Leavitt calls Medicaid costs ‘unsustainable’
WASHINGTON —As if pharmacy retailers didn’t have enough to worry about in the midst of a bleak economic outlook, the Bush administration issued a grim warning last month about the increasingly costly Medicaid program.
Spending for Medicaid is rising to “unsustainable” levels, and the program’s rapidly rising costs are threatening access to health care for poor and lower-income Americans, Health and Human Services secretary Mike Leavitt warned in mid-October.
The Centers for Medicare and Medicaid Services is projecting that Medicaid will spend $4.9 trillion over the next 10 years as federal and state administrators struggle to keep up with rising numbers of the poor and uninsured. That marks an average annual increase of 7.9 percent annually, according to federal budgeters.
At that rate, the rise in Medicaid spending will dramatically outpace the U.S. economy’s growth rate, Leavitt warned.
2007 estimated enrollment, expenditures and estimated per-enrollee expenditures, by enrollment group| Enrollment group | Enrollment* (in millions) | Expenditures (in billions) | Per-enrollee expenditures |
| Children | 23.5 | $57.1 | $2,435 |
| Adults | 11.1 | 39.7 | 3,556 |
| Blind/disabled | 8.5 | 126.7 | 14,858 |
| Aged (age 65 and over) | 5.0 | 70.9 | 14,058 |
| Total | 48.1 | 294.4 | 6,120 |
CMS released its report Oct. 17, prompting the HHS secretary to paint a grim scenario for the cash-strapped health program for the poor. “This report should serve as an urgent reminder that the current path of Medicaid spending is unsustainable for both federal and state governments,” Leavitt said at a meeting of state budget directors last month. “If nothing is done to rein in these costs, access to health care for the nation’s most vulnerable citizens could be threatened.
“We must act quickly to keep state Medicaid programs fiscally sound,” he added.
Combined, Medicaid and Medicare are expected to gobble up 6.9 percent of the gross domestic product by 2017 at current growth rates, according to HHS. This year, Medicaid will see its rolls swell to a projected 50 million beneficiaries, at an average annual cost per person of $6,120.
During the next 10 years, average enrollment is projected to increase at an average annual rate of 1.2 percent, reaching 55.1 million by 2017, the agency reported. Medicaid accounted for 14.8 percent of all U.S. health-care spending in 2006, and at current growth rates will account for 8.4 percent of total federal outlays within five years, from 7 percent in 2007, CMS reported.