Medicare, Medicaid and the Deficit Debate

John Holahan, Stacey McMorrow

Understanding what is driving the spending growth in Medicare and Medicaid is important for identifying appropriate policies to address it. This paper finds that spending in both programs has been and will continue to be significantly affected by growth in enrollment. Over the next decade, projections suggest that annual growth in spending per enrollee in both programs will be close to growth in GDP per capita, a target often advocated by those concerned with the nation's deficit. These findings suggest a need for continued vigilance in monitoring Medicare and Medicaid spending levels and growth, but do not support an argument for major restructuring of either program.

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