Healthcare spending on state, local level double national rate

Growth in healthcare spending by state and local governments doubled the overall growth of healthcare spending nationwide in 2012, illustrating the pressures such entities are under to meet obligations in that arena.

Altogether, healthcare spending nationwide increased about 4 percent in 2012, but rose 8 percent among state and local governments that same year.

The data, provided by the Centers for Medicare & Medicaid Services and analyzed by the Pew Charitable Trusts, concluded that state and local governments were forced to spend more after a temporary jump in Medicaid funds tied to the 2009 federal stimulus package began tapering down in 2010 and 2011. Altogether, more than $100 billion in extra Medicaid money was directed to the states as part of the stimulus.

"The Great Recession swelled Medicaid rolls and drove increases in total program expenditures, but the states' share of Medicaid spending declined from $146 billion in 2008 to $135 billion in 2010 because of federal stimulus money," the report said.

The expenditures on the state and local levels contradict what has been occurring nationally. The CMS' Office of the Actuary concluded that overall healthcare spending rose 3.7 percent in 2012, due in part to smaller increases in spending for prescription drugs, nursing homes and other services. And the portion of the overall economy devoted to healthcare expenditures also declined, to 17.2 percent in 2012 compared to 17.3 percent in 2013, even as the economy as a whole grew. The slow growth rate continued last year.

But increases in state and local government spending on healthcare have actually been rising steadily for the past quarter century. It represented 15.8 percent of all spending in 1987, but rose to 31.5 percent in 2012--an increase of 260 percent when adjusted for inflation. The report, citing data from the Government Accountability Office, said such spending could wind up doubling again by the year 2060.

To learn more
- read the Pew report

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