NEW YORK--(BUSINESS WIRE)--Link to Fitch Ratings' Report: U.S. States: The Rising Cost of Care (How
Medicaid Costs Affect State Budgets and Credit Ratings)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867980
Rising Medicaid costs outpacing average revenue growth for U.S. states could lead to long-term budgetary imbalances, but states are taking actions to offset the risk, according to Fitch Ratings in a new report.
Already one of the largest components of annual spending for U.S. states, Medicaid costs are on the rise. Medicaid spending has increased between 6 and 7% on an average annual basis over the past 20 years compared to just 4.5% annual growth in state tax revenues. That said, efforts by U.S. states are showing improvement, according to Director Eric Kim.
"Some states are shifting away from fee-for-service payments and towards managed care, while others are cutting reimbursement rates or limiting the types of benefits provided," said Kim. "These efforts have been successful to some extent at slowing growth, but it will continue to be a formidable challenge." Fitch anticipates that states will utilize their ample fiscal flexibility to maintain long-term budgetary sustainability.
Implementation of the Affordable Care Act (ACA) has affected state budgets, though not enough to significantly alter fiscal profiles. As a result, state rating changes attributable to ACA are not likely now and for the foreseeable future.
Medicaid presents a clear budgetary challenge for states that Fitch will continue to assess in its credit analysis. Fitch anticipates that states will proactively address the challenge in a sustainable manner so Medicaid, in and of itself, is not likely to precipitate rating actions.
'U.S. States: The Rising Cost of Care' is available at 'www.fitchratings.com' or by clicking on the above link.
Additional information is available at 'www.fitchratings.com'.
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