NASBO Report Leads to Confusion on State Medicaid Spending

By Tara Mancini

The Fall 2012 State Fiscal Survey of States prepared by the National Association of State Budget Officers and the National Governors Association echoes the message that we have heard since the end of the recession; state budgets are rebounding slowly, but remain fragile.  The report contains lots of useful information and is worth a look, especially because misreporting of Medicaid spending seems to follow the release of many state budget reports.

Medicaid is a program jointly funded by states and the federal government, with the federal government contributing, on average, 57% of the funding. It bears repeating that there is a big difference between state general fund spending (state resources) and total state spending (state and federal resources combined) on Medicaid, and it is important to distinguish the two when discussing Medicaid costs.

For example, a recent New York Times article asserted that states are now spending more on Medicaid than on elementary and high school education. However, this is misleading, as it fails to note that these figures refer to total state spending which includes the federal funds. In actuality, the largest share of FY 2012 spending is expected to be on elementary and secondary education (34.7%), while Medicaid is expected to rank second (19.6 %) when only state general funds are considered.

It is worth mentioning that the recent growth in state general fund spending on Medicaid was fueled by the expiration of ARRA enhanced FMAP funds coupled with the increased recession driven Medicaid enrollment. However, as I noted in a recent blog post, slowing enrollment growth in Medicaid is expected to lead to slower spending growth for FY 2013, in both state general fund and total spending.

 

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