Causes of Increase in Medicaid Costs in California

• Published in: Health services reports 1973-03, Vol.88 (3), p.225-235
• Main Author: Gartside, Foline E.
• Format: Article
• Language: English
• Subjects: Adult; Aged; Base year; California; Child; Costs and Cost Analysis; Economics, Dental; Economics, Medical; Eligibility Determination; Fees, Dental; Fees, Pharmaceutical; Finance; Health care costs; Health care payments; Health Expenditures; Hospitalization; Humans; Inpatient care; Insurance, Dental; Medicaid; Medicaid program; Medical Assistance; Medical Indigency; Medicare; Nursing Homes; Patient care; Physicians; Population growth; Price increases; Public Assistance
• ISSN: 0090-2918
• DOI: 10.2307/4594774

Expenditures for services under the Medi-Cal (Medicaid) program in California during fiscal 1970-71 totaled more than $1 billion; the cost of the State's public welfare medical assistance programs in 1964-65, including Medical Assistance for the Aged, was less than one-fifth of that amount. Increases in the price of medical services, expansion of the covered population (including growth in the public assistance caseload and the addition of newly eligible groups of the medically needy), and changes in the utilization of services all were factors that contributed to the upward surge in cost. To disentangle these factors, formulas were developed for determining the cost increase due to each. These formulas were applied separately to each major type of service, and the results were then combined to disaggregate the overall increase. Price increases were found to account for nearly half (49.4 percent) of the total cost increase. Growth in the eligible population accounted for 26.3 percent. Greater utilization of services (including use of benefits not previously covered) was responsible for 24.3 percent. Distribution of the cost increase factors among the major types of service showed that their effects varied widely. The basic data from which the results were drawn are shown.