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Pew Study: Before Health Care Law, Recession Pushed Up Medicaid Spending

By Marissa Evans

April 22, 2015 -- States spent a larger portion of their own money on Medicaid in 2013 than they did in 2000, as participation in the joint federal–state health insurance program for low-income and disabled Americans grew because of the Great Recession of 2007–09, according to a study by the Pew Trusts.

Maine, California, Minnesota, Montana, and Arizona saw the biggest gains in Medicaid spending during the period. Only one state, North Dakota, which experienced an energy employment boom during the recession, saw its Medicaid spending fall, the report found.

The Pew study, released last week, looked at Medicaid spending in the 50 states from 2000 through 2013; states were able to expand their Medicaid programs under the health care law starting in January 2014, with 100 percent of the additional cost borne by the federal government through 2016, when the federal contribution starts to decline to 90 percent by 2020 and thereafter.

Medicaid spending accounted for 16.9 percent of all state-generated funds in 2013, according to the report. The findings are available via PDF and interactive graphic.

Andrea Maresca, director of federal policy and strategy for the National Association of Medicaid Directors, said the report's findings were not surprising but they emphasize how big of a player Medicaid is in the health care world. She said, considering the $200 billion that states are spending on their Medicaid programs, people need to remember the stakes they also have in the program's success.

"There's a false impression states are trying to game the system and not mind the store, and I think with the amount of money they're spending that's an erroneous assumption," Maresca said.

Under the 2010 health care law, state Medicaid programs can be expanded to enrollees with incomes up to 138 percent of the federal poverty line. Twenty-eight states and the District of Columbia are participating in the expansion. States that did not expand their Medicaid program receive an average reimbursement of just 57 percent of their costs.

"The states that have expanded [Medicaid] have outpaced other states that haven't expanded in insurance coverage," said Jesse Cross-Call, health policy analyst for the Center on Budget and Policy Priorities. "Spending isn't just happening; there's also good coming along with it, and that good is people are gaining coverage."

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