Rising Health Care Costs To Widen Local Budget Gaps, GAO Report Finds
State and local governments nationwide should brace for widening budget gaps through 2060, in part because rising health care costs for residents and public employees are expected to surpass current improvements in their revenues, according to a report released Monday by the Government Accountability Office, Reuters reports.
Health-related costs are expected to account for about 3.8% of the gross domestic product for state and local governments this year and to increase to 7.2% by 2060, GAO projected. The report also stated that rising health care costs will assume a larger share of states' spending, particularly under Medicaid.
Further, the scheduled expansion of Medicaid under the Affordable Care Act has created uncertainties in state and local budgets because states can opt out of the expansion.
According to GAO, state and local governments would have to reduce their expenditures by at least 14.2% annually or increases taxes by a "similar magnitude" if they want to close their budget gaps over the next 50 years (Lambert, Reuters, 4/29).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.