Health News

May 15, 1991 2 min read

The U.S. Department of Health and Human Services and the Office of Management and Budget have announced that they will conduct a top-level review to assess unanticipated increases in Medicaid spending.

Federal officials said the review, which is to be completed by June 30, will examine why recent Medicaid cost estimates have been so inaccurate. The Medicaid program is the primary health-insurance provider for most poor children in this country.

In just 15 months, between January 1990 and March of this year, the cost estimate for the federal portion of the program in fiscal 1992 has increased from $49.5 billion to almost $65 billion--a 30 percent rise.

This is the largest percentage increase of any federal program, officials said.

Under Medicaid, states are reimbursed by the federal government for running health-care programs for the poor. Although the federal government reimburses between 50 percent and 80 percent of these costs, states are expected to pay at least $50 billion in fiscal 1992.

Over the past several years, states have complained that it has become increasingly difficult to pay for federally mandated program expansions.

Although federal officials said they do not know why Medicaid costs are skyrocketing, a new report by the American Academy of Pediatrics offers a possible explanation.

The report, A.A.P. Medicaid State Reports, FY 1989, found that the number of persons under age 21 receiving health-care services through Medicaid increased by more than 360,000 in fiscal 1989, to a total of more than 11.2 million.

The report said that the increase is largely attributable to federal laws passed in 1986 and 1987 that allowed states to expand Medicaid eligibility for poor pregnant women and their children.

No data are yet available about the effects of Medicaid expansions ordered by the Congress in 1989 and 1990, but an additional 700,000 children are expected to be served by 1995 as a result of last year’s mandate.

The report found that 80 percent of the increase in child Medicaid recipients occurred in just 10 states, primarily in the South. It also found that only about one-fifth of the children in Medicaid also participated in a preventive health-screening program.

Since last April, states have been required to include in their Medicaid program all pregnant women and children under the age of 6 with incomes less than 133 percent of the federal poverty level.

A law adopted by the Congress last year requires states to phase in by the year 2001 coverage for children up to the age of 19 from families that make less than 100 percent of the federal poverty level.--ef

A version of this article appeared in the May 15, 1991 edition of Education Week as Health News