NCPA - National Center for Policy Analysis

Medicaid Costs Skyrocketing

September 28, 1995

Costs for the Medicaid program - which provides health care for the needy - will in the future effectively double every seven years as the program is now constituted.

Enacted in 1966 as part of President Lyndon Johnson's "Great Society" push, Medicaid has experienced double-digit growth in nearly all of its 30 years.

  • From $770 million in 1966, federal Medicaid expenditures increased to $2.7 billion (1970), $6.8 billion (1975), $14 billion (1980), $22.7 billion (1985), $41.1 billion (1990), and an estimated $89.2 billion in 1995.
  • In addition to federal costs, states and local governments will chip in an additional $67.3 billion this year alone.
  • Thus total Medicaid costs for all levels of government have mounted to $156.5 billion annually.
  • The program serves 33 million poor people - one-eighth of the U.S. population.

Twenty-five years ago, Medicaid's share of federal spending was 1.4%. The Congressional Budget Office estimates that proportion will grow to nearly 10% of the budget - or $232 billion - by the year 2002, unless the program is reined in.

Source: Editorial, "Runaway Medicaid," Washington Times, September 28, 1995.


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