Long-Term Trends in Medicaid Spending by the States

Abstract

After remaining relatively stable between 2004 and 2010, Medicaid spending as a proportion of overall state expenditure has been rising in the current decade. This trend may be expected to continue in the states participating in Medicaid expansion as the federal share of spending on newly eligible beneficiaries falls from 100 percent in 2016 to 90 percent by 2020. The Medicaid spending increase is largely the result of greater enrollment and appears to be displacing spending on other state priorities such as education and transportation. However, I did not find strong evidence that Medicaid spending is directly leading to greater borrowing by states. After 2020, increased nursing home utilization by the Baby Boomer generation should place further upward pressure on state Medicaid expenditures.