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State Medicaid Spending Declines
Written by Jeanne Bohm, Ph.D.   

From the medical news feed

Medicaid spending growth was slower than state revenue growth, according to a survey released by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured (KCMU). Medicaid spending showed a 2.8 percent growth rate, the lowest rate of growth in a decade.

The growth rate of Medicaid spending has been decreasing for the past four years. The survey credits an improved economy, as well as implementation of the new Medicare prescription drug benefit, as reasons for the declining growth. An additional factor was that enrollment into Medicaid also declined, according to survey participants.

Due to the trend of decreased growth in the recent past, in FY 2007 a small majority of states (26) plan to restore some of their previous budget cuts of previous years.

The report is based on a budget survey of state officials and was conducted by the Kaiser Commission and Health Management Associates. State officials indicate that spending growth would have been lower (1.7 instead of 2.8 percent) but states were required to finance some of the new Medicare prescription drug benefit.

However, due to growing health care costs and the decline of employer-sponsored health coverage, state Medicaid officials believe that Medicaid spending will continue to increase. Based on estimated FY 2007 state budgets, Medicaid spending is projected to increase 5 percent. Current Medicaid spending priorities of States include expansion or restoration of eligibility and benefits, improved quality, and changesin the delivery of long-term care services.

While several cost containment strategies will also be implemented in 2007, which include modifying provider rates and prescription drug spending, there are additional priorities being undertaken. These include disease management and quality, improved health care for beneficiaries, and enhancement of long-term care services in the home.

In addition to individual state intiatives, all states are adjusting their programs in response to passage of the Deficit Reduction Act (DRA) this year. For example, a majority of states expect the new citizenship documentation requirements, effective in July 2006, to cause a decline in Medicaid enrollment.


News release:

About the Author

Jeanne Bohm, Ph.D. is a cancer biologist by training, a medical writer and an experienced science educator.

The author has no financial relationship to any of the companies listed in the article.


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