Medical Billing Blog

State and Local Governments Spend 31.5% on Healthcare

Posted by Scott Shatzman on Tue, Feb, 04, 2014 @ 11:02 AM

Health spending graph resized 600The Affordable Care Act was supposed to stem the rapidly rising cost of healthcare in the United States. While costs have continued to rise since the ACA’s passage in 2010, the rate has slowed dramatically. Early indicators suggest that the growth rate of total healthcare spending in the US was only 4% in 2012. This is an improvement when looking at the aggregate expenditures, unfortunately, for state and local governments, the cost curve has not had any form of reduction. According to CMS and the Bureau of Economic Analysis, state and local governments spent 31.5% of their budgets on healthcare costs in 2012. That represents an 8 percent increase over the previous year, or a rate twice as fast as the national rate of increase. This increase is largely due in part to the stimulus bill passed by Congress in 2009. The American recovery and Reinvestment Act granted more than $100 billion to states to cover increasing Medicaid costs, which had ballooned during the recession as high unemployment drove job-seekers to the government run health program. During this period, even though Medicaid saw increased participants, overall state spending on Mediciad actually fell. However, the federal stimulus money would not last forever and State Mediciad expenditures rose 22 percent between 2010 and 2011, and another 15 percent in 2012. The Government Accountability Office says health-care spending represents the single greatest threat to state and local government long-term health.