The Potential Impact of Alternative Health Care Spending Scenarios on Future State and Local Government Budgets

Source:: Donald Boyd, Rockefeller Institute of Government, April 2014

From the abstract:
Health care expenditures by state and local governments have approximately doubled over the last 25 years, and now total $475 billion. These expenditures are 18 percent of national health care consumption expenditures, 24 percent of state and local government spending from their own funds, and 35 percent of state and local government tax revenue. Continued rapid growth in these expenditures could pose significant fiscal issues and difficult choices for state and local governments.

This paper examines state and local government health care expenditure growth under three scenarios, and analyzes possible implications of those choices. It concludes that expenditures could increase over 20 years by 1.2 percentage points of GDP under the baseline scenario, 0.3 percentage points under a low cost-growth scenario, and 2.3 percentage points under a high cost-growth scenario. These cost increases are driven more by non-Medicaid costs than by Medicaid costs. The non-Medicaid increases are driven first by retiree health care costs (OPEB) and second by costs of health care for the existing workforce. The Medicaid cost increases are driven primarily by costs for the elderly and disabled. Children, adults, and Medicaid expansion enrollment play a much smaller role in the increases….
Related:
The Future of U.S. Health Care Spending
Source: Brookings Institution, April 11, 2014
On Friday, April 11th the Engelberg Center for Health Care Reform at Brookings brought together several experts to discuss three questions that will also be addressed in a forthcoming series of Brookings papers. The discussion and papers address the causes of the slowdown and the likelihood it will continue; its impact on federal and state budgets, and private spending; and identify reforms that will ensure slow cost growth while improving health….

Perspectives on Health Care Spending Growth by Louise Sheiner
Federal Health Spending and the Budget Outlook: Some Alternative Scenarios by Alan Auerbach, William Gale and Benjamin Harris
– Alternative Health Spending Scenarios: Implications for Employers and Working Households by Paul Ginsburg
Improving Health While Reducing Cost Growth: What is Possible? by Mark McClellan and Alice Rivlin