A drop in the number of people who lacked health insurance last year reflects a push by states to cover more lower-income adults and children, but the gains might unravel during the economic slowdown, economists and health experts say.

"In 2007, there was a lot of activity, with states taking the lead in moving toward health reform," says Diane Rowland of the Kaiser Family Foundation, a non-partisan research group.

Last year, 26 states expanded eligibility for Medicaid, a program for low-income residents, Rowland says. Yet the troubled economy, coupled with the housing crisis and high gas prices, could force states to step back. "In good times, states expand programs, and in bad economic times … they scale them back," Rowland says.

Census figures released Tuesday show the number of uninsured nationwide dropped by 1.3 million last year, while enrollment in state Medicaid programs grew by the same amount. Other government insurance programs, including Medicare and military health care, also grew.

Covering more children was a priority for states last year. Many, including Oklahoma and Louisiana, expanded Medicaid to cover children in families earning up to 250% of poverty, or $44,000 for a family of three. That allowed Louisiana to enroll 15,000 more children in Medicaid and a related program since January, says Alan Levine, Louisiana's secretary of the Department of Health and Hospitals.

Those states and others initially had sought to raise eligibility to 300% of poverty, or $52,800 for a family of three. But in August 2007, a federal directive limited expansion to 250%.

Levine agrees with the rule, saying "scarce resources" should go to the neediest. Yet Mike Fogarty, CEO of the Oklahoma Health Care Authority, says the larger increase "would have reached nearly 50,000 kids" in his state.

The uninsured numbers will likely fuel debate next year when Congress considers renewing the State Children's Health Insurance Program (SCHIP). The program costs about $5 billion a year.

Late last year, President Bush twice vetoed congressional efforts to increase funding for it, saying the plans raised taxes and expanded a program meant for low-income children to those in middle-income brackets. SCHIP was extended until spring 2009 but was not granted additional funding.