An analysis by USA Today finds this:

"Medicaid spending has started to soar again, a sharp reversal from last year when costs unexpectedly fell for the first time since the program began in 1965. The state-federal health care program for the poor experienced a 10.7% jump in costs during the first six months of the year, according to a USA TODAY analysis of Bureau of Economic Analysis data. That's the biggest increase since 2001 and puts Medicaid on pace to spend a record $330 billion in 2007."

I think this is significant for a couple of reasons. One, it shows that even in good economic times Medicaid spending goes up. I've looked at the amount of Medicaid spending in Maryland and compared it against economic growth, and found that while spending increased dramatically during bad economic times, there was no corresponding dip in spending during good economic times. Perhaps as states are flush with more tax revenue there is more of a desire to spend it. The bottom line, though, is that there seems to be a natural trend for Medicaid spending to go up.

Two, as I've mentioned on this blog before, this increased federal Medicaid spending spells trouble for states in the long run. Any attempts to address the budget deficit will certainly need to include reforms in the way Medicaid is run. There is no way to curb federal spending without finding a way to at least control the growth rate of Medicaid spending. State governments need to start realizing what this will mean to their efforts to continually expand state Medicaid eligibility.