Trends in Medicaid payments and utilization from 1975 through 1989 are examined in this article. Medicaid payments grew significantly over the period 1975-89, but the rate of growth was uneven. Total payments grew rapidly from 1975 through 1981, but the rate of growth slowed considerably from 1982 through 1988. Recent data suggests that there may be a new discontinuity in the series; payments increased sharply in 1989. Sectors that account for growth in the costs of the program are identified by examining who are served and what types of services they receive. The dynamics of change in Medicaid payments within sectors also are explored by examining changes in the number of people receiving services and the average payment per recipient.
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