US Medicaid spending drop is 1st since 1965

The US Medicaid program has reported its first annual drop in expenditure since it was initiated in 1965. The news is all the more notable as the health program has been the fastest-growing item of government spending for US states over the past 10 years.

According to USA Today, a US national newspaper, "the historic reversal will free up billions of dollars in state budgets." In the mid-western state of Ohio, for example, Medicaid spending fell about 10% in the third quarter compared with the like period of 2005, a saving of $310.0 million. In neighboring Michigan, the state's Medicaid budget was underspent by $1.0 billion, a fall of L311.0 million year-on-year. Meanwhile, New York State has revised its earlier forecast for a 7% spending rise downwards to 3.8%.

Overall, Medicare spending will reach $300.0 billion from both federal and state sources in 2007, according to the federal Bureau of Economic Analysis. The agency estimates that, in cash terms, the downward movement in spending amounts to 1.4% for the first three quarters of 2006 but, after allowing for health care inflation, this drops to 5.4%.