It's a first: Medicaid spending drops

Sunday, December 3, 2006

WASHINGTON - Shifting the elderly from nursing homes to less-costly home health care helped spur an unprecedented decline in Medicaid spending this year, according to the Bureau of Economic Analysis.

Medicaid spending fell 1.4% in the first nine months of the year compared to the same period last year, the bureau reported last week. Spending fell even further--by 5.4%--after adjusting for the rate of healthcare inflation.

The decline is the first in Medicaid's history. The 41-year-old program provides health care to 56 million Americans. States run the program and pay 43% of the cost. The federal government pays the remaining 57%.

Other reasons for the decline in Medicaid spending:

* Shifting expenses, such as those for prescription drugs, to Medicare.
* Implementing small cost-containment policies.
* Cracking down on fraud.
* Refining the management of high-cost patients, such as those with AIDS.
* Cutting costs to hospitals and doctors.

In Ohio, for example, the Medicaid program spent 10% less from July through October than a year earlier. That $310 million reduction includes $37 million less paid to nursing homes.