Medicaid May Bust State Budgets Next Year

Brian Blase / September 13, 2010

The Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) just updated national health spending projections as a result of the Patient Protection and Affordable Care Act (PPACA). While many of its estimates are disconcerting, one estimate in particular is eye-popping and will be unwelcome news to the states: CMS projects that state and local spending on Medicaid will increase 41.4 percent between 2010 and 2011. No, that is not a typo.

Medicaid spending now represents on average about 21 percent of the typical state budget. If state Medicaid spending increases by 41 percent as projected by CMS, then by next year Medicaid could end up consuming nearly 30 percent of the average state budget. Medicaid would greatly exceed all other state priorities, including education, which tops state budgets at about 22 percent. In fact, state spending on education would experience certain cuts next year. (more…)