Medicaid spending growth stunted, state revenues on upswing

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Medicaid spending grew just 2.6% for the 2006 fiscal year, according to results of a 50-state survey released Tuesday. It was the first time in eight years that state revenues (3.7%) grew faster than Medicaid spending.

In addition, all but one state said it plans to boost provider payments or eligibility criteria, according to the report from the Kaiser Family Foundation's Commission on Medicaid and the Uninsured.

The new Medicare prescription drug benefit, which shifted most government drug spending away from state Medicaid programs, accounted for the Medicaid spending slowdown, report authors said. They also credited a healthier economy for the favorable results. As a result of the economy, Medicaid enrollment grew just 1.6%, only half of what program officials had predicted.

The study also found that 34 states plan to apply for "Money Follows the Person" demonstration grants to encourage the purchase of private long-term care insurance and boost the use of home- and community-based services instead of nursing homes and other institutional services.

The report, "Low Medicaid Spending Growth Amid Rebounding State Revenues: Results from a 50-State Medicaid Budget Survey State Fiscal Years 2006 and 2007," can be found at www.kff.org/medicaid/kcmu101006pkg.cfm.