Medicaid costs rise 72% in 3 years

December 20, 1992|By Chicago Tribune

WASHINGTON -- Medicaid spending has increased sharply over the past few years primarily because of the increase in the cost of medical services and expanded enrollment, especially for the elderly and disabled, according to a report by the Kaiser Family Foundation.

From the beginning of 1989 to the end of 1991, national spending on Medicaid services increased by $37 billion, a 72 percent jump, it said.

The report has taken on added significance because its primary author, Judith Feder, is heading President-elect Bill Clinton's transition team on health care. One of its primary topics of investigation is how to rein in the cost of health care.

Medicaid pays for medical care for the poor. It is a federal-state program that covers more than one in 10 Americans and gobbles 11 cents of every health-care dollar, according to the report. It is a health insurer for poor families, a supplement to Medicare for the elderly poor and a provider of long-term care for disabled people under age 65.

The report said each of the major forces driving Medicaid spending -- increases in the number of people on the program, increases in the costs of medical treatments and increases in expenditures per person served -- accounted for about a third of the increase.

More than half of the 4.8 million people who joined the program in the three years studied were children and pregnant women. But the costs associated with coverage of these two groups accounted for only 11 percent of the increase in Medicaid spending, the report said. The number of elderly and disabled in the program grew much less than the number of children and pregnant women, but the elderly and disabled represented 19 percent of the spending growth.

The report found that the most important factor in limiting the cost of Medicaid would be restraining health-care costs in general.

The study, prepared by the Kaiser Commission on the Future of Medicaid, said that before 1989 Medicaid spending generally lTC had increased at a slightly lower rate than either private health spending or spending on Medicare, the program for the elderly and disabled.

In 1989-91, that pattern was broken, with Medicaid spending rising 13 percent in 1989, 19 percent in 1990 and 27 percent in 1991. The report projected a 30 percent increase in Medicaid expenditures for this year.

Between 1984 and 1990, Congress amended Medicaid seven times to expand coverage for poor women and children.

Diane Rowland, executive director for the Kaiser commission, said those people were not very expensive to cover.

"Where Medicaid pays more is for hospitals, drugs and other care," she said. "The most important thing is to constrain health-care costs overall."

The Clinton administration is studying health-care proposals modeled on "managed care." That idea, in part, would put people into large health-care pools, either where they work or in a governmental-private pool that would take in employees of small businesses and the unemployed. The pools would choose health insurers.

The Medicaid program essentially would cease to exist since its beneficiaries would be absorbed into the new system. Poor people would have their health insurance premiums subsidized by taxpayers.

Ron Pollock, executive director of the Families USA Foundation, a non-profit group that has done extensive research on health care, says poor people would benefit from being in a pool with the non-poor.

"It would be like Medicare," he said. "If everyone is in the same boat, you can get high-quality care."

The Kaiser report seemed to take a similar tack. It concluded that the "Medicaid crisis" could not be viewed in isolation from all health-care problems.

"Only an examination of these broader problems, and the most effective role of a safety net within them, can ensure adequate protection for the nation's poor and vulnerable," the report said.

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