according to a new joint report by the National Association of State Budget Officers and National Governors Association.

To counteract the change, 33 states said they would enact Medicaid funding increases in fiscal 2013. Ohio ($1.2 billion) and Florida ($685.4 million) top the list. A group of 12 states will institute cuts for the same time period led by Texas ($3.5 billion) and California ($893 million).

The report stated fiscal 2013 “will likely be a turning point for state tax collections.” General fund revenue is expected to be at its highest since the recession began, but state finances will remain uneven. Twenty-one states forecast lower general fund revenue in fiscal year 2013 than in 2008.

“States are seeing stability in their fiscal conditions, although many have yet to return to their pre-recession levels,” NASBO Executive Director Scott Pattison said in a statement. “Money is still expected to be very tight. There are not enough state dollars to meet all of the challenges from rising health care and education costs and other expenses like corrections and infrastructure.”

Medicaid received 23.9% of state spending in 2012. It was the single largest item for total state expenditures and accounted for 19.6% of state general fund expenditures according to the Fiscal Survey of States (Fall 2012).

Medicaid spending increased 20.3% in FY 2011 according to the report. The enhanced federal Medicaid match, a part of the American Recovery and Reinvestment Act of 2009, was in effect from October 2008 through June 2011.

Medicaid enrollment peaked at a 7.8% growth rate in 2009. That figure has declined to an average of 3.2% for fiscal year 2012, according to the state survey.