State variation in Medicaid spending: hard to justify

Abstract

There is great variation among states in Medicaid spending per low-income person. This variation has many determinants, including state discretion and differences in prices and amounts of services used. Incentives in Medicaid to have low-income states spend more have generally not worked. The decentralized approach to Medicaid and the variations in spending created thereby have consequences in access and health outcomes that seem to belie a presumed national interest in equity. The current trend toward state-based solutions to health care coverage would likely exacerbate existing variations. A federal solution, though not likely, would be necessary to eliminate state variations.