By Martha Heberlein

For those regular Say Ahhh! readers, you know we have long harped on accurately depicting the role of Medicaid in state budgets. When new data are released, we update our report or write another blog to try to correct a misrepresentation that Medicaid is solely responsible for state budget woes.

Today we are releasing a report which looks at this question a different way. The premise is simple – state budgets have two sides of the ledger – money coming in (revenues) and money going out (Medicaid and other spending). This report looks at how revenues, compared to state Medicaid spending, have affected state budgets during the recent recession.

The recent recession has seen Medicaid spending grow as a result of increased enrollment, with most of the added spending being shouldered by the federal government. Despite this fact some politicians laid the blame for state budget deficits at Medicaid’s doorstep, saying that the program’s costs are growing “out-of control” and that it is “crowding out” other funding priorities.

Our number crunching finds that a greater challenge to state budgets during these difficult economic times has been the steep decline in state revenues. In fact, state Medicaid spending and general revenues both declined during the last recession (because the feds were picking up a greater share of the cost of Medicaid). Many might find the figure below surprising given the rhetoric.