Jean Donovan Gilman - Medicaid and the Costs of Federalism, 1984-1992

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JEAN DONOVAN GILMAN

This book is dedicated to my children, Ian and Caitrin.

My children Ian and Caitrin have provided both the greatest inspiration and the greatest obstacles to the completion of this book. Their confidence in my ability to succeed in this endeavor, which they did not fully comprehend, was at once humbling and motivating. Yet their mere presence continually drew me away from this task.

As with all difficult endeavors in life, numerous people were instrumental in helping me along the way. Jim Gilman demonstrated his support in many important waysnot the least of which was caring for our children so lovingly. To the extent this book reflects clarity of thought and readable prose, Martha Derthick, my mentor at the University of Virginia, deserves the credit. And where it does not, I assume responsibility for ignoring her good advice. Had she not displayed an uncommon commitment to me, this book would never have been completed.

A special group of colleagues at Mary Baldwin College kept me focused on the meaning of life, supplying me with timely encouragement, advice, flowers, notes, and sympathetic ears (Judy, Carrie, Anne, Mary Hill, John, Brian, Kathleen, Alan, Marlena, Laura, Roussie, Nan, Dinah, Paul, Lydia, Edward, Lallon, Rod, and many others). The Dean of the College, James Lott, also gave me vital support and assistance. I want to thank each of these and my many friends and family, who never lost confidence in me (or at least never expressed it), helping to sustain my own wavering optimism and pushing me on to the end. And finally, I am indebted to Rebecca Wipfler, my editor at Garland Publishing, for her invaluable assistance at the last stages of the publication process.

Rapid growth in health care expenditures has plagued this nation since 1965 when Congress first created medicare (health care insurance for the elderly) and medicaid (health care assistance for the poor). These two programs have not grown at the same rate, however. Largely owing to more favorable congressional treatment, medicares expenditures had generally grown more rapidly than medicaids until the late 1980s. At that time, medicaids costs began skyrocketing, averaging 28 percent rate of growth between 1989 and 1992. This rapid growth rate represented an increase in medicaids expenditures from $58 billion to $113 billion over those three years (Coughlin et al. 1994a, 15). Meanwhile, the annual rate of growth of medicare and private health insurance leveled off to an average of 10.7 percent and 7.2 percent respectively for the same years (Wade and Berg 1995, 11). (See Figure 1.1 for a comparison of growth in expenditures among these three health care financing approaches; and See Figure 1.2 for a comparison of growth rates.) Given the previous history of medicaid, and the impact of its sudden growth on state and federal budgets,1 this surprising change in program expenditures invites investigation.