Milbank Memorial Fund NASBO The Reforming States Group

2002–2003 State Health Expenditure Report

Co-Published by the Milbank Memorial Fund,
the National Association of State Budget Officers, and
the Reforming States Group

June 2005


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Table of Contents

Foreword

National Association of State Budget Officers 2004–2005 Executive Committee

Reforming States Group 2004–2005 Steering Committee

Executive Summary
States' Fiscal Outlook
State Expenditures
Total State Health Care Expenditures
State Health Spending
Medicaid
State Children's Health Insurance Program (SCHIP)
State Employees' Health Benefits
Corrections
Higher Education
State Insurance and Access Expansion
Direct Public Health Care
State Facility–Based Services
Community-Based Services
Population Health Expenditures
Guide to the Tables
Definitions
General Notes
State Health Spending by Region
Table 1: State Health vs. Non-Health Spending, Fiscal Years 2002 and 2003
Table 2: Total State Health Expenditures, Fiscal Years 2002 and 2003
Table 3: Percentage Change in Health Expenditures by Category, Fiscal Years 2002 to 2003
Table 4: Medicaid
Table 5: SCHIP
Table 6: State Employees’ Benefits
Table 7: Corrections
Table 8: Higher Education Health
Table 9: State Insurance and Access Expansion
Table 10: Public Health–Related Expenditures
Table 11: State Facility–Based Services
Table 12: Community-Based Services
Table 13: Total Population Health
Table 14: Total State Health Expenditures, Fiscal 2002 and 2003
Table 15: Medicaid Expenditures, Fiscal 2002 and 2003
Table 16: Total SCHIP Expenditures, Fiscal 2002 and 2003
Table 17: SCHIP Medicaid Expansion Expenditures, Fiscal 2002 and 2003
Table 18: SCHIP Stand-Alone Expenditures, Fiscal 2002 and 2003
Table 19: Total State Employee Health Expenditures, Fiscal 2002 and 2003
Table 20: State Employee Health Premium Expenditures, Fiscal 2002 and 2003
Table 21: State Employee Health Premium–Matching Expenditures, Fiscal 2002 and 2003
Table 22: State Employee Flexible Spending Account Expenditures, Fiscal 2002 and 2003
Table 23: Medical Portion of Workers’ Compensation Expenditures, Fiscal 2002 and 2003
Table 24: Medicare Payroll Tax Expenditures, Fiscal 2002 and 2003
Table 25: Total Corrections Health Care Expenditures, Fiscal 2002 and 2003
Table 26: Adult Corrections Health Care Expenditures, Fiscal 2002 and 2003
Table 27: Juvenile Corrections Health Care Expenditures, Fiscal 2002 and 2003
Table 28: Higher Education Health Expenditures, Fiscal 2002 and 2003
Table 29: Insurance and Access Expansion Expenditures, Fiscal 2002 and 2003
Table 30: Direct Public Health Care Service Expenditures, Fiscal 2002 and 2003
Table 31: Total State Facility–Based Services Health Expenditures, Fiscal 2002 and 2003
Table 32: State-Operated Long-Term Care Facility Expenditures, Fiscal 2002 and 2003
Table 33: Other State Facility Expenditures, Fiscal 2002 and 2003
Table 34: Community-Based Services Health Expenditures, Fiscal 2002 and 2003
Table 35: Total Population Health Expenditures, Fiscal 2002 and 2003
Table 36: Prevention of Epidemics and the Spread of Disease Expenditures, Fiscal 2002 and 2003
Table 37: Protection against Environmental Hazards Expenditures, Fiscal 2002 and 2003
Table 38: Injury Prevention Expenditures, Fiscal 2002 and 2003
Table 39: Promotion of Chronic Disease Control and Encouragement of Healthy Behavior Expenditures, Fiscal 2002 and 2003
Table 40: Disaster Preparation Expenditures, Fiscal 2002 and 2003
Table 41: Disaster Response Expenditures, Fiscal 2002 and 2003
Table 42: Health Infrastructure Expenditures, Fiscal 2002 and 2003
Table 43: Shares of Health Expenditures as a Percent of Total Health Expenditures, Fiscal 2002 and 2003
Table 43 (continued)
Table 44: Shares of Health Expenditures as a Percent of Total State Expenditures, Fiscal 2002 and 2003
Table 44 (continued)
Table 45: State Percentage Expenditure Change by Category of Health, Fiscal 2002 to 2003
Table 46: Total State Expenditures—Capital Inclusive, Fiscal 2002 and 2003
Table 47: Annual Percentage Change in Total State Expenditures, Fiscal 2002 and 2003
Table 48: 2002 State Demographics
Table 49: 2003 State Demographics
Table 50: State Health Expenditures as a Percent of State Gross Product, Fiscal 2002
Explanatory Notes Submitted by Particular States by Region
Individual State Profiles by Region





