The growth rate in Medicaid spending is likely to be less than 10% in fiscal 1994, dramatically lower than the increases in previous years, HCFA Administrator Bruce Vladeck said last week.
The 1994 estimates follow a report released last week by the Kaiser Commission, a private study panel. The group reported that combined federal and state Medicaid spending grew by about 11% to $124.9 billion in 1993, compared with increases of 26.7% and 29.8% in 1991 and 1992, respectively.
Total Medicaid spending figures for 1994 haven't been released.
According to the Kaiser report, the primary reason for the slower growth in 1993 was a decrease in Medicaid disproportionate-share payments to hospitals that treat large numbers of poor people. The payments declined from $17.4 billion in 1992 to $16.7 billion in 1993, following the implementation of a 1991 federal law that restricted states' ability to raise funds through provider taxes or donations. The new law was put into place after several years of sharp increases in payments.
In 1990, total payments were less than $1 billion, but by 1992 they had grown to $17.4 billion.
Another reason for the decrease in spending is a huge growth in Medicaid managed-care programs. Payments to HMOs increased by 54% to $3.9 billion in 1993.
The estimates for fiscal 1994, which ended Sept. 30, will not be confirmed for several weeks, Mr. Vladeck said. However, he added, "the blip of high increases in the late 1980s and early 1990s is gone. There is not a hell of a lot of room to reduce expenditures further."
Mr. Vladeck also said he believed the declining rates of growth in the Medicaid program would reduce pressures in Congress to cap Medicaid expenditures.
"I would be surprised if a proposal (to cap Medicaid spending) got very far," Mr. Vladeck said.
The decline in disproportionate-share payments was partially offset by an increase in new beneficiaries, which resulted primarily from laws expanding Medicaid coverage for children. The Kaiser study found that the number of children on Medicaid grew by more than 26% in 1993.