Medicaid Saw ‘Moderate’ Growth in 1998, Kaiser Family Foundation Study Finds

Medicaid experienced "moderate growth" during 1998, with enrollment declining by 0.5% and overall spending increasing by $8.7 billion, according to a report expected to be released today by the Kaiser Commission on Medicaid and the Uninsured. The report, "Medicaid Spending Growth Remained Modest in 1998, But Likely Headed Upward," also notes that spending per beneficiary increased by 6.8% in 1998, "indicating that states had a tougher time holding down costs than in previous years," a release from the Kaiser Family Foundation says. The report highlights increased spending in various areas. For example, Medicaid spending on outpatient prescription drugs increased 14.8% and spending on home- and community-based services increased by 10.1% in 1998. In addition, the program was affected by an increase in general health care inflation and an increase in the enrollment of individuals with disabilities, who comprised 17% of Medicaid beneficiaries and 43% of spending in 1998, up from 15% of beneficiaries and 39% of spending in 1995. Kaiser Commission on Medicaid and the Uninsured Executive Director Diane Rowland said, "These Medicaid spending trends do not necessarily portend a return to the explosive growth rates of the early 1990s," but she added that they reflect "reasonable program growth as Medicaid responds to pressures facing the health care market." According to preliminary data, Medicaid spending appears to have grown more rapidly in 1999. Study author John Holahan of the Urban Institute said that spending could grow by up to 10% in the near future. The report also says that while Congress has curbed "upper payment limit" arrangements, also known as the Medicaid "loophole," states will continue to take advantage of the arrangement to "draw down more federal funds." States are currently allowed limited use of the financing tool (KFF release, 2/9). Under the loophole, states bill the federal government for the maximum cost of services provided by a local- or county-owned health nursing homes and hospitals but negotiate lower rates with the facilities, keeping the difference. The Kaiser Family Foundation will broadcast today's release of the report on its Web site. To view the briefing, go to
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=114 (KFF release, 2/9).