Foreword

State governments spent $329.7 billion on health in fiscal year (FY) 2002 and $357.8 billion on health in FY 2003, representing about one-fifth of the nation’s overall health spending. State spending from federal funds accounted for half of the amount, while state funds accounted for the other half of total state spending. The 8.5 percent rate of growth in state health spending between FY 2002 and 2003 was more than three times the 2.7 percent rate of growth in non-health spending for the same time period. This fourth edition of the State Health Expenditure Report continues the collaboration between the National Association of State Budget Officers (NASBO) and the Reforming States Group (RSG) to identify and summarize the amount of state health expenditures in broad categories.

The largest components of state health expenditures were Medicaid, state employees’ benefits, population health services, and community-based services. Together these components accounted for about 90 percent of total state health spending.

State health spending comprised approximately 31.5 percent of all state spending in FY 2003, up from 30 percent in FY 2001. The Centers for Medicare & Medicaid Services project that national health expenditures will rise from $1.7 trillion in 2001 to $3.6 trillion in 2014, an average annual increase of 7.2 percent. At this rate, national health spending by 2013 would comprise approximately 18.4 percent of the gross domestic product, up from the current 15.3 percent, to outpace economic growth during this timeframe. States, mirroring the national trends, are seeing health consume an even larger percentage of their budgets over time.

This report provides a perspective of the significance of state health spending within the context of the nation’s provision of personal health care services. As both employers and providers of services, states have felt the demands from rising health care costs. States also have additional expenditures for population health, including an expanded role to protect the public’s safety.

The surge in health care costs, most notably in Medicaid and employees’ health insurance, has been a significant factor in state fiscal stress, particularly in the fiscal years 2002 and 2003 covered in this report. While Medicaid dominates in both dollars and in impact on state fiscal conditions, state spending in non-Medicaid programs accounted for $95.6 billion in FY 2002 and $102.7 billion in FY 2003–a rate of increase of 7.5 percent. Overall, health spending increased by $28 billion from FY 2002 to FY 2003, or 8.5 percent, exceeding the overall increase in state spending during this same period, which was 4.5 percent.

To provide decision makers with comprehensive health expenditure data for their respective states, leaders of NASBO and the RSG decided to pursue a collaborative project to determine the total amount of state-funded health expenditures in each state. The first report, the 1997 State Health Care Expenditure Report, which showed total health care spending by states for FY 1997, represented the first effort ever to detail state health care spending in such a thorough manner. Building on that foundation, the 1998–1999 State Health Care Expenditure Report presented total state health care spending for the following two fiscal years.

While the 1998–1999 edition closely followed the format of the previous report, it differed from it by providing data on flexible spending programs and employees’ contributions to health insurance premiums, and by separately reporting expenditures for the State Children’s Health Insurance Program (SCHIP).

The 2000–2001 edition significantly expanded upon the previous two editions with the addition of population health expenditures. Some elements of the population health expenditures had been previously collected in the earlier editions under direct public health expenditures. Population health expenditures include state spending in the areas of environmental health, surveillance, and promotion of healthy behavior, as well as the public health aspects of disaster preparation and disaster response.

The present edition maintains the same definitions as the previous edition and represents an update for fiscal years 2002 and 2003. This edition continues the expansion of spending on population health that began in the previous edition.

Readers should be aware that considerable differences exist from state to state regarding the types of services provided and the level of government providing the service. Spending by other units of government within states, such as counties and cities, is not included in the data.

This report is a collaboration between NASBO and the RSG, facilitated by the Milbank Memorial Fund. NASBO is a nonpartisan professional organization of governors’ state finance officers that provides research and educational information on major public policy issues. The RSG, organized in 1992, is a voluntary association of leaders in health policy in the legislative and executive branches from all 50 states and several Canadian provinces. The Fund is an endowed operating foundation that works to improve health by helping decision makers in the public and private sectors acquire and use the best available evidence to inform policy for health care and population health.

Many individuals contributed to the preparation of this report. The following persons, who are listed in the positions they held at the time of their participation, provided advice and guidance: Lee Greenfield, Chair, Health and Human Services Finance Division, Minnesota House of Representatives; Sandy Praeger, Insurance Commissioner, Kansas; Wayne Roberts, Budget Director, Texas; and John Colmers, Senior Program Officer, Milbank Memorial Fund.

