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Putting Medicaid in the Larger Budget Context: An In-Depth Look at Three States in FY 2015 and 2016

Medicaid has long-played an important role in the U.S. healthcare system, accounting for one in every six dollars of all U.S. health care spending while providing health and long-term services and supports coverage to millions of low-income Americans. Medicaid also plays an important role in states budgets as both an expenditure item and the largest source of federal revenue for states.

The years 2015 and 2016 continue a period of significant change and transformation for Medicaid programs. With slow but steady improvements in the economy following the Great Recession, Medicaid programs across the country were focused on implementing a myriad of changes included in the Affordable Care Act (ACA), pursuing innovative delivery and payment system reforms with the goals of assuring access, improving quality and achieving budget certainty, and continuing to administer this increasingly complex program.

However, these changes to Medicaid policy take place in the larger context of states budgets. Unlike the Federal government, states generally have balanced budget requirements, taking into account the amount of revenue coming in from a state’s own resources as well as federal revenues. State lawmakers must balance competing priorities across budget expenditure categories. Even in years of economic growth, state lawmakers face this pressure of balancing priorities.

This report provides an in-depth examination of Medicaid program changes in the larger context of state budgets in three states:

These case studies build on findings from the 15th annual budget survey of Medicaid officials in all 50 states and the District of Columbia conducted by the Kaiser Commission on Medicaid and the Uninsured (KCMU) and Health Management Associates (HMA). Additional research on budget activity, economic conditions, and other relevant health policy activity was conducted by KCMU and HMA staff members; each case study was submitted to its respective state for review and comment.

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.