...Medicaid Poses State Budget Challenge: Medicaid costs are one of the largest components of annual spending for U.S. states. While enhanced federal aid during the recession reduced states' share of Medicaid costs, the secular long-term trend toward steadily higher overall healthcare costs is substantial. Importantly, this growth outpaces average state revenue growth, creating the potential for a long-term budgetary imbalance absent offsetting state actions. State Efforts Yielding Some Improvement: States have taken a range of actions to slow Medicaid cost growth, with some success, reflecting a level of flexibility and control they wield over the program's growth trajectory. Approaches vary widely but generally reflect trends in the broader healthcare sector, including a shift away from fee-for-service payments and toward managed care. States have also pursued measures such as broad provider reimbursement cuts or freezes. These efforts have succeeded somewhat, and the outlook remains challenging...