Rosemary Booth Gallogly
President, National Association of State
Budget Officers
State Budget Officer
Rhode Island Department of Administration

Sheila Peterson
Co-Chair, Reforming States Group
Steering Committee
Director, Fiscal Management Division
North Dakota Office of Management and Budget

Leticia Van de Putte
Co-Chair, Reforming States Group
Steering Committee
Chair, Veteran Affairs and Military
Installations Committee
Texas Senate

Daniel M. Fox
President, Milbank Memorial Fund



National Association of State Budget Officers 2004–2005 Executive Committee

Rosemary Booth Gallogly
President, NASBO
State Budget Officer
Rhode Island Department of Administration

Duane Goossen
President-Elect, NASBO
Kansas Secretary of Administration and Director
of the Budget

Wayne Roberts
Past President, NASBO
Senior Fiscal Advisor, Governor of Texas

Scott D. Pattison
Secretary/Treasurer and Executive
Director, NASBO

MEMBERS-AT-LARGE

Jennifer Davis
Budget Director
Delaware Office of the Budget

F. Mike Stormes
Administrator
Arkansas Office of Budget

REGIONAL DIRECTORS

Alda Rego Weathers
Budget Director
Massachusetts Executive Office for
Administration and Finance

Michael Maul
Associate Director
Virginia Department of Planning and Budget

Jason Dilges
Commissioner
South Dakota Bureau of Finance and
Management

Randy Tilley
Senior Financial Management Analyst
Idaho Division of Financial Management

STANDING COMMITTEE CHAIRS

Mary Lannoye
Chair, Health, Human Services & Justice
Committee, NASBO
State Budget Director
Michigan Office of the State Budget

Duane Goossen
Chair, Training, Education & Human Resources
Management Committee, NASBO
Kansas Secretary of Administration and Director
of the Budget

Donald Hill
Chair, Financial Management, Systems, and Data
Reporting Committee, NASBO
Commissioner, New Hampshire Department of
Administrative Services

Richard Brown
Chair, Tax, Commerce, Physical Resources &
Transportation Committee, NASBO
Director, Virginia Department of Planning
and Budget



Reforming States Group 2004–2005 Steering Committee

Kimberly Belshé
Secretary
California Health and Human
Services Agency

Linda Berglin
Chair, Health and Human Services
Budget Division
Minnesota Senate

Harriette L. Chandler
Member, Health Care Committee
Massachusetts Senate

Eileen L. Cody
Chair, Health Care Committee
Washington House of Representatives
Vice Chair, RSG Steering Committee, 2005–

Kevin Concannon
Director
Iowa Department of Human Services

Gene Davis
Assistant Minority Whip
Utah Senate

Rosemary Booth Gallogly*
State Budget Officer
Rhode Island Department of Administration
President, NASBO, 2004–2005

Richard N. Gottfried
Chair, Health Committee
New York State Assembly

Gail Gray
Director
Montana Department of Public Health and
Human Services

Lee Greenfield
Senior Policy Advisor
Hennepin County Health and Community
Initiatives
Chair Emeritus, RSG Steering Committee

John Michael Hall
Commissioner
Vermont Department of Prevention, Assistance,
Transition, and Health Access

Anne R. Harnish
Assistant Director
Ohio Department of Health

Toni Nathaniel Harp
Chair, Appropriations Committee
Connecticut Senate
Vice Chair, Health Committee, National
Conference of State Legislatures

John A. Heaton
Majority Caucus Chair
New Mexico House of Representatives

John A. Hurson
Chair, Health and Government Operations
Committee
Maryland House of Delegates
President-Elect, National Conference of
State Legislatures

M. Jane Kitchel
Vice Chair, Appropriations Committee
Vermont Senate

Kurt Knickrehm
Director
Arkansas Department of Human Services
Vice Chair, RSG Steering Committee, 2005–

Pamela S. Maier
Chair, Health and Human Development
Committee
Delaware House of Representatives

B. Joyce McRoberts
Deputy Director
Idaho Department of Health and Welfare

S. Peter Mills
Member, Health Committee
Maine Senate

Angela Z. Monson
Assistant Majority Floor Leader
Oklahoma Senate

Thomas L. Moore
Member, Judiciary Committee
South Carolina Senate

Bob Nakagawa
Director of Pharmacy
Fraser Health Authority

John T. Nilson
Minister of Health
Government of Saskatchewan
Vice Chair, RSG Steering Committee, 2005–

Carmen Hooker Odom
Secretary
North Carolina Department of Health and
Human Services

Janet Olszewski
Director
Michigan Department of Community Health

Sheila Peterson
Director, Fiscal Management Division
North Dakota Office of Management and Budget
Co-Chair, RSG Steering Committee, 2005–

Sandy Praeger
Insurance Commissioner
Kansas Department of Insurance
Chair Emerita, RSG Steering Committee

Raymond D. Rawson
Assistant Majority Floor Leader
Chair, Human Resources and
Facilities Committee
Nevada Senate
Chair, RSG Steering Committee, 2003–2004

