Good news: State health care budget and IT projections

Deltek Senior Analyst Chris Cotner reports.

The national health care 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. Since the recession began, an additional qualifier 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.

In all states combined, health care (HC) budgets will account for 26.02 percent of all-funds expenditures in FY 2012. While this is a net loss of -3.91 percent from FY 2011, this is the second largest budget expenditure for the states (behind education). In the recent environment of decreased state revenues in a sluggish economy, budget cuts have been the norm. As I wrote in a previous article, FY 2012 is the first time in decades that state budgets have decreased on the whole.

As part of our continued analysis of state and local budgets and spending, Deltek developed a set of statistical projection models to examine future trends in the states’ HC budgets. What we found was more good news. After the net loss in FY 2012 for all states, HC budgets are projected to increase (see Figure 1, below) in FY 2013.The following analysis explains both the methodology and projections in greater detail. This analysis also includes HC budgets, budget projections, IT budgets, and IT projects for individual states.

For the complete blog, go here.