A new study of future funding requirements for Medicaid projects a less dire situation than suggested by conventional wisdom. The study by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured and published in Health Affairs finds that expected growth in government revenues is likely to be large enough to sustain Medicaid spending increases over the next 40 years, while also allowing substantial real growth in spending for other public services. The study projects that over the next 40 years, as overall health spending grows, Medicaid will also grow but stay at roughly the same share of national health spending in the coming decades.
After accounting for demographic and health coverage trends such as an aging population and declines in employer-sponsored insurance, the study finds that Medicaid’s share (16.5% in 2005) of national health expenditures is expected to remain at an average of 16.6% from 2005 to 2025 and slowly rise to 19% by 2045. But as overall health spending increases as a share of gross domestic product from 2005 to 2045, there will be a commensurate increase in the share of GDP that Medicaid spending represents, according to the study. The results lead the authors to conclude that “there is little that is special about Medicaid spending: It is likely to increase with health spending more generally, neither much more quickly nor much more slowly.”