Elizabeth H. Roberts
Chair, Health and Human Services Committee
Rhode Island Senate

Wayne R. Roberts*
Senior Fiscal Advisor
Texas Office of the Governor
President, NASBO, 2003–2004

J. Thomas Schedler
Member, Health and Welfare Committee
Louisiana Senate

Charles K. Scott
Chair, Labor, Health and
Social Services Committee
Wyoming Senate

Betty Sims
Project Manager
Missouri Department of Health and
Senior Services

Kathy W. Stein
Vice Chair, Health and Welfare Committee
Kentucky House of Representatives

Jean I. Thorne
Director
Oregon Department of Human Services

Donne E. Trotter
Chair, Appropriations Committee
Illinois Senate
Chair, Health Committee, National Conference
of State Legislatures

Gregg Underheim
Chair, Health Committee
Wisconsin State Assembly

Leticia Van de Putte
Chair, Veteran Affairs and Military
Installations Committee
Texas Senate
Co-Chair, RSG Steering Committee, 2005–

Therese M. Vaughan
Commissioner of Insurance
Iowa Insurance Division

Eric E. Whitaker
Director
Illinois Department of Public Health

*ex-officio member


Executive Summary


States' Fiscal Outlook

The period covered by this report—fiscal years 2002 and 2003—was a time of severe fiscal stress in state budgets. States had to sharply reduce spending, raise taxes and fees, and use reserves, as well as many other measures, to maintain fiscal balance. For example, in FY 2002 and FY 2003, general fund spending grew by 1.3 percent and 0.6 percent, respectively, or well below the historical average of 6.3 percent. In FY 2002, 38 states cut their budgets by nearly $13.7 billion, and 40 states cut their enacted budgets in FY 2003 by $11.8 billion.

State expenditures grew by an estimated 3.0 percent in FY 2004 and 4.5 percent in FY 2005. While these increases in expenditures exceeded the previous two years when states were in fiscal crisis, the increases are still well below the 27-year average of 6.3 percent. States also have used a variety of other measures to limit spending, raise revenue, and defer costs. These include relying on borrowing versus cash, securitizing tobacco funds, implementing employee layoffs and furloughs, reducing local aid, reorganizing and eliminating programs, and offering early retirement plans. States also raised taxes and fees to keep budgets balanced, totaling approximately $21.7 billion for fiscal years 2002 through 2005.

Year-end balances—which include both ending balances and balances in the budget stabilization funds—play a critical role in providing states with necessary resources to deal with unforeseen fiscal downturns. While stable, total balances for the two years covered in this report were relatively unchanged and remain below 5 percent, the level generally considered to be fiscally healthy. Estimated FY 2004 balances are 4.8 percent of expenditures, and balances in FY 2005 are projected to be 3.4 percent of expenditures. By comparison, in FY 2000 balances were 10.4 percent of expenditures.

The current outlook for FY 2005 is for improved state finances, though long-term fiscal pressures, most notably from rising health costs, will continue to exert pressure on state budgets.

State Expenditures

Total state spending in FY 2003, at approximately $1.1 trillion, is a 4.5 percent increase from FY 2002, as reported in NASBO’s 2003 State Expenditure Report. General funds reflect a 0.1 percent increase and federal funds reflect a 10.3 percent increase, while other state funds rose 3.8 percent from the previous year. State expenditures—namely money that flows through the state budgets—are used as a comparison of how the health expenditures collected in this report compare to total state expenditures.

Based on the NASBO State Expenditure Report, general funds accounted for 44 percent of total state spending in FY 2003, followed by federal funds at 29 percent, other state funds at 24 percent, and bonds at 3 percent. The components of total state spending in FY 2003 are as follows: elementary and secondary education, 21.7 percent; Medicaid, 21.4 percent; higher education, 10.8 percent; transportation, 8.2 percent; corrections, 3.5 percent; public assistance, 2.2 percent; and all other expenditures, 32.2 percent.

Total State Health Care Expenditures

While the State Expenditure Report separately tracks Medicaid and the State Children’s Health Insurance Program (SCHIP) expenditures, the other components of state health spending are not separately tracked. The purpose of this report is to identify and summarize the amount of state-funded health expenditures in each of the following broad categories: Medicaid, SCHIP, state employees’ health benefits, corrections, higher education, insurance and access expansion, direct public health care, state facility–based services, community-based services, and population health.

With the exception of population health expenditures, states were asked to report direct personal health expenditures, including expenditures to cover treatment of physical health conditions as well as mental health and substance abuse services. These figures generally exclude expenditures for subsistence and personal care. Spending detailed in this report for direct public health care services, corrections, higher education, community-based services, and state facility–based services therefore does not represent the totality of spending in these areas but rather only the direct personal health expenditures in these categories.

