As health care costs have risen at a rate far outpacing inflation and overall economic growth, states are having trouble containing the costs of Medicaid.

A report by Fitch Ratings finds that average annual Medicaid costs have increased by 6 percent to 7 percent over the past 20 years, compared to an average annual medical cost growth rate of 4.5 percent. That gap has for many years threatened states with long-term budget problems, but Fitch notes that a number of changes to the public health programs offer many state governments a way to avoid fiscal crisis.

Critically, a number of states have sought to implement a payment system that favors managed care instead of the long-prevailing fee-for-service system.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and events
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.