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GAO Report on Concentration of Medicaid Spending

By May 20, 2015Commentary

A well-recognized characteristic of health spending is that a small subset of the population accounts for a big chunk of total spending.  A Government Accounting Office report confirms that this extends to Medicaid.  (GAO Report)   In 2013 the Medicaid programs spent $460 billion to provide services to 72 million people, some of whom were also Medicare beneficiaries.  These dual eligibles are 13% of all Medicaid enrollees, but incur 35% of Medicaid costs.  GAO looked at the Medicaid-only population for years 2009 to 2011 and found that in each of those years, the top 1% of Medicaid recipients in terms of spending represented at least 25% of all Medicaid spending and the top 5% for 50%, and conversely, the bottom 50% in spending accounted for only 8% of total Medicaid outlays, and 12% had no spending.  There is variation among the states in these rankings.  The disabled category of Medicaid recipients is disproportionately represented among the high-spending recipients.

As expected, certain health conditions or circumstances are far more prevalent among high-spending enrollees than the rest of them.  Asthma has 14% prevalence in this group, diabetes 19%, mental health issues, over 50%, substance abuse 20% and 8% live in a nursing home.  Limitations in the data made it difficult to draw conclusions about what categories of care the high spenders used most.  Many states are exclusively or largely using managed care arrangements for their recipients and GAO did not obtain the data on what the health plans paid various providers.  But one suspects that there is greater inpatient use in particular.  GAO did not look at the persistence of high spending over multiple years for particular recipients.  This is the most important data for guiding care management efforts because if a person is high-cost over a long period of time, the payback for intensive care management is more certain.

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