Medicaid spending soars this year

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Medicaid spending rose by 10.7% during the first six months of 2007, according to a USA Today analysis of federal government data. The state-federal program pays for nearly half of all long-term care costs in the United States.

Spending is likely to reach $330 billion in 2007, data from the Bureau of Economic Analysis shows. Efforts by states to expand Medicaid coverage and the children's health insurance program, increases in Medicaid enrollment, and increases in Medicaid reimbursements to healthcare providers have contributed to the jump in spending, according to USA Today.

This dramatic increase comes after two years of controlled growth. Costs increased by just 5.1% in 2005. In 2006 spending was down by 1.7%, in part because some prescription drug coverage was shifted from the Medicaid program to Medicare Part D, according to the report. In addition, the trend toward increased use of home health care instead of nursing homes may have contributed to the spending drop last year, the USA Today report said.