At 40 percent of Medicare’s and of Medicaid’s costs, the 9 million dual eligibles who receive benefits from both programs, are a focus of efforts to slow growth in entitlement spending. But, given the two programs’ responsibilities, policy-makers are relying far too heavily on states to find the solution. Dollars spent on dual eligibles are overwhelmingly federal; potential savings come from better management of Medicare-financed acute care services; and enhanced state, rather than federal, responsibility for overall spending increases the risk of cost-shifting to Medicare and may undermine quality of care for vulnerable beneficiaries.