Medicaid is not main cause for rise in healthcare spending: Report

August 02, 2015

Analysis by Donald Boyd of The Brookings Institution suggests that Medicaid won't be the main driver of state and local healthcare spending growth, despite expansion of the program under the ACA. That's because a large proportion of Medicaid costs is paid by the federal government, including 100% of the costs of the Medicaid expansion through 2016, trending down to 90% by 2020 and holding at that level thereafter. As the New York Times reports, Medicaid is the cheapest source of healthcare coverage, costing about $3,200 per adult annually, again with the federal government picking up most of the tab. Private insurance, delivered through an employer, costs about $5,300 annually. Medicaid spending growth per enrollee is also much lower than that for private coverage: according to the CBO, per-person Medicaid spending growth has been below that of Medicare and other sources since 1975. Healthcare benefits for public employees and retirees, not Medicaid, account for a majority of the growth in state and local healthcare spending. Adjusted for inflation, spending for those healthcare benefits rose 447% between 1987 and 2013. Medicaid spending rose a great deal as well, but not as much, at 386%.