This Centers for Medicare and Medicaid Services (CMS) Office of the Actuary report found that Medicaid costs are expected to rise annually by 7.9 percent from a projected $339 billion in 2008 to $674 billion in 2017. Enrollment is expected to grow at a slower rate, reaching 50 million people in 2008, increasing at an annual average rate of 1.2 percent to 55.1 million people in 2017.

From the report:

Over the past 15 years, the year-to-year growth of Medicaid expenditures has varied substantially, as can be seen in Figure 2. During FY 1994 through FY 1999, Medicaid experienced an extended period of relatively slow growth—an average rate of 6.2 percent per year—that was influenced mainly by two trends. The first was that Medicaid enrollment growth slowed due to the combination of strong economic growth and welfare reform. Enrollment grew at a rate of just 0.4 percent per year over the 6-year period, a rate that was lower than overall U.S. population growth. Another trend was slower growth in the use and price of health care services. These trends were influenced in part by the increased use of managed care plans in the U.S. over the same period.

Full report:  2008 Actuarial Report on the Financial Outlook for Medicaid (PDF | 565.64 KB)

US Department of Health and Human Services. Centers for Medicare and Medicaid Services. Office of the Actuary. (2008). 2008 actuarial report on the financial outlook for Medicaid. Truffer, Christopher J., Klemm, John D., Hoffman,E. Dirk, Wolfe, Christian J.