Health Reforms Impact on State Budgets

It isn’t news to anyone that states are having great trouble paying for their current Medicaid programs, even with large Federal contributions. However, the severity to which states are expecting to suffer under federal Health Reform is surprising.

A new National Governors Association Fiscal Survey of States released a couple of weeks ago indicates that for fiscal year 2012 a majority of states are facing tough decisions and are strongly considering cuts in state Medicaid programs. For example, the survey showed that 30 states are proposing limits on prescription drug spending and 28 are proposing limits, or even elimination, on certain benefits. Another 37 states have considered freezing or reducing provider payments, which everyone knows will significantly and negatively impact the access and quality of Medicaid care.

Even more concerning than direct cuts to Medicaid are the reductions that will result for other public goods such as public safety and education as state monies will have to be shifted. To make room for more health-related expenses in 2014 as Health Reform is fully implemented, cuts will have to come from other state funded sources. This is going to force the hand of state legislators to prioritize spending and place health care above other public goods due to the Federal regulations in place for health reform.

Although North Carolina recently completed a tough, but thoughtful and efficient state budget, as we approach the next budget cycle we must be fully aware of the large additional costs coming our way.

Nicole Fisher

Nicole Fisher is a current PhD candidate at the University of North Carolina in the Health Policy and Management Department. She also currently writes health care policy for t...