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Recent trends in Medicaid expenditures.
Health Care Financing Review. Annual Supplement
|December 10, 1991
Summary
Medicaid spending nearly doubled from 1987 to 1991, exceeding $94 billion. Key drivers include healthcare inflation, state decisions, and federal mandates expanding coverage and services.
Area of Science:
- Health Economics
- Public Health Policy
- Healthcare Finance
Background:
- Medicaid expenditures experienced rapid growth from 1987 to 1991, nearly doubling and significantly outpacing Medicare and private insurance growth.
- In fiscal year 1991, total net Medicaid spending surpassed $94 billion, with five states (New York, California, Massachusetts, Pennsylvania, Texas) accounting for over 40% of this total.
- Inpatient and institutional long-term care represented approximately one-third of national Medicaid spending each.
Purpose of the Study:
- To analyze the trends and contributing factors behind the rapid growth in Medicaid expenditures between 1987 and 1991.
- To identify the distribution of expenditure growth across different states and service categories.
- To project future federal expenditures and understand the impact of legislative and policy changes on Medicaid spending.
Main Methods:
- Analysis of national and state-level Medicaid expenditure data from fiscal years 1987 to 1991.
- Examination of expenditure growth rates across different service categories, including inpatient, long-term care, and other services.
- Review of legislative changes, federal mandates, and state-specific program decisions influencing Medicaid spending.
Main Results:
- Medicaid expenditures nearly doubled between 1987 and 1991, a growth rate significantly higher than Medicare and private health insurance.
- Expenditure growth varied by state, with 12 states experiencing increases of 125% or more, while an equal number saw increases below 75%.
- Institutional long-term care, despite slower growth, remained the largest payment category. Inpatient services, community long-term care, and other services showed the fastest growth rates. Projected federal expenditures were expected to exceed $100 billion by 1995.
Conclusions:
- Healthcare inflation, state program decisions, and federal mandates significantly influenced Medicaid expenditure growth.
- Legislative actions expanded coverage for vulnerable populations (pregnant women, infants, children, elderly, disabled) and increased provider payment rates.
- States utilized alternative financing arrangements like DSH payments and provider taxes, though these were curtailed in 1991.