In the demographic data collected for FY 2003, states reported a total population of 290.5 million, a total Medicaid caseload of 40 million, 3.4 million state employees, 1.2 million adult inmates, 64,000 incarcerated juveniles, and 4.2 million SCHIP beneficiaries (see Table 49).

In FY 2003, states spent $357.8 billion on health (see Table 14). Health spending represented approximately 31.5 percent of state budget totals, on average. Table 1 shows the proportion of total state health expenditures from all funding sources.



As Table 2 shows, state shares for health spending in FY 2003 were as follows: 71.3 percent for Medicaid, 1.7 percent for SCHIP, 8.2 percent for state employees’ benefits, 1.2 percent for corrections, 1.5 percent for higher education, 0.4 percent for state insurance and access expansion, 3.0 percent for direct public health services, 4.8 percent for community-based services, 2.6 percent for state facility–based services, and 5.4 percent for population health services (numbers do not add up to 100 due to rounding). These totals are broken down, state by state, in Table 43, which highlights the share of each state’s health spending budget represented by various programs and shows the wide variation among states’ spending patterns.


Each state reported its health spending by funding source (state general funds, federal funds, and other state funds) for each of the categories. General-fund revenues are received from broad-based state taxes and account in FY 2003 for 36 percent of funding for total state health expenditures, as compared to approximately 44 percent of funding for all state spending. The general fund makes up varying amounts of the total funding, depending on the category: For example, the general fund accounts for approximately 97 percent of total funds for corrections while making up only 22 percent of total funding for SCHIP. State general funds also supply the predominant share of the funding for state facility–based services and community-based health.

States receive federal funds directly from the federal government to spend for specific purposes. Federal funds provide about 50 percent of total state health expenditures and account for a much larger percentage of state health spending than of total state spending. (Federal funds provide approximately 29 percent of total state spending for all functions.) The amount of federal funding in the various health categories ranges from 0.3 percent for corrections to 67 percent for SCHIP expenditures. Other state fund expenditures, which provide about 13 percent of total state health expenditures, are dedicated state funds. These are the primary source for insurance and access expansion, accounting for almost 65 percent of expenditures in that category, while providing only 2 percent of funding for corrections health expenditures.

From FY 2002 to 2003, the percentage growth in non-health expenditures totaled 2.7 percent, while health expenditures increased 8.5 percent during this period (see Table 3). Insurance and access expansion expenditures showed the largest percentage increase (36.2), followed by SCHIP (17.9 percent) and population health expenditures (10.7 percent). The large increase for insurance and access expansion is due to New York’s implementation of its Family Health Plus program during FY 2003.

As a measure of each state’s ability to finance health or other government services, state health expenditures as a share of state gross product for FY 2002 are shown in Table 50. State health expenditures, as a share of gross state product—a measure of production in each state—range from 1.7 percent to 5.8 percent.

Since the survey for this edition of the report is the same as that of the previous edition, it is possible to examine state health expenditures from 2000 to 2003. During that time, state health expenditures grew from $271 billion in FY 2000 to $357 billion. This 32 percent growth in health spending far outpaced the 24 percent growth in non-health spending over the same time period. Such was the case in each of the years under study, except between 2001 and 2002 when non-health spending growth (13.3 percent) was greater than health spending growth (9.0 percent).


There is particular interest in the change in population health spending during this period, as it straddles the events of September 11, 2001, and the anthrax attacks in October and November of that year. Population health spending grew by $3.7 billion, or 24.1 percent, between 2000 and 2003, although most of that growth occurred at the beginning and at the end of that time period. Spending in population health was essentially flat between FY 2001 and 2002, or in the period in the immediate aftermath of September 11 and the anthrax attacks. Indeed, it was only between 2002 and 2003 that the increase in spending for population health exceeded that of the overall increase in total state health spending or that of Medicaid, and that was the result of significant increases in health-related spending for disaster preparation and response.

The more traditional population health spending categories remain a large percentage of population health spending. For example, prevention of epidemics and the spread of disease (i.e., immunization, infectious diseases control, and food safety), promotion of chronic disease control and encouragement of healthy behavior (i.e., substance abuse prevention, maternal and child health, and health education), and health infrastructure (i.e., facility and professional licensure, and vital statistics) combined reflect more than half of all population health spending in FY 2003. However, combined they grew at only one-third the rate of overall health spending (9.7 percent) over the four years, which is still less than half the 24 percent rate of growth experienced by all of population health spending.





