Medicaid’s share of state budgets continues to grow


State spending on Medicaid in fiscal 2017 was up 6.1% over 2016, and the program’s share of state budgets increased for the fifth year in a row, according to the National Association of State Budget Officers.

Total spending by the states on Medicaid benefits for more than 74 million individuals was an estimated $574 billion in 2017, which represented 29% of all expenditures. That compares with 28.7% in 2016 and 23.6% in 2012 – the last year that Medicaid’s share of state spending decreased, NASBO said in its annual State Expenditure Report.

Percentage of state budgets spent on Medicaid, 1995-2017
Medicaid’s $574 billion cost this year – up from $541 billion in 2016 – made it the largest component of state budgets, but 61% of that was covered by the federal government, so it was only the second-largest share – after elementary and secondary education – of state general-fund spending. The federal funding grew by 5.1% for the 31 states that expanded Medicaid under the Affordable Care Act and by 3.5% for the 19 nonexpansion states, NASBO said.

Enrollment rose by 2.9% from 2016 to 2017, which was down from the 3.9% increase seen from 2015 to 2016. Since October 2013, Medicaid enrollment is up 38% in expansion states and 12% in nonexpansion states, the report noted.

Enrollment increases are “the major driver” of spending growth, NASBO said, and “Medicaid’s annual spending growth from all fund sources has averaged 8.1% over the past 5 years, while the rest of total spending growth has averaged 2.2% annually.”

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