Is Medicaid sustainable? Spending projections for the program's second forty years

Abstract

We constructed long-term projections of Medicaid spending and compared projected growth in spending with that of state and federal revenues. Notwithstanding the anticipated decline in employer-sponsored insurance and the long-term care needs of the baby boomers, we project that Medicaid spending as a share of national health spending will average 16.6 percent from 2006 to 2025--roughly unchanged from 16.5 percent in 2005--and then increase slowly to 19.0 percent by 2045. Growth in government revenues is projected to be large enough to sustain both Medicaid spending increases and substantial real growth in spending for other services.