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State Medicaid costs grow

Medicaid costs accounted for 11.4 percent of the state’s general revenue budget in 2013, up from 8 percent in 2000, a study released Wednesday by the Pew Charitable Trusts shows.

Still, that was below the national average of 16.9 percent in 2013, an average that grew from 12.2 percent in 2000.

“In the aggregate, states spent $199.2 billion of their own resources in 2013 on Medicaid health services, making it their biggest expense after K-12 education,” the report notes. “Medicaid spending accounted for 16.9 percent of all state-generated funds, or nearly 17 cents of each dollar -- 4.7 cents more than in 2000.”

Deputy Revenue Secretary Mark Muchow said Wednesday the results are not surprising, because with the exception of North Dakota, whose economy is buoyed by the oil boom there, health care costs are outpacing growth in the economy nationwide.

“Medicaid spending is growing faster than state revenue,” he said. “Over time, it requires a greater and greater slice of the pie.”

Medicaid is primarily federally funded, but West Virginia’s share of funding, based on per-capita income, has increased from 10 percent to 30 percent in recent years. In the 2015-16 budget, more than $466 million of general revenue and nearly $15 million taken from the state’s Rainy Day reserve account will go to pay the state’s share of the health care program for the poor, elderly and disabled.

The 2013 study does not account for states like West Virginia that expanded Medicaid coverage in 2014 to cover low-income adults, with incomes up to 138 percent of the federal poverty level, noting that “potential costs and savings to states are still being assessed.”

However, it notes that initial findings show Medicaid spending by states grew more slowly in fiscal 2014, in part because the first three years of the Medicaid expansion are 100 percent federally funded.

While West Virginia appears to fare well, ranked 19th in the survey of growth in Medicaid spending between 2000 and 2013, Muchow said that is somewhat misleading.

He noted that in West Virginia, about 80 percent of all tax revenue is generated at the state level, with 20 percent produced at the local level, while in some states, state and local revenue is roughly equal.

“These are apples and oranges when you try to figure out state-level spending on Medicaid,” he said.

The Pew study found that seven states spent more than one-fifth of their revenue on Medicaid in 2013: New York (27.2 percent), Missouri (22.3 percent), Maine (22.1 percent), Rhode Island (21.9 percent), Pennsylvania (21.3 percent), Massachusetts (20.5 percent), and California (20.3 percent).

“An increase in Medicaid’s claim on each revenue dollar reduces the share of state resources available for other priorities, such as education, transportation, and public safety,” the report states.

Muchow said growing costs of government-funded health care programs, including Medicaid and Medicare, will increasingly become a critical issue, particularly as Baby boomers grow old.

“They’re growing very rapidly,” he said of health care costs. “They’re not sustainable.”

Reach Phil Kabler at philk@wvgazette.com, 304-348-1220, or follow @PhilKabler on Twitter.

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