Medicaid spending sees first decline

USA Today reports:

Medicaid spending has declined unexpectedly this year, the first drop since the health program for the poor was created in 1965.

The historic reversal will free up billions of dollars in state budgets. Medicaid has been the fastest-growing expense for states over the past 10 years.

Medicaid spending fell 1.4% in the first nine months of the year compared with the same period a year ago, according to the Bureau of Economic Analysis. The drop was even greater — an unprecedented a 5.4% decline — after adjusting for the rate of health care inflation.

The spending has been reduced by cost-controlling efforts and a shift of some prescription-drug expenses to Medicare, the federal health program for the elderly.

“States have made really aggressive changes in how care is managed in Medicaid,” Arizona Medicaid Director Anthony Rodgers said. “Every state has taken a different approach, but the success can be seen almost everywhere.”

Medicaid provides health care to 56 million poor Americans. The federal government sets broad rules for the program and pays 57% of the expense. States run the program and pay 43% of the cost.

The program is on track to spend $300 billion in federal and state money in 2006, the Bureau of Economic Analysis reports.

Medicaid is separate from Medicare, which insures 42.5 million elderly and disabled. That program — run entirely by the federal government — will spend about $384 billion this year, up 15.6%.

We can safely say Medicare and Medicaid spending will go higher.Free health care for Warren Buffett.