Rising Drug Costs to Boost State Medicaid Spending
State expenditures on Medicaid are expected to increase by 11.1% in FY 2002, fueled mostly by rising pharmaceutical costs, according to preliminary figures from a survey by the Kaiser Commission on Medicaid and the Uninsured, the Wall Street Journal reports. Despite some cost-cutting efforts, including asking pharmaceutical companies for rebates, Medicaid spending in FY 2002 will "grow faster" than it did in FY 2001, which saw an increase of 9.9%, the survey found. Forty-eight states indicated that rising pharmaceutical costs is one of the top "two or three" factors driving higher Medicaid expenditures. Vernon Smith, a principal with Health Management Associates, which worked with Kaiser on the survey, said, "There is no question that pharmacy growth is in the middle of everybody's radar screen." Other expenses cited by the states include increased nursing home and provider reimbursements, higher enrollment figures and higher long term care costs. The Journal reports that 20 states already expect to need "supplemental budget funds" or will use "emergency" Medicaid trust funds to "meet" rising Medicaid costs by the end of the current fiscal year. Last year, 36 states needed supplemental funding (Gold, Wall Street Journal, 8/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.