From the TATRA Project, funded by the Rehabilitation Services Administration:

Medicaid is now threatened by the inability of states to afford rapidly increasing costs, by federal rules that constrain state options to shape and control their programs, and by federal budget pressure to slow federal spending. The National Governor's Association recently released a new report "Medicaid in 2005: Principles & Proposals for Reform." The paper looks at the issues, problems and challenges that face Medicaid in 2005, the outlook for the future, and offers principles and options for reform.

The authors note that Medicaid has a special role to play in several important areas, including, providing long-term care and intensive care for persons with chronic conditions and disabilities and for persons with mental illness, and assuring prenatal care, caring for babies in neonatal intensive care units, providing well-child preventive care and acute care for children that helps them stay healthy in school.