Medicaid spending on the state level will be the hot topic in the next decade. For now it is quiet because most states are turning a blind eye to economic indicators that are warning them. Right now, about 17% of their budgets are dedicated to Medicaid. As that increases, more funding for things like education and hiring workers will be crowded out.
States together spent 17.1 cents of every state-generated dollar in fiscal year 2017 to provide Medicaid health care coverage to low-income Americans—nearly 5 cents more than in fiscal 2000 and the largest amount since that year. After a post-recession spike, the share of state funds spent on the program has stayed high but nearly level—even as states that expanded Medicaid eligibility for the first time picked up a fraction of the extra costs.
Every state except Illinois spent a larger share of its own dollars on Medicaid in 2017 than in 2000, though the decline in Illinois reflects a delay in payments rather than a reduction in costs.
Higher enrollment has been one of the major drivers of growth in Medicaid spending, with more than twice as many people enrolled in 2017 than in 2000. However, enrollment growth has been slowing since 2014. From 2000 to 2013, a number of factors drove up enrollment, including two economic downturns—which caused people to lose jobs and associated health insurance—and a gradual erosion of employer-sponsored insurance. From 2014 through 2017, millions more joined the program as the optional expansion under the ACA was implemented by 31 states, but the federal government agreed to absorb the first three years of all related expenses for newly eligible enrollees. As states for the first time began picking up a portion of these costs in 2017, total spending—including both state and federal funds—per enrollee for newly eligible adults ($5,244) was lower than the average for all Medicaid enrollees ($7,654), according to the Medicaid and CHIP Payment and Access Commission.
Source: Pew Research