How Much Do States Really Spend On Medicaid? Governors have been complaining for years that the rising cost of the health program is crowding out the rest of their budgets. But some say the program doesn't actually cost states as much as some statistics claim.
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How Much Do States Really Spend On Medicaid?

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How Much Do States Really Spend On Medicaid?

How Much Do States Really Spend On Medicaid?

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Governors have long complained that Medicaid could swamp their budgets, but as NPR's Julie Rovner reports, some of the statistics they've been using may exaggerate the situation.

JULIE ROVNER: It's nothing new for governors to claim that Medicaid is wrecking their budgets. Here's Kentucky Democratic Governor Paul Patton, back in 2002.

PAUL PATTON: Quite simply, we have at present a crisis in Medicaid that is heading towards catastrophe.

ROVNER: And here's Tennessee Democratic Governor Phil Bredeson in 2005.

PHIL BREDESON: I simply do not have the money to keep the program going in its current form.

ROVNER: And not that much has changed. Scott Pattison is executive director of the National Association of State Budget Officers. In a recent appearance on C-SPAN, he explained what the loss of the additional Medicaid money from Washington might mean for strapped states in the coming year.

SCOTT PATTISON: As a result, they have to go to other areas, like K- through-12 spending, to get the money to cover their health care costs.

ROVNER: And all the time, costs keep rising. Here's former Kentucky Governor Ernie Fletcher, testifying before the Senate Finance Committee just last week.

ERNIE FLETCHER: Medicaid has grown to consume about 22 percent of state budgets.

ROVNER: Now that 22 percent number comes directly from the National Association of State Budget Officers. But some Medicaid advocates say those NASBO numbers actually overstate how much states spend on Medicaid.

BEN SOMMERS: What they're presenting is the total spending that the state does on all of its programs.

ROVNER: Ben Sommers teaches health policy and economics at the Harvard School of Public Health.

SOMMERS: And then it also includes the fact that revenues are coming from a variety of different sources: state funding, bonds and then the - and federal spending, as well.

ROVNER: And when it comes to Medicaid, he says, those federal revenues account for more than half of the program's funding, even more in poorer states. So what happens to the picture of how much states spend on Medicaid if you subtract out the federal dollars?

SOMMERS: Then that number drops to about 12 percent. And the implication here is that states are spending a lot of their money on Medicaid, but they're spending a lot less than they would be because the federal government is taking up more than half of the tab.

ROVNER: In other words, Medicaid stops being the biggest spending item in state budgets and falls to number two or three, behind K-through-12 and higher education. Sommers and other advocates for the program say there's a reason some people want to make Medicaid look as expensive as possible, and it has to do with politics.

SOMMERS: So it becomes a potential punching bag for conservatives who are trying to argue that the federal government is overreaching, the Obama administration's health reform is unsustainable and that the budget numbers just don't add up.

ROVNER: But NASBO official Stacey Mazer says the organization has perfectly reasonable, non-political reasons for organizing its numbers the way it does. Among them are that no matter where the money comes from, states are responsible for its being spent in a prudent way. But she says total spending also paints a more accurate picture of the Medicaid program over time.

STACEY MAZER: And certainly, the program is growing similar to health care overall at an annual rate of growth that exceeds state revenues or national economic growth, which really leads to budget pressures at all levels of government.

ROVNER: Julie Rovner, NPR News, Washington.



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