Texas could feel a fiscal strain in the coming years due to growing Medicaid costs if economic growth slows and a recession sets in, according to a new report from S&P Global Ratings.
The S&P “budget scorecard” examines the 2020-2021 state spending plan signed this month by Gov. Greg Abbott. The $250 billion budget spends about 16 percent more than what was earmarked in the previous biennium.
S&P Global Ratings is not critical of the 2020-2021 budget overall, but analysts expressed concern about Medicaid spending in the state.
“Costs to support the Medicaid program continue growing in Texas, as in nearly every state,” Oscar Padilla, an S&P credit analyst, said in a prepared statement, “and in our opinion, while we do not anticipate it, should a recession occur during the upcoming biennium, caseloads would likely rise, resulting in further supplemental appropriations in the next legislative session – a period in which resources may be stretched.”