Monday, October 20, 2008

Report Says Medicaid Spending "Unsustainable"

Spending on the Medicaid health program for the poor is on a path to grow at a much higher rate than the overall U.S. economy in the next 10 years, officials said on Friday.

Spending on Medicaid benefits will increase 7.3% from 2007 to 2008, reaching $339 billion, and will expand at an annual average of 7.9% over the next decade, hitting $674 billion by 2017, the U.S. Department of Health and Human Services said in a report.

Over that same time span, the projected rate of growth for the overall economy is 4.8%, the report stated.

The report's release comes at a time of growing worry over the fact that health spending has become an increasing burden on individual Americans, businesses and governments.

Medicaid is the joint state-federal health insurance program for low-income people.

Medicaid spending is projected to grow at a higher rate than spending on the Medicare federal health insurance program for the elderly and disabled, according to the report.

Spending on Medicaid over the next decade is forecast to amount to $4.9 trillion, the report said. Average Medicaid enrollment is seen increasing 1.8% to 50 million people in 2008, and is projected to hit 55.1 million by 2017.

Medicaid is forecast to increase as a share of the federal budget from 7% in 2007 to 8.4% by 2013, according to the report.

"This report should serve as an urgent reminder that the current path of Medicaid spending is unsustainable for both federal and state governments," Health and Human Services Secretary 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."

In 1970, the report said, combined federal and state expenditures for Medicaid represented 0.4 percent of the economy, but this percentage grew to 0.9% in 1980, 1.2% in 1990, 2.0% in 2000 and 2.3% in 2007.

Source: Reuters

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