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Chicago Fed Letter, No. 175, March 2002
Reining in Medicaid Spending—States Respond to Declining Revenues

Even before the current economic downturn, states were finding it increasingly difficult to fund their Medicaid programs. In part, states may have become victims of their own recent good fortune. With the economy prospering in the latter half of the 1990s and tax dollars flowing in, few states saw the need for significant cuts in Medicaid spending, as such cuts could prove both socially painful and politically unpopular.

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