Historical and Projected Trends in Medicaid. II. Highlights


a) Enrollment

  • Medicaid enrollment increased from 41.4 million in 1999 to 58.6 million in 2004, a 14 percent increase. Enrollment is expected to increase another 24 percent to 72.8 million by 2016.
  • Among the four major categories of Medicaid enrollment (children, adults, aged, and disabled), children make up the largest number of enrollees covered under Medicaid and accounted for almost half of all enrollees in 2004.
  • The number of children enrolled in Medicaid is projected to increase from 28.7 million in 2004 to 35.4 million in 2016, a 23 percent increase. The number of aged enrollees will increase by 1.7 million (5.2 million to 6.9 million), an increase of 33 percent. The share of total enrollees will remain the same for children (48.9 percent to 48.6 percent), while the share of the total for aged enrollees will slightly increase (8.9 percent to 9.5 percent).
  • While varying by state, Medicaid on average covers 26 percent of all children in the U.S. and 8 percent of all nonelderly adults.
  • States enroll 58 percent, on average, of their low-income children in Medicaid.

b) Expenditures

  • Overall Medicaid expenditures increased by 65 percent, from $180.5 billion to $298 billion between 1999 and 2004, a faster rate than private insurance and Medicare (51 percent and 45 percent respectively).
  • Recent estimates from the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary (OACT) indicate total expenditures for Medicaid, both federal and state, represented 2.5 percent of the nation’s Gross Domestic Product (GDP) and 15.9 percent of the nation’s total health spending of $1.9 trillion in 2004. The federal share of Medicaid expenditures has averaged about 57 percent of the overall total for the past decade.
  • Medicaid expenditures will continue to increase at rates exceeding overall health care spending. Projections by OACT indicate that Medicaid spending is expected to increase at a rate of nearly eight percent per year over the next ten years.
  • Estimates indicate that total Medicaid spending will increase by 132 percent to $690.1 billion in 2016 and represent 3.1 percent of GDP, up from 2.5 percent in 2004.
  • Children utilize fewer services than the other Medicaid enrollment groups and on average incur $1,200 in expenses annually compared to $8,600 per aged enrollee.
  • The largest category of Medicaid expenditures is nursing facility costs, representing 20 percent of total expenditures in 2004. However, OACT projects that home health services will experience the fastest rise in spending between 2004 and 2016, increasing its share of total spending from 11 percent to 18 percent.
  • Spending on Medicaid has increased faster than any other major spending category for states. As a percent of total state spending, Medicaid has risen from 19.5 percent in 1999 to an estimated 21.9 percent in 2004, and now surpasses spending on elementary and secondary education as the top-spending category for states.

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