State Medicaid programs could spend $1.6 trillion on long term care expenses over the next 20 years. When federal matching funds are included, total government spending on long term care will exceed $3.7 trillion, according to America’s Health Insurance Plans, Washington.

Medicaid LTC spending will grow at a faster rate than overall health care spending, faster than Medicare, and faster than the national gross domestic product, AHIP predicts. If existing trends go on, annual Medicaid LTC expenditures could grow by 124% between 2008 and 2027, to $116 billion, from about $51 billion, AHIP says.

In 2008, 15 states will be spending $1 billion each on “Medicaid C” services.

By 2027, 25 states will be spending $1 billion or more, AHIP says.

The AHIP report was co-written by Paul London, an economist and former Commerce Department deputy undersecretary in the Clinton administration, and Daniel Shostak, president of Strategic Affairs Forecasting, Silver Springs, Md.

The researchers project Medicaid LTC expenditures in 2008 dollars. They do not include the LTC costs that Americans pay out of pocket.

Medicaid pays LTC costs for low-income individuals and for individuals who have spent enough of their assets to qualify for Medicaid nuring home benefits.

AHIP President Karen Ignani says the report shows the nation needs to improve its preparation for LTC costs and find better ways to improve recipients’ access to home and community-based care.

“Many Americans underestimate their risk of needing long term care…and many erroneously believe they have long term care coverage,” Ignani says.