Table 6. State and Local Government Expenditures for Health Services and Supplies: United States, Selected Calendar Years 1987-2000.
- State and local health expenditures reached $212.1 billion in 2000. Medicaid is the largest component, accounting for 41 percent of all State health care outlays in 2000, up from 32 percent in 1987.
- Some States have used various creative financing schemes to divert Medicaid funds to fungible State budget accounts for use in financing other health and non-health spending.
- The most notable schemes are the disproportionate share hospital arrangements that allow States to pay higher rates to certain hospitals serving a disproportionate share of poor people. The cost of these higher payments is shared with the Federal Government. States have used various tax, donation, and intergovernmental transfer mechanisms to recoup a portion of these payments, thereby raising Federal spending for Medicaid and reducing State and local costs. This controversial practice was limited by congressional action in 1991, 1993, and 1998 (Coughlin, Ku, and Kim, 2000).
- More recently, States have used loopholes in upper payment limits rules affecting local government-owned hospitals and nursing homes to return funds to State general revenues. This practice, too, has caught the attention of the legislative and executive branches of the Federal Government and is being gradually curtailed.
- In the NHA, an adjustment is made to remove disproportionate share hospitals and upper payment limits monies not used directly for patient care from the State portion of Medicaid reimbursements for hospitals and nursing homes. This has generally slowed the growth in State Medicaid expenditures below the growth level for Federal Medicaid spending in the estimates presented in this article.
- The second-largest share of State and local government health expenditures, after Medicaid, is the employer portion of health insurance for State and local government employees. These expenditures amounted to $56.9 billion in 2000.
| State and Local Spending Category | 1987 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 |
|---|---|---|---|---|---|---|---|---|---|
| Amount in Billions | |||||||||
| State and Local Government | $71.1 | $132.0 | $146.9 | $153.8 | $159.3 | $168.7 | $180.3 | $196.5 | $212.1 |
| Employer Contribution to Private Health Insurance Premiums | 16.4 | 36.3 | 39.0 | 39.8 | 41.8 | 44.1 | 45.2 | 52.0 | 56.9 |
| Employer Medicare Hospital Insurance Trust Fund Payroll Taxes | 3.1 | 5.0 | 5.3 | 5.6 | 5.8 | 6.1 | 6.5 | 6.9 | 7.3 |
| Health Expenditures by Program | 51.6 | 90.7 | 102.6 | 108.4 | 111.7 | 118.5 | 128.6 | 137.7 | 147.9 |
| Medicaid1 | 22.8 | 45.8 | 53.7 | 59.2 | 61.5 | 66.4 | 73.4 | 80.1 | 86.1 |
| Hospital Subsidies | 10.2 | 11.6 | 12.4 | 11.0 | 10.4 | 10.0 | 10.7 | 11.1 | 11.8 |
| Other Programs2 | 18.6 | 33.4 | 36.5 | 38.1 | 39.8 | 42.1 | 44.4 | 46.5 | 50.0 |
| Percent Distribution | |||||||||
| Share of State and Local Spending | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
| Employer Contribution to Private Health Insurance Premiums | 23 | 27 | 27 | 26 | 26 | 26 | 25 | 26 | 27 |
| Employer Medicare Hospital Insurance Trust Fund Payroll Taxes | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 3 |
| Health Expenditures by Program | 73 | 69 | 70 | 70 | 70 | 70 | 71 | 70 | 70 |
| Medicaid1 | 32 | 35 | 37 | 39 | 39 | 39 | 41 | 41 | 41 |
| Hospital Subsidies | 14 | 9 | 8 | 7 | 7 | 6 | 6 | 6 | 6 |
| Other Programs2 | 26 | 25 | 25 | 25 | 25 | 25 | 25 | 24 | 24 |
| Percent Growth from Previous Year Shown | |||||||||
| Growth in State and Local Spending | — | 10.9 | 11.2 | 4.7 | 3.6 | 5.9 | 6.9 | 9.0 | 7.9 |
| Employer Contribution to Private Health Insurance Premiums | — | 14.2 | 7.6 | 2.1 | 4.9 | 5.5 | 2.5 | 15.0 | 9.6 |
| Employer Medicare Hospital Insurance Trust Fund Payroll Taxes | — | 8.1 | 5.9 | 6.0 | 3.9 | 5.1 | 6.0 | 6.2 | 6.4 |
| Health Expenditures by Program | — | 9.9 | 13.0 | 5.7 | 3.1 | 6.1 | 8.5 | 7.1 | 7.4 |
| Medicaid1 | — | 12.3 | 17.2 | 10.3 | 3.9 | 7.9 | 10.6 | 9.0 | 7.6 |
| Hospital Subsidies | — | 2.1 | 7.0 | -10.7 | -6.1 | -3.4 | 7.2 | 3.7 | 5.6 |
| Other Programs2 | — | 10.2 | 9.3 | 4.4 | 4.4 | 5.7 | 5.5 | 4.7 | 7.6 |
1
Includes Medicaid buy-in premiums for Medicare.
2
Includes other public and general assistance, maternal and child health, vocational rehabilitation, public health activities, and State Children's Health Insurance Program.
NOTE: Columns may not add to figures shown because of rounding.
SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group.