Medicaid Entitlement Costs

I can't find any good data on Medicaid entitlement costs so I am presenting my own. First, the threshhold question - is Medicaid an entitlement? Strictly speaking no. It has no trust fund or dedicated revenue stream. The funding for it comes from the general revenues on a yearly basis. However, as a practical matter, eliminating Medicaid or even cutting it slightly would cause recipients and medical providers to howl bloody murder, that you are killing poor people. From that standpoint, it is more of an entitlement than even Social Security. So it is financially imprudent to ignore the cost of it.

So how much does it cost? As a starting point I am using data from Table 5 of the Estimated Financial Effects of the “Patient Protection and Affordable Care Act of 2009" (i.e. Obamacare). I am assuming that healthcare costs will increase by 8.7% a year, which is the same assumption that that document uses. And I am using a discount rate of 3%, which is somewhat arbitrary and may be too low. I am also assuming a 50-year horizon which is less than what is usually used when estimating entitlement costs. I also include both Federal and State costs as it seems disingenuous to ignore costs on the basis that State governments will pay for them when the State governments are close to insolvency and may get bailouts from the Federal government. The 2019 numbers are 893.2 under the prior law and 979.7 under the new law. So in other words, Obamacare is expected to increase Medicaid spending by 86.5 in 2019.

Here are the results I came up with:
1. The present value of the Medicaid entitlement under the prior law over the 50 year timeframe of 2010-2059 using a 3% discount rate is 105,022.
2. The present value of the Medicaid entitlement over the 50 year timeframe of 2011-2060 using a 3% discount rate is 121,377.
3. Since Obamacare claims to have cut Medicare by trillions, it is only fair to point out that it has also increased the cost of Medicaid over 50 years by 16,354.

And, yea, the numbers are in billions. Which means that we have an unfunded liability for Medicaid of $121 trillion. This is the amount of money you would have to put in a bank account today earning 3% interest in order to pay for Medicaid for the next 50 years.

Ok, you can go back to putting your head in the sand and hope the problem will go away. Or we can have an honest discussion about fixing Medicaid. Maybe I have made an error in my calculations and if so I would be happy to correct it, but until then I stand my this number. And I ask how any rational human being can believe that this is a sustainable situation.

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Edit: Just so I am comparing apples to apples, I also want to include prior year comparisons. The best info I have is that in 2008, total Medicaid costs were 343 and in 2009 they were 374.

The unfunded liability for Medicaid using the same assumptions in 2007, for the time period of 2008 to 2057 using the 3% discount rate was 94.2 trillion.
The unfunded liability for Medicaid as of 2008, for the time period of 2009 to 2058 using the 3% discount rate was 99.5 trillion.

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Update: A better number for the increase in Medicaid costs is 8.3% as stated in https://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf . Also, an updated document on Obamacare costs is at http://www.cms.gov/ActuarialStudies/Downloads/PPACA_2010-04-22.pdf . The current rate on 30-year US bonds is 4.375%, so probably 4.5% is a better number to use for a long-term discount rate.