Reports: State Budgets Looking Grim, Medicaid Particularly Problematic

Medicaid costs continue to rise as state revenues are not recovering fast enough from the recession.

The New York Times: As State Budgets Rebound, Federal Cuts Could Pose Danger
Adjusted for inflation, this year's revenues are still expected to be 7.9 percent below the 2008 levels. And with Medicaid costs continuing to rise — states now spend more on Medicaid than on elementary and high school education — states find themselves hard-pressed to restore many of the deep cuts they have made to other services. Now many governors are bracing for the prospect of cuts in federal aid, which provided states with roughly a third of their revenue last year (Cooper, 12/14).

The Washington Post: States Face Double Fiscal Whammy: Federal Aid Cuts And Spiraling Health-Care Costs
The Fiscal Survey of States, a report released Friday by NASBO and the National Governors Association, found that state revenues for the current fiscal year surpassed pre-recession levels for the first time. The problem for states is that the revenue is increasing slowly while health-care costs are going through the roof. The result is that many other state government priorities — including higher education, infrastructure development and law enforcement — are being forced to take a back seat (Fletcher, 12/14).

Stateline: Medicaid Trumps ‘Fiscal Cliff’ As Top State Budget Concern
The so-called fiscal cliff talks in Washington, D.C., might be getting all the attention, but for states, Medicaid is still the biggest budget worry for the coming year, according to a new survey of state legislative directors to be released soon. Nowhere is the problem larger than in Texas, which faces a $4.3 billion Medicaid deficit. Nine other states likewise are reporting spending overruns for Medicaid and other health care programs for the current 2013 fiscal year, compared with six at this time last year, says the National Conference of State Legislatures (Prah, 12/14).

The Wall Street Journal: Fiscal Threats Are Forecast For New Jersey
New Jersey faces "major fiscal threats in years ahead" despite having made strides in reining in costs and resorting to fewer budgetary tricks than other states according to a report released Thursday ... The privately financed report from former Federal Reserve Chairman Paul Volcker and former New York Lt. Gov. Richard Ravitch found that it will cost New Jersey an additional $9 billion over the next five years to keep up with four major expenses: Medicaid, school aid, health benefits and pensions. That amount represents 29% of the state's current $31.7 billion budget (Haddon, 12/13).

The New York Times: New Jersey's Pension Plan Is Said To Be In Trouble Despite Overhaul By Christie
Mr. Volcker and Mr. Ravitch formed the task force out of a concern that the fiscal debate in Washington was overlooking parallel fiscal problems at the state level, and that the coming measures to shore up the federal government’s finances were likely to make the states’ troubles worse. Federal proposals to raise the Medicare age to 67 would blow back onto the states, for example, because many have promised to cover retiree health care in the years before Medicare kicks in (Walsh, 12/13).

The Associated Press: Report: Retiree, Health Costs Draining NJ Budget
The report describes spiraling retiree and health care costs draining all state budgets. ... "It became very clear to many of us that for a lot of reasons most states were on the verge of being on unsustainable paths for true fiscal balance. The reasons for this, which are almost uniformly true, are that the cost of pensions and other retiree payments and the costs of health care and Medicaid in particular are rising at rates far greater than the rates at which taxes are being collected," Ravitch said (Delli Santi, 12/13).

This is part of Kaiser Health News' Daily Report - a summary of health policy coverage from major news organizations. The full summary of the day's news can be found here and you can sign up for e-mail subscriptions to the Daily Report here. In addition, our staff of reporters and correspondents file original stories each day, which you can find on our home page.