With Arizona and other states already seeking to drop coverage for thousands of Medicaid recipients, governors are asking the federal government for help in dealing with Medicaid budget shortfalls.

The elderly and disabled account for the majority of Medicaid spending, with a significant portion going to long-term care. Medicaid payments represent nearly half (40%) of all nursing home spending, the Kaiser Family Foundation says.

Congressional Democrats, including House Minority Leader Nancy Pelosi (D-CA) and Sen. Tom Harkin (D-IA), favor extending the expiring Medicaid aid until 2014. But Congressional Republicans see this as contributing to the deficit. The National Governors Association and the Republican Governors Association are leaning on Congress to let states downsize their Medicaid rolls.

Industry analysts expect more states to ask for waivers. “The states are reaching a crisis point fiscally,” Dan Mendelson, CEO of the consulting firm Avalere Health, told the Kaiser Family Foundation. He said dropping coverage “runs directly counter to the goals” of the Obama administration, and that it would lead to “an erosion of coverage before the next (presidential) election.”