Report: State budgets torn asunder by Medicaid spending

Financial outlook is grim for not-for-profits, analyst says

Regardless of whether states choose to expand Medicaid, states are facing fiscal crisis related to rising healthcare costs and government pension obligations, a new report finds. 

Medicaid cost growth will outstrip revenue growth by an ever-growing margin due to increasing enrollments and escalating healthcare costs according to a new report from the State Budget Crisis Task Force. Former Federal Reserve Chairman Paul Volcker and former New York Lt. Gov. Richard Ravitch (D) organized the panel. Medicaid pays for the bulk of nursing home care.

An even larger problem than healthcare, the authors said, is unfunded state government pension obligations that could total as much as $3 trillion.

The task force focused on the budgets of six states: California, Illinois, New Jersey, New York, Texas and Virginia.

The authors point out that states cannot control Medicaid spending without the help of the federal government.

“Reaching agreement on how to control federal and state costs, while assuring the basic goals of enlarging and improving healthcare for persons who cannot now afford private insurance, is a major political and economic challenge that should be addressed sooner rather than later,” the authors state.

Click here to read the full report.