Medicaid Costs Growing More Slowly Than Private Insurance

March 2, 2011 at 12:08 pm

Medicaid costs per beneficiary grew much more slowly over the past decade than costs for employer-sponsored insurance or across the health care system as a whole, according to a new Urban Institute study conducted for the Kaiser Family Foundation.   It’s just the latest evidence that contradicts the false – though oft-repeated – claim that Medicaid costs are growing out of control and, as a result, policymakers should convert Medicaid into a block grant.

Between 2000 and 2009, Medicaid costs per beneficiary rose by an average of 4.6 percent a year, the study found, while premiums for employer-sponsored insurance rose by an average of 7.7 percent (see graph).  National health expenditures per capita, which include spending on private insurance as well as on public programs like Medicaid and Medicare, rose by an average of 5.9 percent.

The Urban Institute researchers attribute Medicaid’s better performance to “an aggressive set of cost containment policies” such as expanding the use of managed care, instituting efficiencies in rates for health care providers, limiting pharmaceutical costs, and providing long-term services and support to people in the community rather than in more costly nursing homes.

We previously explained that the exaggerated claims about Medicaid spending don’t hold up under scrutiny.  Over the past 30 years, for example, Medicaid cost growth per beneficiary has essentially tracked growth in health-care costs systemwide.

Moreover, Medicaid actually costs less per beneficiary than private insurance to cover people with similar health status.  While Medicaid provides more comprehensive benefits than private insurance and charges beneficiaries significantly lower out-of-pocket costs, its lower payment rates to providers and lower administrative costs help make Medicaid very efficient.

Print Friendly

More About Edwin Park

Edwin Park

Park is Vice President for Health Policy at the Center on Budget and Policy Priorities, where he focuses on Medicaid, the Children’s Health Insurance Program, and issues related to federal health reform.

Full bio | Blog Archive | Research archive at CBPP.org

1 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. Bob Mitzel #
    1

    t is sad; but no facts will convince those whose minds are already set


2Trackbacks/Pingbacks

  1. Medicare and Medicaid Spending Trends Don’t Justify Restructuring – PNHP California - Single Payer Health Insurance 14 08 12
  2. Medicare and Medicaid costs continue to rise slower than private insurance « The Progressive Pulse 10 08 12

Your Comment

Comment Policy:

Thank you for joining the conversation about important policy issues. Comments are limited to 1,500 characters and are subject to approval and moderation. We reserve the right to remove comments that:

  • are injurious, defamatory, profane, off-topic or inappropriate;
  • contain personal attacks or racist, sexist, homophobic, or other slurs;
  • solicit and/or advertise for personal blogs and websites or to sell products or services;
  • may infringe the copyright or intellectual property rights of others or other applicable laws or regulations; or
  • are otherwise inconsistent with the goals of this blog.

Posted comments do not necessarily represent the views of the CBPP and do not constitute official endorsement by CBPP. Please note that comments will be approved during the Center's business hours. If you have questions, please contact communications@cbpp.org.




− 5 = four

 characters available