"We must, however, continue to express our concerns about mandated Medicaid ex- pansions. States do not have the luxury of operating a budget deficit. Every man- dated dollar that we spend is a real dollar that has to be taken from another program." Governor Bill Clinton of Arkansas, June 7, 1990 While attention recently has focused on the problems of the Medicare system, Congress shortly will try to tackle another health care financial time bomb in the form of Medicaid, the health care program serving the nation's poor. If significant reforms are not enacted, states will face a heavy in- crease in spending and a rise in the proportion of their projected revenues that must be dedicated to Medicaid. And because the rate of growth in state Medicaid spending will exceed the rate for total state spending, states will be forced either to increase taxes or to divert money from other programs. Medicaid is a state-administered program that operates under federal guidelines. Federal and state governments jointly fund the program. Federal reimbursement to the states is based on a statutory formula designed to give a higher matching rate to states with lower per capita incomes. Matching rates for these services range from 50 percent to 83 percent and are adjusted annually. The cost of Medicaid to the federal government has been growing at double-digit rates in recent years.