By Tom Curry National affairs writer
updated 2/5/2010 11:07:40 AM ET 2010-02-05T16:07:40

Claim: The recession is what's making government health spending grow faster than private-sector outlays.

In a report released this week, actuaries at the federal Centers for Medicare and Medicaid Services (CMS) estimated that medical spending last year by government programs grew by 8.7 percent, far faster than the 3 percent spending growth by private insurance payers. The actuaries said a primary factor driving the surge in government outlays was the nearly 10 percent increase in spending on the Medicaid program. As the recession decimated private-sector employment last year, more people became eligible for Medicaid to pay for their care. Medicaid enrollment jumped by 6.5 percent last year, the actuaries estimated. Total federal and state Medicaid outlays reached nearly $380 billion. Is this simply a short-term cyclical trend, and will private health care spending grow faster than government health spending once the economy revives?

Fact or fiction?
A little of both. Medicaid enrollment goes up during recessions, as happened in 1990 and in 2001. When the economy is robust, Medicaid enrollment grows slowly or declines, as happened in 1998 and 2006. Once private-sector employment revives, thousands of people who are now are Medicaid will get jobs and will no longer be eligible for Medicaid. But there are also more than 11 million elderly and disabled on Medicaid. Their enrollment isn't driven by economic cycles. Elderly and disabled Medicaid enrollment has risen by one third since 1997. Also, as the CMS actuaries point out, there's inexorable growth in that other government health program, Medicare. "For 2011-2019, Medicare spending growth is expected to average 7.4 percent, partially because of greater enrollment growth as the oldest baby boomers become eligible," they said. Recession or no recession, long-term trends are driving growth.

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