Medicaid Spending Consumes Nearly One out of Every Three Dollars of State Budgets, New Research Finds

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Naples, FL — 
New research from the Foundation for Government Accountability (FGA) shows that Medicaid spending has skyrocketed to an estimated $603 billion in 2018, consuming 30 percent of state budgets. Thirty-two states now have a quarter or more of their budgets devoted solely to Medicaid spending. Some states—such as Missouri, Ohio, and Pennsylvania—are nearing 40 percent.

The new paper reveals that Medicaid spending in both expansion and non-expansion states has far outpaced growth in state revenues. Since 2000, nationwide Medicaid spending has grown by 227 percent, while state tax revenue has grown by just 91 percent. Over the next decade, Medicaid spending is projected to outpace economic growth, exceeding more than $1 trillion per year. 

As Medicaid spending grows, it is becoming akin to Pac-Man, devouring funding for other state priorities like education and transportation. In 2000, education spending exceeded Medicaid spending. Today, Medicaid spending is now 50 percent higher than education spending.  

“Medicaid has grown at an alarming rate over the past two decades. The larger share of the pie that Medicaid consumes, the less money there is available for other state priorities,” said Nic Horton, research director at FGA and author of the paper. “States are watching their Medicaid spending climb to extraordinary levels. Hopefully state leaders will continue to recognize the need to rein in their Medicaid programs and implement commonsense reforms like work requirements and Medicaid expansion enrollment freezes.”

Read the full research paper, which includes Medicaid spending highlights for Ohio, Florida, Indiana, Louisiana, and Alaska, here.

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The Foundation for Government Accountability is a non-profit, multi-state think tank that specializes in health care, welfare, and work reform. To learn more, visit TheFGA.org.