State Budget Woes? Take a Look at Revenues, Not Medicaid – Say Ahhh! A Children’s Health Policy Blog

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.


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