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Mr. Chairman and Members of the Committee, it is my pleasure to be here today to share with you the analysis that the Congressional Budget Office (CBO) has conducted concerning the recent growth in Medicaid expenditures and the program's projected growth under current policy. The rapid increases in Medicaid spending and the growing prominence of the program in the federal budget surely present a serious challenge to the Congress.

Between 1988 and 1993, Medicaid spending on average increased at the rapid rate of 16 percent a year. Yet over the same period national health expenditures were rising at an average annual rate of only 9 percent. Medicaid expenditures are expected to continue to rise faster than other health expenditures through 2002. Medicaid now accounts for about 6 percent of the federal budget, but that percentage is projected to climb to 8 percent by 2002. Modifying those trends will clearly require policy changes by both the Congress and the states.

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