Medicaid spending continues to increase

October 18, 2004 WASHINGTON -  Medicaid costs increased faster than any other area of state spending in fiscal year 2003 and are expected to consume a greater portion of total spending than elementary and secondary education for the first time in 2004, according to a report released last week by the National Association of State Budget Officers and the National Governors Association. According to the report, Medicaid grew an average of 8% in FY 2003, and the program's expenses accounted for an estimated 21.4% of states' total spending, compared with 21.7% for K-12 education spending. Medicaid's share of state general fund spending was 16.5% in fiscal year 2003, compared with 35.5% for elementary and secondary education, the report said. In addition, Medicaid costs are expected to grow by 4.6% this year and 12.1% next year, the report says. States' total spending increased by an average of 1.4% last year and likely will rise by 2.4% this year. Ray Scheppach, executive director of the NGA, said states' revenues have increased by an average of 7% over the past year, an improvement from the prior three years when revenue growth declined, the Seattle Post-Intelligencer reported. In FY 2003, 23 states experienced Medicaid budget shortfalls, and 18 likely will experience budget shortfalls this year for a combined deficit of about $7 billion, according to the NGA release. "What we're seeing is Medicaid is going to trump education spending, going forward," Scheppach told the Post-Intelligencer.