States Push to Contain Health Costs

Jun 15, 2012

States spent a nervous spring this year wondering how the Supreme Court would rule on the Affordable Care Act. They are still wondering. But despite the uncertainty, they managed to write a good deal of health legislation, especially when it came to Medicaid, the joint state and federal program that covers poor families with children.

Some continued the pattern of Medicaid spending reductions that marked the past few years, while others were in a mood to restore earlier cuts they had made. Some even expanded coverage.

Overall, the health care budget picture in the states is brighter than it has been in a while. Although Medicaid spending continues to grow faster than state revenues, its recent growth curve—as with the rest of health care spending—is not as steep as it was during the recession and immediate post-recession years.

According to a state fiscal survey released this week by the National Association of Budget Officers and the National Governors Association, Medicaid budgets for the fiscal year that starts this coming July 1 assume a growth rate of only 3 percent over fiscal 2012. That compares to an 11 percent increase in 2011 and average annual spending growth of 7 percent from 2007 to 2010.

As a result, a number of states have been able to invest in new efforts designed to save money and improve health outcomes. “We’re seeing a shift to longer-term types of cost-containment strategies,” says Stacey Mazer, health care analyst with the association of budget officers.

States are also responding to new federal grant opportunities aimed at encouraging investment in programs that lower costs by providing more efficient care. In some states, injections of federal money for these programs have plugged major gaps in Medicaid budgets.

Read the full story, States Push to Contain Health Costs, on the Pew Center on the States' website.

Read the rest of Stateline's 2012 Legislative Reviews:

In Energy Policy, A Year Marked by Clashes in Federalism
Public School Alternatives Gain Steam in States
Civil Service Changes Gain a Foothold
For Many State Budgets, a Year of Relief 

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