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Governors' Proposed Budgets for FY 2018: Focus on Medicaid and Other Health Priorities

This report provides Medicaid highlights from governors’ proposed budgets for state fiscal year (FY) 2018, which runs from July 1, 2017 through June 30, 2018 in most states.1 Proposed budgets reflect the priorities of the governor and are often blueprints for the legislature to consider. As of the 2017 legislative session, 31 governors are from the same party as their legislatures (24 Republican and 7 Democratic states) and 18 governors are from different parties than their legislatures.2,3 As governors were issuing proposed budgets for FY 2018, federal lawmakers were debating the American Health Care Act (AHCA) which included major changes to the ACA as well as fundamental reforms for the structure and funding of the Medicaid program. While the AHCA failed to pass in the House, discussions on Medicaid reform are likely to continue at the federal level.

The analysis is based on a review of proposed state budget documents, news reports, and other relevant documents. In total, 47 states will enact a new budget for FY 2018 while three states (Kentucky, Virginia, and Wyoming) have previously enacted budgets that cover FYs 2017 and 2018. We reviewed 48 proposed state budgets (including proposed supplemental changes to the 2017-2018 biennium budgets for Virginia and Wyoming). Key findings from the report are highlighted below.

Key Takeaways
  • While a number of states have improving economies and stable state finances, nearly half are facing budget challenges for FY 2018 and relatively weak state revenue growth. While experiences vary across states, at least 12 governors are proposing broad-based state budget cuts for FY 2018.
  • Despite some budget challenges, governors are proposing more enhancements to Medicaid compared to restrictions. For example, governors proposing provider rate increases or benefit enhancements for FY 2018 outnumber the governors proposing rate cuts or benefit restrictions. Many governors continue to propose policies to expand the use of managed care and community-based long term services and supports.
  • Despite federal debates regarding the ACA and Medicaid, proposed budgets continued to build on Medicaid as well as ACA Medicaid expansion coverage to address broader health priorities including the opioid epidemic, behavioral health issues, and treatment for persons involved with the criminal justice system.
Issue Brief

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.