Newspapers Examine Effect of Health Care Costs on State Governments
Two newspapers recently featured articles examining states' reactions to rising health costs. Summaries appear below.
CongressDaily: CongressDaily on Monday examined how, although "[s]tate revenues have largely rebounded after tough financial times," some "governors and lawmakers say the recovery might not last long unless the growth of Medicaid costs slows." Many states have implemented or are considering changes to stem costs. For instance, Florida will test a program that will place beneficiaries in different managed care plans and cap state per-beneficiary costs, while Vermont this year used a federal waiver to cap Medicaid spending over the next five years and place beneficiaries in managed care plans. Vermont also added benefits for services not normally covered under Medicaid. In addition, Oklahoma and New Mexico have started programs aimed at expanding health coverage by allowing small businesses to use Medicaid money to help fund the cost of health insurance for employees, CongressDaily reports (Klein, CongressDaily, 12/12).
- New York Times: The Times on Sunday looked at the "ballooning" costs of retiree medical benefits promised by state and local governments that "threaten to swamp budgets in many states." According to the Times, "[f]or years, governments have been promising generous medical benefits to millions of school teachers, firefighters and other employees when they retire," but "virtually none of these governments have kept track of the mounting price tag." The Governmental Accounting Standards Board has issued a new accounting rule that will require governments to determine the costs of future obligations to pay for retiree health care and to report those costs to taxpayers and bondholders. According to the Times, the rule "has not yet drawn much attention," but "it threatens to propel radical cutback for government retirees and to open the way for powerful economic and social repercussions." The rule also could result in tax increases and fewer public services or a city's bankruptcy in the worst cases, the Times reports (Freudenheim/Williams Walsh, New York Times, 12/11).