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Medicaid is not the Problem, It’s the Rising Cost of Health Care

Medicaid spending increased to $276 billion by fiscal year 2003, up one-third from FY2000, according to a new web-exclusive article released by the journal Health Affairs and commissioned by the Kaiser Commission on Medicaid and the Uninsured. Increased program spending was largely driven by rapid increases in enrollment of children and parents in low-income families. For FY2000-03, Medicaid spending grew at an average of 10.2 percent annually. However, state Medicaid cost containment actions — ranging from curbing provider payment rates to reducing benefits — and a slowing of enrollment growth served to moderate Medicaid spending growth in FY2003. The 7.1 percent growth in FY2003 is comparable to the increases the program experienced in the late 1990s. “We know states are struggling with Medicaid spending and the pressure it puts on other state priorities, but this study shows that Medicaid costs actually grew at a slower rate than private insurance costs. The real problem is rising health care costs and the states’ ability to pay the bill, and not that Medicaid spending is out of control,” said Diane Rowland, executive director of KCMU.

Source: Health Affairs (26 Jan 2005) http://content.healthaffairs.org/content/early/2005/01/26/hlthaff.w5.52.short

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