United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Health, Education, and Human Services Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1997-06-27 monographic deposited born digital 29 p. GA 1.13:HEHS-97-128 https://www.govinfo.gov/app/details/GAOREPORTS-HEHS-97-128 P0b002ee1803a45a0 f:he97128 DGPO 2010-08-12 2011-03-28 GAOREPORTS-HEHS-97-128 machine generated eng fdlp REPORT GAOREPORTS-HEHS-97-128 HEHS-97-128 Health care cost control Health care programs Budget outlays Managed health care State-administered programs Long-term care Payments Hospital care services Future budget projections Medicaid Disproportionate Share Hospital Program Medicaid Managed Care Program Medicaid Program Other Written Product HEHS

Pursuant to a congressional request, GAO reviewed Medicaid's spending growth rate, focusing on: (1) the dominant factors affecting trends in Medicaid spending growth from fiscal years 1989 to 1995; (2) key factors that contributed to the low spending growth rate for fiscal year (FY) 1996 and variations in states' Medicaid spending growth for the most recent 2-year period; and (3) the implication of these factors for future Medicaid spending.<p/>GAO noted that: (1) the Medicaid spending growth rate increased dramatically in the early 1990s, rising to almost 29 percent in 1992, with expenditures growing from almost $60 billion in FY 1989 to $157 billion in FY 1995; (2) factors that help explain this trend include: (a) escalating disproportionate share hospital (DSH) payments made to hospitals that cover a large proportion of low-income and Medicaid beneficiaries; (b) the increasing cost of providing services (the prices paid for services and the average costs of services per beneficiary); and (c) the growing number of program beneficiaries; (3) each of these factors prevailed to increase spending growth at different times; (4) for example, from fiscal years 1990 to 1992, the contribution of DSH payment increases soared from 6 to 46 percent of total spending growth until those payments were brought under control in 1993; (5) while DSH payment contributions erratically increased and decreased, the impact of additional beneficiaries on overall expenditure growth steadily increased due in part to mandated and optional eligibility expansions; (6) by FY 1995, however, as Medicaid spending growth had abated substantially, the contribution of these factors had decreased; (7) the dramatically low Medicaid expenditure growth rate in FY 1996 masked wide variations in states' Medicaid growth; (8) one state's Medicaid expenditures decreased by 16 percent, another's increased by 25 percent; (9) most states, however, accounting for 80 percent of FY 1996 federal Medicaid outlays, had moderate decreases or minimal changes from their previous year's spending growth; (10) a combination of factors, some affecting only certain states and others common to many states, explains the low FY 1996 growth rate; (11) a number of other states GAO contacted attributed lower growth rates to a generally improved economy and state initiatives to limit expenditure growth through program changes such as managed care programs and long-term care alternatives; (12) the low 1996 Medicaid spending growth rate of 3.3 percent appears to be an anomaly not likely to persist in subsequent years; (13) the factors that reduced growth in FY 1996 will continue to affect future Medicaid spending; (14) the net effect of factors, such as DSH spending and the future economy, however, are unknown; (15) some of these factors may contribute to higher growth in the near future; (16) in addition, if the economy decl* https://www.govinfo.gov/content/pkg/GAOREPORTS-HEHS-97-128/html/GAOREPORTS-HEHS-97-128.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-HEHS-97-128/pdf/GAOREPORTS-HEHS-97-128.pdf GAO/HEHS-97-128 https://www.govinfo.gov/app/details/GAOREPORTS-HEHS-97-128 Other Written Product GAO/HEHS-97-128; Medicaid: Sustainability of Low 1996 Spending Growth Is Uncertain; Health care cost control Health care programs Budget outlays Managed health care State-administered programs Long-term care Payments Hospital care services Future budget projections Medicaid Disproportionate Share Hospital Program Medicaid Managed Care Program Medicaid Program Title 42 Section 1315(a) Title 42 Section 1396(a)(13)(A) 42 U.S.C. 1315(a) 42 U.S.C. 1396(a)(13)(A) Public Law 102-234 Public Law 103-66 Public Law 104-193