Overall US state spending on Medicaid has increased this year to nearly 25%, while education funding has dropped by 20%, according to a report by the National Association of State Budget Officers (NASBO).
The NASBO report shows that 12 states have spent more than 10% on Medicaid, while 14 US states spent over 25% and California has spent up to 40% this year. Meanwhile, in Maine, Nebraska and New Mexico, Medicaid spending dropped due to a decline in federal funding.
Excluding administrative costs, total Medicaid spending is over $398 billion for 2011, or 10% more than last year. Overall state spending for all programs was roughly $1.7 trillion this year, although expenditure remained lower than they were before the housing crisis.
Why The Increase?
Due to the slow economy, more individuals now qualify for Medicaid enrollment, with enrollment up 5.5% for the fiscal year 2011. Enrollment is expected to grow another 4.1% next year. The Affordable Care Act of 2010 will further increase eligibility as of 2014.
The NASBO report also shows that almost every state has started a new Medicaid policy to manage higher costs, with many states paying doctors less for their services. States are also cutting back or eliminating dental and medical equipment, personal care and therapy services.
Although state funding declined in 2009 due to the recession, the NASBO report suggests that federal stimulus packages should have supported states in their spending habits.
When the NASBO began reporting on state spending in 1987, education accounted for the largest portion of local budgets. Medicaid overtook education in state spending in 1990, and has been the largest state-funded program since 2003.
NASBO warns that lower federal funding, the risky economy and continuing pressure to provide health care for retirees will cause most states to restrict spending in many areas over the next several years to maintain sufficient funds for Medicaid's growing needs.
North Carolina Overspends Due to New Billing System
There are other bumps in the Medicaid road: North Carolina, in specific, is experiencing problems with its new billing system. State managers for North Carolina's Medicaid system are being criticized for not adequately documenting delays in the construction of the state Medicaid claims system.
NC state officials were unaware of the changes made by the company hired to construct the system, and as a result, have inherited a completely different system than the one approved by the legislature.
The contract with Computer Sciences Corp. nearly doubled from $265 million to $494.8 million. The company needs an additional 22 months to complete the project. Roughly $90 million will also be spent to maintain the old system during the time of construction.
Even though the federal government will provide 90% of the overall costs, legislators remain upset over the wasted funds and the overall carelessness of officials. In an attempt to justify her performance as head of the Medicaid Management Information System, Angeline Sligh told legislators that she feels she has “done a good job leading the program” and would give herself an A for her role in the project.
Representative Justin Burr told the New Observer that if time and money were wasted in the private sector, those responsible would have been fired long ago, calling the project a “money pit.”
Key Statistics – US Medicaid (source: Medicaid.gov)
- Medicaid provides health care for over 4.6 million low-income seniors, the majority of which are also enlisted in the Medicare program.
- Medicaid helps over 3.7 million disabled seniors who are admitted in Medicare.
- Over 8.8 million disabled non-seniors are covered by Medicaid.
- Roughly 11 million low-income parents, caretakers, pregnant women, and other non-disabled and non-elderly individuals avail of Medicaid.
- Medicaid finances over 40% of all US births and is vital in maternal and child health care.
- Half of all low-income children, roughly 31 million children, avail of health care as a result of Medicaid and the Children's Health Insurance Program.