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Health Care Final 10-15-09 -   8.1 - Growth in DSHS Medical Programs Costs Compared to Washington's Personal Income

 
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Health Care Final 10-15-09
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8.1 - Growth in DSHS Medical Program Costs Compared to Washington's Personal Income

How does growth in DSHS Medical Costs compare to personal income growth?

 
 
 
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Data Notes
Data Source:

March 2009 Economic and Revenue Forecast Council. Historic data from the U.S. Department of Commerce, Bureau of Economic Analysis and Washington State Office of Financial Management. Data are obtained from the Council on a quarterly basis.

Agency Financial Reporting Systems (AFRS), based in large part on Medicaid Management Information Systems (MMIS) data. Chain-weighted annual change adjusting for caseload and case mix in per capita costs growth (actual and forecasted).

Measure Definition: DSHS medical programs' per capita costs growth rate compared to Washington's personal income growth rate
Target Rationale: The Governor's Blue Ribbon Commission (BRC) on Health Care Cost and Access directed that the rate of growth in total health care spending will be no more than the rate of growth in personal income.
Link to Agency Strategic Plan: The HRSA 2009-13 strategic plan sets forth as one of its goals that the per capita growth rate of DSHS medical programs will be less than the state's personal per-capita income growth rate 
Relevance: Managing costs within these parameters helps sustain state government's ability to provide affordable health coverage for low-income residents and children.
Notes: (optional)

Lighter lines represent forecasted data; heavier lines represent actual cost rates.

AFRS historical and forecast data do not include the October 1, 2008 to December 2010 Federal Medical Assistance Percentage (FMAP) increases resulting from the American Recovery and Reinvestment Act (ARRA). Also not reflected in the AFRS data are policy steps resulting from the 2009 supplemental budget and the 2009-2011 biennial budget.

Also Available
Action Plan: Yes
Extended Analysis: Yes

 Drill Down Measures

 Summary Analysis

Until recently, Washington's per capita personal income continued to grow at a faster rate than DSHS medical programs per capita expenditure growth rate.

  • For SFY 05-08, DSHS medical programs per capita costs grew an average of 2.9% per year. Washington's per capita personal income grew an average of 5.4% per year.  
  • For SFY 09-11, DSHS medical programs per capita costs are forecasted to increase at a faster rate (3.2%) than Washington's per capita personal income (1.4%). 

Current and future DSHS medical programs costs are caseload-driven. For SFY 2009, 72% of the 8.2% forecasted growth in total expenditures for DSHS medical programs is due to caseload increases versus an increase in per capita costs. For SFY 2010, 68% of the 7.1% forecasted growth in total expenditures will be due to caseload increases.  This is in contrast to SFY 2007 when 97% of the 2.6% increase in the growth of total expenditures was due to an increase in per capita costs (see the graph displayed on the DSHSTotExpGrth tab to the left). 

Children account for a majority of the growth in DSHS medical programs caseload, but not for its costs growth. Although the Children medical eligibility group (MEG) caseload is forecasted to grow an average of 6.7% for SFY 09-11, average per capita costs growth for this MEG during the same period is 0.6%. The average growth of the Elderly MEG caseload is 1.7% for SFY 09-11, with a 2.4% average per capita costs growth. The Disabled MEG is forecasted to have an average 3.5% caseload growth, with an average growth in per capita costs of 4.1% for SFY 09-11. The average growth in per capita costs for the Family MEG during the SFY 09-11 period is 2.1%, with an average caseload growth of 2.9%.

DSHS per capita costs growth remains lower than the growth in per capita national health expenditures (NHE). The growth of DSHS medical program's spending was less than national per capita medical spending during the SFY 05-07 period (see the graph displayed on the DSHS+NHE PerCapCostsGrth tab to the left). This trend is projected to continue during SFY 09-11.