Each year, actuaries in the Centers for Medicare and Medicaid Services (CMS) issue projections on Medicare spending. For the first time, the CMS Office of the Actuary has published a fiscal report on Medicaid…and the projections are fiscally chilling.
Spending on Medicaid will grow 7.3% between 2007 and 2008, hitting $339 billion.
Thereafter, the average annual growth rate will be 7.9% in the next decade, reaching $674 billion in 2017.
The overall U.S. macroeconomy is expected to grow 4.8% per annum between now and 2017. Thus Medicaid costs are growing much, much faster than the general economy.

Combined, Medicare and Medicaid will represent nearly 7% of U.S. GDP in 2017.
Health Populi’s Hot Points: As I wrote in Health Populi on October 16, 2008, it’s hard to be a Governor these days.
Secretary Leavitt presented this forecast yesterday to the members of the National Association of State Budget Officers (NASBO). These are the folks responsible for managing the budgets for every state in the union.
In the National Governors Association‘s (NGA) latest Fiscal Survey of the States issued in June 2008, the report noted: “Unfortunately, when revenue growth declines as a result of a weakened economy, spending pressures for social programs and health care increase.”

That was observed back in June, before the dramatic downturn in the economy in this fourth quarter of 2008. States and their governors are looked to by the Federal government as “laboratories for health reform.” Indeed, states have been creative over the past decade in trying to contain health costs. Some of the strategies for cost-containment have included freezing or reducing provider payments, and even putting co-pays on Medicaid enrollees prescription drug costs covering chronic diseases (the latter being an anti-recipe for prescription drug adherence and persistence).

Still, Governors remain committed to expanding health access to uninsured citizens. Given the economy, as the NGA stated in June, “changes to expand health care” could “take more than one budget cycle to achieve.” That will turn out to be an understatement by a few budget cycles.