Increasing Medicaid costs lead to deficits in 40 states

Friday, May 31, 2002

WASHINGTON - Increased state Medicaid costs over the past two years have contributed $40 billion in budget deficits to more than 40 states, despite improvements in the national economy, according to a survey conducted by the National Governors Association, the Washington Post reported last week.

The survey found that state Medicaid costs have increased 25% over the past two years, while state revenues have increased only 5%. NGA Executive Director Raymond Scheppach said that the cost of Medicaid "has reached the breaking point. The growth rate is simply unsustainable."

Scheppach added that health-care costs today account for 27% of state budgets, a trend that he attributed in large part to increased prescription drug costs in state Medicaid programs.

To address the issue, the NGA has lobbied Congress to increase the federal match rate for Medicaid by 1% for each state for 18 months, beginning April 1. The increase would provide the states with an additional $4 billion in Medicaid funds, the NGA said. HME