Medicaid Spending Growth At "Near-Record Low" for FY 2012

Oct 25, 2012 | Budgets & Projections

Though it seems we are far away from reaching a comprehensive debt deal, we can, at least for the moment, breathe a little sigh of relief.  A recent report from the Kaiser Commission on Medicaid and the Uninsured (KCMU) reveals that Medicaid spending has slowed to a "near-record low" growth for FY 2012.  This slow rate of spending growth for the program is anticipated to continue for FY 2013.

In analyzing the report, a Wall Street Journal piece states that the slowdown in Medicaid spending is "good news" for the federal budget.  Nevertheless, the article also portends disastrous consequences for healthcare in future, since physician payment cuts accounted partly for the slow growth in Medicaid spending, which were influenced by the wind down of stimulus spending. According to the article:

The Kaiser Family Foundation surveyed all states on their Medicaid spending this year. The biggest takeaway might surprise you: Medicaid spending hit a “near-record low” in 2012, with similar trends expected in 2013.

That’s good news for the federal budget. The entitlement program is growing more slowly than we expected at the start of this fiscal year. At the same time, that could be bad news for the program. Some of the spending slowdown has to do with states reducing how much they pay doctors, which could make providers less likely to accept new patients.

Therefore, this positive development can only be a first step in reducing Medicaid spending--and health care spending more broadly--as a lot more work still needs to be done in attaining more sustainable and comprehensive cost containment measures. It also serves as a lesson that simply reducing provider payments cannot be the sole solution. Delivery system reforms and changes to benefits must also be in the mix if we want to keep health care spending under control.

Read the Kaiser report here and the WSJ article here.