CHICAGO — States already facing big challenges balancing their budgets should brace for new costs and volatility stemming from implementation of the new federal health care law over the next few years, Standard & Poor’s said in a new report.

The expansion of the Medicaid program, a key element in the new law, could strain state budgets, analysts said in the report, which is called “U.S. States Brace for Health Care Reform and Higher Medicaid Spending.”

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