Study Looks At Medicaid Spending

The Massachusetts Medicaid Policy Institute and Massachusetts Budget and Policy Center released an issue brief, “Massachusetts Medicaid in Perspective: An Analysis of Spending Growth and Economic Growth, 1996-2007.” The brief reports that Medicaid spending growth has risen only slightly faster than the economic growth rate of the state from FY 1996 through FY 2007. The analysis shows that Medicaid accounted for 1.79% of Massachusetts personal income in FY 1996 and only 1.96% in FY 2007:

The study also finds that the overall growth of Medicaid spending over the eleven years (1996-2007) was $315 million, which is modest in comparison to the $3.4 billion lost due to cuts in state tax over the same period of time. Medicaid spending growth is eating up a larger piece of the state’s budget due to the reduction in revenue:

Medicaid spending is up as medical care costs more and because of improvements in coverage. Enrollment grew by more than 70,000 individuals in 2006, in part due to health reform. Medicaid spending is “counter-cyclical” – at its highest during economic downturns, when the state can least afford it. This presents an enormous challenge to policymakers.
Katie Weider, HCFA Policy Intern

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