Question-and-Answer Session
Operator
(Operator instructions). Your first question comes from the line of Ralph Giacobbe with Credit Suisse. Please proceed.
Ralph Giacobbe – Credit Suisse
Great, thanks. Just wonder you talk about the expectations, mainly around sort of the Medicaid, the 2% rate increase. I was wondering first if you could just remind us maybe put that in the context of what the expectations have been in the past and sort of the difference between and then maybe specifically on the state level what the expectations are from Medical and maybe even Texas Medicaid for the back half of the year?
Dev Ghose
Yes, most of – this is Dev. The 2% growth in Medicaid really is a result of sort of what we've seen historically. Again we're – we've kind of said this before, we're really in a majority of our Medicaid days are in states that are well below the national average so we still think there is room to move in several other states including Texas and those areas where we've seen new Medicaid systems. So we think the 2% a good solid number for us to shoot for 2009.
In regards to California, as of right now, the nursing homes are not affected by the California State budget based on the AB 1629 that was passed so we'll see how that plays out. We've seen solid rate growth there in California, we've seen sort of back-to-back 4% to 5% growth year-over-year. So we think with the blended 2% California generates about 37% of the days for all the Medicaid.
And then in Texas, we predicted about a 5%, 6% growth with the new rate increase in September in the conversion of the RUG system and we actually realized about a 12% rate growth over where we ended in August month end, so we ended about $110 and we're running about 124, 125 right now. So we are optimistic. Again anytime we move to a case mix, state which Texas has now moved to sort of a RUG system it's really benefited us. We feel that we – anytime the acuity comes in to play we get benefited by that.
Ralph Giacobbe – Credit Suisse
Okay, great. And then just at the beginning of the call you mentioned sort of the economic back drop and is it fair to say that the risk around the economy largely still is as sort of on the Medicaid side and potential State budget cuts or is there anything on the utilization side we should also consider?
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