A new report recently released by the Kaiser Foundation nonprofit organization details the extent to which the recession has led to an increase in Medicaid spending that is still being dealt with by state legislatures today.
Though the recession officially ended in 2009, Medicaid spending between 2007 and 2010 increased by about 6.6% per year. This was significantly larger than the 1.3% increase during the pre-recession years of 2005 and 2006. This increase in Medicaid spending amounted to an additional $70 billion that states had to spend on Medicaid. Since then, Medicaid costs now eat up at least 1/5th of almost all state budgets, and several states spend about 1/3rd of their income solely on Medicaid.
Medicaid provides health insurance coverage to the poor, and the job losses suffered during the recession contributed to millions more people applying for Medicaid. An estimated 8 million people, many of them families, applied for Medicaid as a direct result of the recession, thus causing the massive increase in spending.
States have been dealing with the spending increase ever since, and many, such as Arizona and Illinois, have taken or are considering drastic steps to reduce spending. At least 20 states have made deep cuts in health care this year already, and more may soon follow. Though unemployment rates have been recently dropping and the recovery appears to continue, it may not be a quick enough recovery to prevent more Medicaid cutbacks in the future.