Outcomes of California's Medicaid cost-containment policies, 1981-84

In 1982, California enacted a package of tough Medicaid cost-containment measures. This article examines its effects on program expenditures through 1984 by enrollment group and service category. Total expenditures fell by 19 percent (or $656.5 million) after inflation. Expenditures per enrollee declined for almost every group, with enrollees on cash assistance taking the greatest reductions. Ambulatory, physician, and pharmacy spending declined the most followed by long-term and hospital care. The effects of these policies are of particular importance in the early 1990s as States face even greater fiscal challenges and seek lessons from past attempts at controlling program costs.