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Monitoring health spending increases: incremental budget analyses reveal challenging tradeoffs.

Hartman M, Smith C, Heffler S, Freeland M - Health Care Financ Rev (2006)

Bottom Line: With each passing decade, health care has consumed a larger share of gross domestic product (GDP) and Federal budgets.The financing challenges are expected to become more acute for private payers as well as Federal, State, and local budgets.With the implementation of Part D in 2006, the U.S. Office of Management and Budget projects that Federal budget pressures will heighten, bringing increased attention to Medicare's long-term fiscal outlook.

View Article: PubMed Central - PubMed

Affiliation: Office of the Actuary, Centers for Medicare & Medicaid Services (CMS), Baltimore, MD 21244-1850, USA. Micah.Hartman@cms.hhs.gov

ABSTRACT
With each passing decade, health care has consumed a larger share of gross domestic product (GDP) and Federal budgets. By the 2000-2004 period, society was willing to devote over 20 percent of the cumulative increase in GDP and the cumulative increase in Federal outlays towards health care. The financing challenges are expected to become more acute for private payers as well as Federal, State, and local budgets. With the implementation of Part D in 2006, the U.S. Office of Management and Budget projects that Federal budget pressures will heighten, bringing increased attention to Medicare's long-term fiscal outlook.

Show MeSH
State Medicaid Expenditures Share of State and Local Outlays1: Calendar Years 1980-2004
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f5-hcfr-28-1-041: State Medicaid Expenditures Share of State and Local Outlays1: Calendar Years 1980-2004

Mentions: States' Medicaid share of total State outlay growth does not spike during recessionary periods like we've discussed for the overall economy and the Federal Medicare and Medicaid share of total government outlays (Figure 5). This observation at first seems counterintuitive, as eligibility for Medicaid should rise during recessions. However, the requirement of most State and local governments to maintain balanced budgets in each FY may be the more important driver. During times of tightened budgets, States must scrutinize their expenses, and as a result, they occasionally turn to federally matched payment programs as a way to shift payment burdens to the Federal Government, in effect reducing the State and local share of outlays. For example, States used DSH funding to help with the financial pressures associated with the 1991 recession, enabling States to provide a level of services that otherwise would have been unaffordable (Medicare Payment Advisory Commission, 2001). Eventually, as the Federal Government began to retract DSH funding, States were not willing or able to scale down benefits as rapidly, resulting in greater strain on their budgets as the postponed effects of the recession came to fruition. In doing so, States total outlay spending annual growth slowed from calendar years (CY) 1992–1995, but State Medicaid expenditure annual growth remained above 10 percent.


Monitoring health spending increases: incremental budget analyses reveal challenging tradeoffs.

Hartman M, Smith C, Heffler S, Freeland M - Health Care Financ Rev (2006)

State Medicaid Expenditures Share of State and Local Outlays1: Calendar Years 1980-2004
© Copyright Policy
Related In: Results  -  Collection

Show All Figures
getmorefigures.php?uid=PMC4194975&req=5

f5-hcfr-28-1-041: State Medicaid Expenditures Share of State and Local Outlays1: Calendar Years 1980-2004
Mentions: States' Medicaid share of total State outlay growth does not spike during recessionary periods like we've discussed for the overall economy and the Federal Medicare and Medicaid share of total government outlays (Figure 5). This observation at first seems counterintuitive, as eligibility for Medicaid should rise during recessions. However, the requirement of most State and local governments to maintain balanced budgets in each FY may be the more important driver. During times of tightened budgets, States must scrutinize their expenses, and as a result, they occasionally turn to federally matched payment programs as a way to shift payment burdens to the Federal Government, in effect reducing the State and local share of outlays. For example, States used DSH funding to help with the financial pressures associated with the 1991 recession, enabling States to provide a level of services that otherwise would have been unaffordable (Medicare Payment Advisory Commission, 2001). Eventually, as the Federal Government began to retract DSH funding, States were not willing or able to scale down benefits as rapidly, resulting in greater strain on their budgets as the postponed effects of the recession came to fruition. In doing so, States total outlay spending annual growth slowed from calendar years (CY) 1992–1995, but State Medicaid expenditure annual growth remained above 10 percent.

Bottom Line: With each passing decade, health care has consumed a larger share of gross domestic product (GDP) and Federal budgets.The financing challenges are expected to become more acute for private payers as well as Federal, State, and local budgets.With the implementation of Part D in 2006, the U.S. Office of Management and Budget projects that Federal budget pressures will heighten, bringing increased attention to Medicare's long-term fiscal outlook.

View Article: PubMed Central - PubMed

Affiliation: Office of the Actuary, Centers for Medicare & Medicaid Services (CMS), Baltimore, MD 21244-1850, USA. Micah.Hartman@cms.hhs.gov

ABSTRACT
With each passing decade, health care has consumed a larger share of gross domestic product (GDP) and Federal budgets. By the 2000-2004 period, society was willing to devote over 20 percent of the cumulative increase in GDP and the cumulative increase in Federal outlays towards health care. The financing challenges are expected to become more acute for private payers as well as Federal, State, and local budgets. With the implementation of Part D in 2006, the U.S. Office of Management and Budget projects that Federal budget pressures will heighten, bringing increased attention to Medicare's long-term fiscal outlook.

Show MeSH