Explaining the recent growth in Medicaid spending.

Medicaid spending more than doubled from 1988 to 1992, reversing a long trend of cost containment in the program. Reasons for the cost explosion are severalfold. (1) Congress expanded eligibility to more children, pregnant women, and low-income elderly persons. (2) The recession has added more people to the Medicaid rolls. (3) Growing numbers of disabled cash assistance recipients have increased Medicaid enrollment. (4) States have increased their use of federal Medicaid funds to supplement previously state-funded programs and have become more skillful in leveraging federal funds to defray the cost of their Medicaid programs. This DataWatch explores the relative impact of enrollment changes, inflation, and increased reimbursement on the increase in Medicaid spending.