Cantor says states are spending more on Medicaid than on public schools

House Majority Leader Eric Cantor, R-7th, is urging lawmakers to make Medicaid more flexible, effective and cheaper for states to run.

"Under the Medicaid system the rules are set in Washington, but much of the bills are paid in our state capitals," he said during his Feb. 5 "Make Life Work" speech at a conservative think tank in Washington  "Collectively states are spending more on Medicaid than they do on K-12 education."

We looked into the claim that states are paying more for Medicaid than public education. Cantor’s staff told us the information came from a report, published by the National Association of State Budget Officers last fall, that tallied where states get and spend their money.

The study found that states planned to spend a total $1.7 trillion in fiscal 2012. Of the sum, 39.8 percent would come from general fund moneys that are collected through statewide taxes, 31.2 percent from federal grants and the remaining 29 percent from other state funds and bonds.

Medicaid, which provides health care for the poor, was expected to be the most expensive item in the collective state budgets. States were projected to spend $406 billion on the service, or 23.9 percent of their total budgets. Elementary and secondary education came in second, drawing $336 billion, or 19.8 percent of total expenses.

But there’s a catch to these figures: The federal government provides states with about 56 percent of what they spend on Medicaid, according to NASBO report. So Cantor is including as state expenses about $228 billion that Uncle Sam sends to the states for Medicaid.

The picture changes if we simply examine the portions of Medicaid and public education that states pay out of their general funds. Public schools rise to the top of the expense list, drawing an expected $235 billion last fiscal year, or 34.7 percent of all general fund spending. Medicaid falls to a distant No. 2, receiving an estimated $133 billion, or 19.6 percent of general fund outlays.

Experts we spoke to didn’t express a preference for one accounting method or the other.

"We include both methods in our report," said Stacy Mazer, senior staff associate at NASBO. "One reason we’ve been using total funds is that some states define their funds differently. And one of the other issues is that even though it’s not all your money, you’re still administering it."

Tracy Gordon, a fellow in economic studies at the Brookings Institution, said most health care industry analysts use a total figure cited by Cantor, but note that it includes federal dollars.

Arturo Perez, a fiscal analyst with the National Conference of State Legislatures, said his organization tracks states’ general fund spending and considers K-12 education to be the greatest recipient of state money.

Our ruling

Cantor said states are spending more on Medicaid than on education. His statement is correct, although it should be noted that a substantial portion of the dollars states are spending on Medicaid come from the federal government.

We rate Cantor’s statement True.

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