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Health Affairs, 23, no. 2 (2004):
142
doi: 10.1377/hlthaff.23.2.142 © 2004 by Project HOPE |
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Medicaid |
PROLOGUE
Medicaid In The Health Insurance Market
PROLOGUE: And the beat goes on. With the failure of a new cost containment model to emerge to offset commercial health insurance markets’ retreat from applying managed care’s utilization control mechanisms, few are surprised that U.S. health care spending is continuing its steady and relatively unchecked upward gallop (see Katharine Levit and colleagues, Health Affairs, Jan/Feb 04). Health care spending, in fact, advanced 9.3 percent in 2002, compared with 8.5 percent in 2001—greatly outstripping growth in gross domestic product (GDP) and vaulting health spending’s share of the domestic economic pie to 14.9 percent in 2002. The usual suspects drove the continuing increase. From a relatively tame 3.7 percent average annual growth rate during 1993–2000, hospital spending had advanced 7.5 percent by 2001 and 9.5 percent by 2002—accounting for roughly 32 percent of the spending increase. Prescription drug spending, while continuing to slow its growth, nevertheless increased 15.3 percent in 2002, constituting 16 percent of total health care spending.
In a painful double-whammy, this historic spree occurs at a time when a soft economy, yielding relatively high unemployment, has contributed to swelling Medicaid rolls and an overall 11.7 percent growth in Medicaid spending—up from a 10.2 percent increase in the previous year. In fact, together Medicaid and Medicare contributed to upward of 33 percent of total health care spending. In recent years, Medicaid’s slice of the state budgetary pie could not help but be considered a tempting target for fiscal axe-wielders. Various options exist for states seeking to whittle down their share of Medicaid costs, including inhibiting enrollment growth through higher premiums and the reprise of administrative barriers, reducing provider payments, and cutting benefits.
The papers that follow shed light on how Medicaid has fared at the state level in tough budgetary times. They generally make the case that while cause for concern persists, the rumors of Medicaid’s impending demise have been greatly exaggerated. First, John Hoadley, Peter Cunningham, and Megan McHugh debunk conventional wisdom predicting Medicaid’s vulnerability to cuts because of its historical lack of a class of vocal political supporters. They bear out Larry Brown and Michael Sparer’s hypothesis that "Medicaid has developed constituencies of sufficient breadth, depth, and clout to protect the program in hard times and to enlarge it when the clouds lift." Next, Debra Draper, Robert Hurley, and Ashley Short show that while traditional health maintenance organizations (HMOs) have become personae non grata in the commercial health insurance sector, Medicaid managed care remains a viable and popular care delivery vehicle for states loath to reduce Medicaid eligibility or benefits but needing to aggressively manage costs.
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