Medicaid spending is expected to expand by 5.6% for fiscal 2005, despite a projected drop in the federal budget deficit for the same time period. Spending for the program is expected to rise to $186 billion in fiscal 2005 compared to $176 billion in 2004, according to the Congressional Budget Office.

Similarly, Medicare spending should increase by 9.4%, to $325 billion, for fiscal 2005, from $297 billion in fiscal 2004, CBO said this week.

Medicaid and Medicare funding combined cover about 75% of all nursing home patients in America. Medicaid spending is estimated to skyrocket to $392 billion in 2015, an increase of 123% compared to 2004.

The deficit is projected to decrease to $368 billion in fiscal 2005. That compares to a deficit of $412 billion in fiscal 2004. The $368 billion, however, does not factor in spending for the conflicts in Iraq and Afghanistan.