States to further cut spending in fiscal year 2011, report finds

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CMS: Nursing home Medicare cuts helped keep healthcare spending at historic low levels
CMS: Nursing home Medicare cuts helped keep healthcare spending at historic low levels
Fiscal year 2010 presented the most difficult challenge to states' financial management since the Great Depression, according to a new report from the National Governors Association. Fiscal 2011 will be equally challenging, the report said.

To address falling revenues and meet balanced budget requirements, states cut spending from $687.3 billion in fiscal 2008 to $612.9 billion in fiscal 2010. Fiscal 2011 spending will be $52 billion lower than fiscal 2008, a 7.6% decline.

Twenty-eight states have proposed reducing Medicaid payments to healthcare providers in fiscal year 2011 due to budget constraints, the report said. A total of 20 have proposed freezing provider payments, and 13 expect to raise provider taxes in FY 2011.

"States are still reeling from the downturn after the unprecedented declines in year over year spending in fiscal 2009 and 2010," National Association of State Budget Officers Executive Director Scott D. Pattison said. "States face significant fiscal challenges going forward with the federal Recovery Act funds ending, revenues not expected to be returning to pre-recession levels, and higher demands for many services like health and education."