Although states had strong revenue in FY06 and improved finances, Medicaid continues to strain state budgets, according to the biannual Fiscal Survey of States published by the National Association of State Budget Officers and the National Governors Association. At 22% of total state spending, Medicaid constitutes the largest portion of state expenditures. In FY06, Medicaid spending increased 5%, with state funds increasing by 7.7% and federal funds by 2.9%. The report noted that every state has implemented cost-containment measures, such as freezing or reducing provider payments and better drug-cost management. According to a report issued last month by NASBO, Medicaid funding shortfalls affected 18 states in FY05, and 16 states anticipated shortfalls in 2006, for an average shortfall of $5.2 billion. Also singled out for considerable concern by states are the overall cost increases in health care, the rise in state employee insurance, and the number of uninsured people.
