Five percent of Medicaid enrollees run up nearly half of program's costs

The Medicaid program costs the U.S. taxpayers some $460 billion a year. And it appears just 5 percent of the program's enrollees account for nearly half of its costs, according to a new report from the Government Accountability Office.

Medicaid super-users take up the lion's share of resources, with 5 percent accounting for 48 percent of the costs and the most expensive 25 percent of patients taking up 75 percent of the program's total costs. The study focused only on pure Medicaid enrollees and not dual-eligible Medicaid and Medicare beneficiaries, which are among the most costly of patients to treat.

What comprises a high-spending Medicaid enrollee? Most have chronic conditions, according to the report. Mental illness is the biggest cost driver: Those enrollees account for more than half of all high-cost individuals, and they have been steadily rising, from slightly more than 50 percent in 2009 to 52 percent in 2011, the timespan that GAO used for the trends. However, Medicaid enrollees with mental health conditions represent slightly less than 15 percent of the program's total beneficiaries.

Enrollees diagnosed with diabetes comprised nearly 19 percent of the high spenders. Those with asthma, more than 14 percent. Hospital care comprised some 27.2 percent of the total expenditures in the high cost groups nationwide, with long-term care consumer about 22 percent of all expenditures in that group.

By contrast, the least expensive 50 percent of Medicaid enrollees to treat cost only 8 percent of the program's total expenditures. And 12 percent cost the program no money at all between fiscal 2009 and 2011.

Rural states tended to have more high-cost Medicaid enrollees that consumed hospital services: Mississippi and Idaho were among the leaders, with Massachusetts, Pennsylvania, Delaware and Hawaii well below the average.

Despite the significant resources that high-spending Medicaid enrollees exert on the overall program, hospitals have reaped rewards from the expansion of the program in the 30 states that have signed on under the Affordable Care Act. And states that have agreed to expand Medicaid have saved millions on their own expenditures. A new report by the Kaiser Family Foundation suggests that Medicaid spending would increase by another $472 billion over the next nine years if the remaining states were to jump on board.

To learn more:
- read the GAO report (.pdf)