State Health Spending

Medicaid

Medicaid is a means-tested program with rules mandated by the federal government. It is administered by states and provides medical care for low-income individuals. State participation in the Medicaid program is voluntary, although all states have elected to do so because they receive matching federal funds for Medicaid programs. The jointly funded program requires state matching funds based on a federal rate that varies indirectly according to each state’s per capita personal income, with a minimum matching rate.

States must provide Medicaid coverage to certain low-income population groups (members of families with children and pregnant women, and persons who are aged, blind, or disabled) and have the option to cover other populations as well. The state must provide certain basic medical services but may cover additional services if it chooses to do so. Services covered include inpatient hospital care, nursing home care, residence in state facilities for the mentally retarded, home health care, physician services, outpatient hospital care, and prescription drugs.

Although approximately one-quarter of all Medicaid beneficiaries are elderly and disabled and three-quarters are children and non-disabled adults, the costs are not similarly distributed. Approximately three-quarters of Medicaid costs are for the elderly and the disabled, and one-quarter are for children and non-disabled adults.

Medicaid spending in FY 2003 totaled approximately $255 billion or 8.9 percent more than the 2002 level. Medicaid spending accounted for 21.5 percent of total spending and 71 percent of total health spending in FY 2002. By FY 2003, Medicaid spending accounted for 22.4 percent in total state spending and 71.3 percent in total health spending.

Growth in Medicaid Spending

For governors’ proposed fiscal 2005 budgets, states estimated growth rates of 12.1 percent in state funds and 3.9 percent in federal funds. The large variance in rates of growth for the federal and state shares is attributable to the temporary increase of 2.95 percent in the Federal Medical Assistance Percentage (FMAP) that was in effect from April 2003 through June 2004 as part of state fiscal relief.

Even with extensive cost containment and fiscal relief, states have experienced Medicaid expenditures exceeding the amount that had been originally budgeted for the program. Twenty-three states experienced Medicaid shortfalls in FY 2003, and eighteen states anticipated shortfalls in FY 2004. The shortfalls as a percentage of the total Medicaid program in FY 2003 ranged from less than 1 percent to 16.4 percent of the program costs, averaging 4.6 percent. The combined amount of the shortfalls in FY 2003 and 2004 totaled nearly $7 billion.

Medicaid Cost Containment Actions

States have been able to maintain a growth rate below private insurance levels due to the cost containment efforts used by all 50 states. For instance, every state implemented at least one new Medicaid cost containment strategy in FY 2004, according to the Kaiser Commission on Medicaid and the Uninsured. Over the past four years, states have been aggressive in taking action to control Medicaid costs. Even with those actions, 38 states were facing increased pressure and an additional 12 states were facing constant pressure to control Medicaid costs.

States are faced with the same cost pressures affecting private insurance, such as prescription drug costs increasing at double-digit rates and rising medical services. Enrollment increases have also played a major role in the increase in Medicaid spending, with enrollment increases of 5.2 percent in FY 2004 and an additional 4.7 percent estimated in FY 2005, according to the Kaiser Commission on Medicaid and the Uninsured.

In addition to the cost containment measures to limit spending, about one-half of the states planned to generate additional revenues for Medicaid. Most of the measures that rely on additional resources involve fees or taxes placed on health care providers. Other measures include reallocating tobacco settlement funds and increasing cigarette taxes.

The Jobs and Growth Tax Relief Reconciliation Act of 2003, which includes state fiscal relief, has helped states by providing a temporary increase in the federal Medicaid matching rate, which was expected to provide $10 billion in fiscal relief to states during FY 2003 and 2004. The funds from the fiscal relief were used in a variety of ways to assist in Medicaid programs. About three-fourths of the states used the funds to avoid, minimize, or postpone Medicaid cost containment measures and/or to resolve a shortfall in the Medicaid budget. The remainder of the states held the funds in reserve and have yet to make a decision on some or all of the funds, or increased programs.


States continue to feel pressure in funding Medicaid. The extensive cost containment efforts of states combined with the state fiscal relief provided by the federal government has largely helped states avoid further cuts to Medicaid services in FY 2004. Over the long run, however, projections for Medicaid spending by both the Congressional Budget Office and the Office of Management and Budget are in the range of 8 to 9 percent. Even after a full economic recovery is under way in state budgets, increases in Medicaid costs will far outstrip the growth in state revenues into the future.

State Children's Health Insurance Program (SCHIP)

The enactment of the State Children’s Health Insurance Program (SCHIP) as part of the Balanced Budget Act of 1997 has increased health coverage for previously uninsured children. SCHIP is targeted to children whose families have income too high to qualify for Medicaid but too low to afford private insurance. States receive a federal match for their SCHIP programs ranging from 65 percent to 85 percent within a capped allotment. During FY 2003, approximately 5.8 million children enrolled in SCHIP.

