The additional federal funding will help cash-strapped states in the short term, but enrollment trends and rising healthcare costs mean that Medicaid spending will continue to strain state budgets. Most states say enrollment is growing faster than expected because of the slow economy. Many states will likely face Medicaid budget deficits by the end of fiscal 2011.
"The federal match for Medicaid may be a good deal for states—but states still have to come up with their share," Miller said. "In today's lean times, that is difficult and the states that counted on a larger match are digging into other state programs, including K-12 and higher education."
The additional funding ranges from $22 million in North Dakota, and $23 million in Wyoming and South Dakota, to $851 million in Texas, $1.41 billion in New York and $1.88 billion in California.