Medicaid costs - getting a grip

Donald B. Marron, Acting Director of the Congressional Budget Office (CBO), presented testimony today before the U.S. Senate Special Committee on Aging at its hearing on "From Medicaid to Retiree Benefits: How Seniors Impact America's Health Care Costs."

In Marron's testimony, CBO projects that federal spending for Medicaid will nearly double over the next 10 years, from $190 billion in FY2006 to $363 billion in 2015, when it will account for about 2 percent of gross domestic product (GDP). Medicare spending by the states will also increase, and for the economy as a whole, health care costs of GDP will climb from 16.5 percent in 2006 to 20 percent in 2015.

CBO offers the following options for controlling Medicaid spending:

• Reduce the federal contribution
• Reduce mandatory benefits or restrict coverage
• Increase beneficiaries' cost sharing
• Encourage greater use of lower-cost services

Testimony on Medicaid Spending Growth and Options for Controlling Costs
(pdf, 168KB, 28p.), July 13, 2006