States may develop SCHIP programs in one of three ways to serve the needs of their specific populations: A state may (1) expand its Medicaid program, (2) develop an alternative, stand-alone state SCHIP program, or (3) create a program that is a combination of Medicaid and SCHIP. Within federal guidelines, each state determines its specific program design, eligibility categories, covered benefits, provider payments, and administrative and operating procedures. Tables 16–18 provide state-by-state breakdowns of total SCHIP expenditures, SCHIP Medicaid expansion expenditures, and SCHIP stand-alone expenditures, respectively.

Under SCHIP, states receive an enhanced federal matching rate that exceeds their federal Medicaid match by about 30 percent, with the federal share capped at 85 percent. States have up to three years to use their yearly federal allotment. Although states are eligible to receive additional SCHIP funds each year, they cannot use the new funds until the funds from the previous year are expended.

Expenditures for SCHIP programs totaled $5.0 billion in FY 2002, representing 1.5 percent of total state health spending and 0.5 percent of all state spending. In FY 2003, these expenditures increased to $5.9 billion, representing 1.7 percent of total state health spending and 0.5 percent of all state spending. By FY 2004, the federal costs for SCHIP are estimated to be $5.2 billion while the president’s budget estimated federal costs of $5.3 billion for FY 2005. These amounts represent the combined expenditures for the three types of SCHIP programs: Medicaid expansion programs, stand-alone programs, and combination programs. Table 5 shows fund shares for FY 2002 and 2003.


State Employees' Health Benefits

Health care–related expenditures for state employees totaled $26.8 billion in FY 2002 and increased to $29.4 billion in FY 2003. State employee health care spending represented 8.1 percent of total state health care spending in FY 2002 and 8.2 percent of total state health care spending in FY 2003; it accounted for 2.5 percent of total state spending in FY 2002 and 2.6 percent of total state spending in FY 2003. After Medicaid, spending for employees’ health is the next major category of health care spending by state governments. Between FY 2002 and 2003 health expenditures for state employees rose by 9.7 percent, relative to an overall state spending increase of 4.5 percent. This rate of growth exceeded the growth rate in Medicaid spending for the same period.

The acceleration in health costs has greatly affected state governments, most especially in Medicaid and in employees’ health benefits. According to the Employer Health Benefits 2004 Summary of Findings, employer-sponsored health insurance rose by 11.2 percent between the spring of 2003 and the spring of 2004, the fourth year of double-digit increases. State governments are experiencing similar cost pressures in providing health benefits to employees.

These expenditures included amounts employers paid for health insurance premiums for state employees, the medical portion of workers’ compensation, and the Medicare payroll taxes paid on behalf of state employees. Also included in this category are amounts that employees contributed for their health insurance premiums and to flexible spending accounts. Of these amounts, state employee health premiums—$19.1 billion in FY 2002 and $21.2 billion in FY 2003—represented more than 70 percent of the total amount of state employee health expenditures.

About 56 percent of the amounts spent were drawn from general funds, with the remainder comprising federal funds and other state funds. The range in the percentage of total state health spending represented by state employees’ benefits ranged from 0.7 to 24.9 percent of that spending in FY 2003.

Services covered also vary, and depending on the state, may include prescription drugs, mental health, and vision programs. Amounts for self-insured plans include direct care plus administrative costs. Amounts for state employee health insurance premiums include benefits for dependents and for retirees and their dependents. The total number of state employees in FY 2003 was approximately 3.4 million. (Elementary and secondary school employees are excluded from the figures.) Table 6 shows fund shares for FY 2002 and 2003. Some states reported only total fund spending rather than categorizing spending by source; spending for these states appears in the “undesignated fund source” line in the table.


Corrections

Corrections health care expenditures consist of direct personal health expenditures for incarcerated adults and juveniles, including spending to cover treatment of somatic conditions as well as mental health and substance abuse treatment. Services reflected in corrections health care expenditures range from general health care costs to hospital and emergency room costs, infirmary medications, contractual medical services, and salaries of state-employed medical staff.

A significant factor behind rising costs is an increase among incarcerated populations in expensive-to-treat diseases such as AIDS and hepatitis—an increase that mirrors increases in the incidence of these diseases in the general population. States are also seeing increases in corrections health care spending as a result of the aging of the inmate population.

In 2003, states reported a total of about 1.2 million adult and 64,000 juvenile inmates. In 2002, states estimated they spent $4.1 billion on total corrections health care costs; of this amount, $3.8 billion was spent on adult corrections and $0.2 million on juvenile corrections. In 2003, states spent approximately $4.3 billion on total corrections health care costs, including $4.1 billion spent on adult corrections and $0.3 million on juvenile corrections. Overall, corrections spending accounted for 3.5 percent of state budgets in FY 2003 and increased by 1.7 percent from FY 2002 to 2003.

