Medicaid Spending Growth To Accelerate - report by Kaiser Commission on Medicaid and the Uninsured - Brief Article

Healthcare Financial Management, April, 2001

Medicaid spending has remained moderate for three straight years, but likely will accelerate in future years, according to a report from the Kaiser Commission on Medicaid and the Uninsured, Washington, D.C. Medicaid spending fell by 0.5 percent from 1997 to 1998, while overall spending rose by $8.7 billion, or 5.2 percent. Spending per enrollee increased by 6.8 percent, indicating that states had a tougher time holding down costs than in previous years.

These Medicaid spending trends do not mean a return to the explosive growth rates of the early 1990s. Rather, they reflect reasonable program growth as Medicaid responds to pressures facing the healthcare market generally and serves as the primary source of coverage for more than 40 million low-income children, parents, and elderly and disabled beneficiaries who rely on the program for medical and long-term care assistance, according to the commission.

Preliminary reports indicate Medicaid spending grew more rapidly in 1999. Factors that could influence increased spending include rising healthcare costs, particularly for prescription drugs; the eroding impact of Medicaid managed care; wage pressures in the healthcare industry; the use of supplemental financing programs; and Medicaid enrollment increases. Medicaid spending continues to grow at a slower pace than private-sector healthcare spending.