New Kaiser Study Shows Medicaid Share of National Spending to Remain Steady until 2025

 

The Kaiser Family Foundation’s Commission on Medicaid and the Uninsured (KCMU) released a new study February 23 on the Medicaid program’s future funding requirements, suggesting that financial projections predict a “less dire situation” than is typically assumed. Published in Health Affairs on the 23rd, the study, called “Is Medicaid Sustainable? Spending Projections For The Program's Second Forty Years,” shows that the projected increase in government revenues will likely be sufficient to pay for increases in Medicaid spending over the next 40 years without undue cuts to expenditures for other public programs.  This report is particularly timely as Congress and the Administration prepare to debate the federal budget, and because the future sustainability of Medicaid has been a subject of much debate in recent months.

 

Medicaid’s share of national health expenditures in 2005 was 16.5 percent.  Based on Kaiser’s work, this figure is expected to stay at an average of 16.6 percent from 2005 to 2025 and slowly rise to 19 percent by 2045. Also, from 2005 to 2045, the share of gross domestic product (GDP) occupied by Medicaid spending will not increase any faster than the share of GDP occupied by overall health spending. Based on this, the authors conclude “there is little that is special about Medicaid spending: It is likely to increase with health spending more generally, neither much more quickly nor much more slowly.”  KCMU’s executive director Diane Rowland was quoted as saying that Medicaid is not the “culprit” driving high health care spending growth: “If there is a culprit in the room, it is not Medicaid but ever-rising health costs that threaten future sustainability.”

 

Kaiser indicates that the report was developed in response to the lack of an annual analysis of the long-term financial status of the Medicaid program, such as is provided for Medicare each year by the Medicare Trustees’ report. The Kaiser study provides a detailed forecast based on historical trends of projected spending over the next 40 years, 2005-2045, for Medicaid as currently structured and comparing projected Medicaid spending to projected overall health spending and federal and state revenue growth.

 

The full study can be accessed here: http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.2.w271?ijkey=//0mcifm9.bZ6&keytype=ref&siteid=healthaff.