Good news graphs, part three; Health care and social services state budget projections

Deltek Senior Analyst Chris Cotner and Health Care/Social Services Analyst Kate Tussey report.

The national healthcare debate has waxed and waned for decades, with the obvious recent history of Clinton’s failed foray and Obama’s push for national health care reform. Two main drivers behind the discussion are the rapidly rising cost of health care (HC) and the massive baby boomer generation entering retirement. An additional qualifier since the recession has been the increased number of uninsured, either by way of unemployment or underemployment. Even before the Affordable Care Act of 2010 (ACA), states were concerned about paying for HC services in this projected environment. After the act, 26 states entered a class action suit against the federal government, 17 states passed laws opposing the act, and 44 states filed legislative measures opposing elements of the legislation. The issue is clearly not resolved.

Some of these same drivers also affected social services (SS) budgets in the states. After Clinton’s massive revision of welfare law in the 1990s, public assistance roles were drastically reduced. However, with the recent recession, unemployment, underemployment, and employment without benefits, HC have once again been on the rise in the states. While the recessionary forces are temporary abnormal drivers of social services budgets, states must still contend with this short-term spike and plan for providing services moving forward.

In all states combined, HC and SS will account for 34.8% of all funds expenditures in 2012. This is the largest budget expenditure for the states (with education closing in around 31%). In the recent environment of decreased state revenues in the sluggish economy, budget cuts have been the norm. As I wrote in my previous article (here), FY 2012 is the first time in decades that states budgets have decreased on the whole. With the prospect of rising costs and budgets in HC and SS, there is good reason for states to be concerned.

For the complete blog, go here.