Q&A: State Health Care Costs

Jan 30, 2013

 Sue Urahn, executive vice president, The Pew Charitable Trusts, and Valerie Chang, associate director for policy, John D. and Catherine T. MacArthur Foundation, explain why states are seeking these answers and how this new project will find and share them.

Q: How are health care costs contributing to states’ fiscal troubles?

Sue Urahn: Overall, states have seen revenues rebound slowly for the past two years, but revenue hasn’t grown fast enough to keep pace with demands for important services, including health care. High unemployment, the housing crisis, and other financial hardships—they’re all causing more people to seek help from programs like Medicaid. On top of that trend, the cost of health care has continued to climb, adding significant pressure on state budgets. Bottom line: You can’t care about state fiscal health and not care about health care costs.

Valerie Chang: It’s critical that policy makers recognize they’ve got more than a short-term, recession-related problem to solve. Projections from the Government Accountability Office show that, absent policy changes, health care costs will consume an increasing share of state and local government budgets for the next five decades. Too often, we’ve seen costs simply get shifted to individuals, service providers, and other levels of government. That’s like squeezing a balloon and moving the pressure around but not reducing it. This doesn’t fix the problem, and it delays reforms that can contain spending and improve health outcomes.

Read the full Q&A on the Pew Center for the States website.

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