Medicaid Spending Will Outpace U.S. Economy

Abstract

Mary Ellen Schneider is with the New York bureau of Elsevier Global Medical News. The price tag for medical assistance under Medicaid is expected to reach nearly $674 billion over the next decade, with the federal government picking up more than $383 billion of the cost, according to projections from the Centers for Medicare & Medicaid Services. Under this estimate, which was part of the first annual actuarial report on the financial outlook of Medicaid, the program's expenditures for medical assistance are projected to grow on average 7.9% per year for the next 10 years, outpacing a projected 4.8% growth in the U.S. gross domestic product. “This report should serve as an urgent reminder that the current path of Medicaid spending is unsustainable for both federal and state governments,” Secretary of Health and Human Services Mike Leavitt said in a statement. “If nothing is done to rein in these costs, access to health care for the nation's most vulnerable citizens could be threatened.” Medicaid spending for fiscal 2007 was about $333 billion, with the federal government paying 57% of the cost and the states picking up 43%. Average Medicaid enrollment also is expected to increase over the next decade, according to the report, from 49.1 million in FY 2007 to 55.1 million by FY 2017. For states, the 10-year projections are likely to be mainly academic as they struggle to balance their budgets in a worsening economy, said Judith Solomon, senior fellow at the Center on Budget and Policy Priorities, a research organization that analyzes state and federal budget issues. The report offers an analysis of past trends in Medicaid and a 10-year projection of expenditures and enrollment. Future reports are expected to have longer-range projections and more extensive analysis, according to CMS. The data and assumptions of the report are based largely on three sources: data submitted to CMS from the states; the boards of trustees of the Social Security and Medicare programs; and National Health Expenditure historical data and projections. The analysis is based on current law and does not make predictions of possible policy or legislative changes. The full report is available online at http://cms.hhs.gov/ActuarialStudies/03_MedicaidReport.asp.