Stateline Story

Roads and Health Care Costs Worry States

Spiraling Medicaid costs

Record unemployment helped push up states' overall spending on Medicaid, the nation's main taxpayer-funded health care program for the poor, by nearly 8 percent in fiscal year 2009.

But spending in six states shot up at more than twice that rate, according to the National Association of State Budget Officers (NASBO): Wisconsin (27.1 percent), Mississippi (20.3), Missouri (17.9), Nevada (16.9), Alaska (16.5) and Washington (16.1).

After decades of growth, Medicaid now accounts for 21 percent of state expenditures, counting both federal and state funding streams. National health care reform could push that number even higher, causing worries that, after paying for health care, states would have little left for other priorities.

Nine states already spend more than a quarter of their overall budgets on Medicaid: Missouri (38.4 percent), Maine (30.4), Illinois (29.9), Pennsylvania (29.8), Arizona (29.4), New Hampshire (27.0), New York (26.7), North Carolina (26.6) and Tennessee (25.9), according to fiscal year 2009 estimates from NASBO.

Stateline.org
How the stimulus
is progressing
Just over half of all projects receiving stimulus funds were under way by the end of October 2009 and 38 percent of projects weren't yet started. The speed with which states are spending new money for highways and other transportation projects varies greatly. Illinois and Iowa are among the quickest spenders as both Midwestern states are using their money to repave and repair existing roads. California is funneling most of its money through local governments, which adds time to the process.
Source: Recovery.gov analysis of recipient reporting, last updated Oct. 30, 2009

Winning more federal road funds

Alaska got more than five times what it gave to the federal Highway Trust Fund, the shared pool of motor fuel taxes that helps finance state road-building and transit projects. Montana, North Dakota, Rhode Island and Vermont got double what they contributed in 2008. Fifteen other states also received more than they paid into the fund.

On the flip side, 30 states contributed more than they withdrew.

After running a surplus for more than half a century, the nation's $40 billion highway fund is running on empty. The fund-fed by an 18.4-cent federal tax that motorists pay on every gallon of gasoline, along with a 20 percent matching contribution per state-has seen expenditures exceed revenue since 2002. States also tax gasoline to raise federal matching funds and pay for transportation projects. A top issue when Congress reauthorizes the highway bill, work already overdue, is whether the federal government should raise its gas tax rate. Oregon, Rhode Island and Vermont increased their own gas taxes in 2009 to help balance their budgets.

Opting out of national health care reform

Legislatures in more than half the states are being asked to consider blocking a key element of national health care proposals-a requirement that most adults acquire health insurance.

As the 2010 legislative season got under way, lawmakers in 26 states had introduced measures to give people the right to opt out of a universal health care plan if enacted by Congress: Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Virginia, Washington, West Virginia and Wyoming. In six other states, lawmakers promised to introduce similar legislation, according to the conservative American Legislative Exchange Council.

The bills are modeled after Arizona's Proposition 101, a proposed constitutional amendment that Arizona voters narrowly rejected in 2008 but will see again on the 2010 ballot. If successful, experts say the measures-which would bar penalties for failing to sign up for health insurance-will be challenged in court.