Final answer:
State governments have been challenged by the rising costs of Medicaid, leading to reductions in optional healthcare services to alleviate financial strain. This is part of larger fiscal adjustments including increased military spending and tax reductions for businesses, despite healthcare spending growing as a proportion of GDP over time.
Step-by-step explanation:
As the country struggles to reduce debt, healthcare spending has been slashed. Due to the high cost of health care services covered under Medicaid, state governments have been financially burdened. With Medicaid being the second-largest category in state budgets after education, states have had to make difficult decisions, including cutting back on optional medical services provided through the program. This trend reflects broader financial strategies that involve shifting spending priorities, such as a surge in military spending and policies like a reduction in taxes for businesses that promote investment.
Over the years, while national defense spending has had periods of increase, Social Security and health care spending have continued to grow steadily as a percent of GDP. However, this growth in healthcare expenditures, which includes payments for Medicare and Medicaid, has placed pressure on state budgets, especially during times of economic downturn when these budgets are hit hard.