The states are experiencing almost unprecedented increases in their Medicaid spending – both more money and a larger share of their overall state budgets.
According to a new Pew Research Center report,
In fiscal year 2023, the combination of expiring federal COVID-19 pandemic aid, slowing tax revenue growth, and rising costs for Medicaid led to an increase in the share of state revenue dedicated to Medicaid of 17.8%, or $44.4 billion, over the previous year – the largest single-year rise in at least two decades. States spent 15.1% of every state-generated dollar on Medicaid, up 2.2 percentage points from the previous year, though still about half a cent less than the 15-year average.
In addition,
Individually, 17 states dedicated a larger share of their own dollars to Medicaid than they had, on average, over the previous 15 years – a sharp shift from fiscal 2022, when only Alaska exceeded its long-term average. Among these states, the differences varied widely, from 3.3 percentage points in Colorado to 0.03 percentage points in Georgia.
Factors driving the increased state Medicaid spending include reduced federal funding that had been introduced temporarily to help states cope with the COVID emergency; the rising cost of prescription drugs – especially GLP-1-based weight-loss drugs; increased payments to providers; higher post-pandemic Medicaid utilization; increased Medicaid benefits for postpartum mothers and their children; and more.
Learn more about the increase in state spending on Medicaid and its underlying causes and find state-by-state analysis of spending trends in the Pew Research Center report “The Share of State Budgets Spent on Medicaid Posts Largest Annual Increase in 20 Years.”