Health & Wealth Blog
4:02 pm
Thu October 27, 2011

States to Pick Up Medicaid Costs

During the Great Recession, as the ranks of poor and unemployed swelled, enrollment in Medicaid shot up, growing by 7.8 percent in 2009. At the same time, state tax revenues collapsed by nearly 17 percent. States couldn't afford to pay their share of Medicaid costs, and Congress came to the rescue with the Recovery Act, boosting federal Medicaid funding by around $103 billion. But the recovery dollars ran out in June, and now states are facing the biggest yearly increase in Medicaid costs in history, according to projections by the Kaiser Family Foundation. Missouri already spends over a quarter of the state budget on Medicaid.

Usually the Feds and the states share the costs of Medicaid about 60 / 40. But with the extra stimulus funds, the federal government was paying 74 percent in Missouri during the past two years. The loss of that extra cash means Missouri taxpayers are looking at a 29 percent increase in state spending on the program, according to the Kaiser Family Foundation Medicaid budget survey, released today.

Meanwhile, enrollment will continue to grow -- by a little over four percent next year. States can't tackle costs by restricting enrollment. They aren't allowed to under health reform. So instead they are restricting payments to medical providers (46 states plan to do so in 2012), reducing benefits, and increasing copayments.

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