WASHINGTON (Reuters) - One part of the Affordable Care Act is going according to plan, with U.S. states receiving and spending more money on the Medicaid health insurance program, a report released by the National Association of State Budget Officers on Thursday showed.

States run Medicaid, which serves families who have low incomes, and receive partial reimbursements from the federal government. The healthcare overhaul known as Obamacare allowed more people to enroll in Medicaid and also gave states 90 percent to 100 percent reimbursements for new enrollees.

"The large increase in federal funds to states in fiscal 2014 was almost solely due to additional Medicaid dollars, mainly resulting from the expansion of Medicaid in a majority of states under the Affordable Care Act," the association found. "While federal Medicaid funds to states increased $41.8 billion in fiscal 2014, all other federal funds to states are estimated to have declined $3.4 billion."

For most states, fiscal 2014 ended on June 30.

Medicaid spending rose the most of all states' budget areas, increasing 11.3 percent in fiscal 2014, but the federal government shouldered most of the burden. Federal funding for Medicaid increased 17.8 percent, and state dollars directed to the program only grew 2.7 percent, according to NASBO.

Before Obamacare, Medicaid had each year eaten up a larger portion of state spending. In fiscal 2014, it was states' biggest budget item, consuming slightly more than a quarter of all state expenditures. Elementary and secondary education, though, remains the largest category of spending exclusively from state funds, representing 24.2 percent of state funds, compared to 15.3 percent for Medicaid.

States have become less reliant on federal funds since the U.S. stimulus plan expired and Congress enacted "sequestration" spending cuts. When the stimulus plan's infusion of cash ended in fiscal 2010, federal funds represented 34.9 percent of state spending. In fiscal 2014 federal funds backed 30.3 percent of state spending.

NASBO found spending in almost all budget categories edged up slightly last fiscal year, with only the "all other" and public assistance categories declining. Higher education spending rose 3.7 percent, corrections increased 4 percent, and transportation was up 2.7 percent.

"Looking forward, states remain concerned about both the short- and long-term outlook due to increased spending demands, recent volatility in states revenues, and uncertainty surrounding future federal fiscal policies," NASBO found.

Reporting By Lisa Lambert; Editing by Cynthia Osterman)