Total corrections health care spending accounted for 0.4 percent of total state budgets in both FY 2002 and 2003. Relative to total state health care expenditures, total corrections health care spending accounted for 1.2 percent in both FY 2002 and 2003. As a percentage of total state health care spending, corrections ranged from 0.1 percent to 2.3 percent, with total dollar expenditures ranging from $2.3 million to $824.3 million. Tables 25, 26, and 27 give individual states’ total corrections health care spending, adult corrections health care spending, and juvenile corrections health care spending, respectively. Fund shares for FY 2002 and 2003 are provided in Table 7, which reflects the fact that almost all funds for corrections health care are derived from state general funds.



Higher Education

Higher education health spending covers state support for state university–based teaching hospitals, including any state funds for health insurance premiums or coverage of teaching hospital employees. Teaching hospitals are the sites of clinical education and training for students preparing for the health professions.

Higher education health spending includes expenditures for postgraduate students who render reimbursable health care, costs of treating uninsured patients at the teaching hospitals, and salaries of other employees of the teaching hospitals that are not reimbursed by Medicare, private insurance, or direct payments by patients. Data on physician loan-repayment programs, other incentive programs, student health clinics, and state funds for degree-granting programs in any health professions are not included in higher education health spending totals.

State health expenditures for higher education totaled $5.1 billion in FY 2002, rising to $5.3 billion in FY 2003. These amounts represented 1.5 percent of state health spending in both FY 2002 and 2003, and accounted for 0.5 percent of total state spending in both fiscal years. Overall, higher education expenditures accounted for 10.8 percent of state budgets in FY 2003 and rose by 3.2 percent from FY 2002 to 2003.

As a percentage of total health spending, higher education ranged from 0 to 7.7 percent in FY 2003. As reflected in Table 28, individual states reported higher education health expenditures ranging from $0.0 million to $1.3 billion for FY 2003. Fourteen states reported no higher education health spending, in most cases because those states do not have state university–based teaching hospitals.

Table 8 shows fund shares for higher education health spending for FY 2002 and 2003. Some states reported only total fund spending rather than categorizing expenditures by source; spending for these states appears in the “undesignated fund source” line in the table.


State Insurance and Access Expansion

States use various approaches—including insurance programs funded by the state alone and public-private partnerships—to extend health care coverage. State insurance and access expansion includes state funding provided for high-risk pools and insurance subsidies. These pools help people who have difficulty buying health insurance in the private market (usually because they are in high-risk groups or have preexisting conditions). Participants are required to pay premiums under these programs.

State expenditures for insurance and access expansion totaled $987 million in FY 2002, rising to $1.3 billion in FY 2003. These amounts represented 0.3 percent of total state health spending in FY 2002, 0.4 percent of total state health spending in FY 2003, and 0.1 percent of all state spending in both FY 2002 and 2003.

As Table 29 shows, insurance and access expansion expenditures in the 50 states ranged from $0.0 million to $351.7 million in FY 2003. Twenty-nine states reported no spending on state insurance and access expansion, as defined in this report.

As shown in Table 9, fund shares for FY 2002 and 2003 were predominantly other state funds.


Direct Public Health Care

As defined in this report, public health care services cover direct personal health expenditures for specific program areas but do not include subsistence, personal care, or general public health expenditures. Included in this category are local health clinics and funds spent on Indian health care. The clients served by the public health care expenditures are specific to the programs offered and range from infants to the elderly and from patients to medical professionals.

Expenditures for direct public health care services totaled $10.3 billion in FY 2002, rising to $10.7 billion in FY 2003. These amounts represented 3.1 percent of total state health spending in FY 2002 and 3.0 percent in FY 2003 and accounted for 0.9 percent of all state spending in both FY 2002 and 2003. As a percentage of total state health spending, total public health–related expenditures ranged from 0.6 percent to 6.4 percent in FY 2003. Individual states’ dollar expenditures ranged from $5.3 million to about $1.7 billion in FY 2003, as shown in Table 30.

Depending on the state, the amounts reported for direct public health care may include money spent on the following kinds of services:

  • pharmaceutical assistance for the elderly
  • chronic disease hospitals and programs
  • hearing aid assistance
  • adult day care for persons with Alzheimer’s disease
  • health grants
  • medically handicapped children
  • Women, Infants, and Children (WIC) programs
  • pregnancy outreach and counseling
  • chronic renal disease treatment programs
  • AIDS treatment
  • breast and cervical cancer treatment
  • tuberculosis (TB) programs
  • emergency health services
  • adult genetics programs
  • phenylketonuria (PKU) testing

Table 10 gives public health–related fund shares for FY 2002 and 2003.



State Facility–Based Services

As shown in Table 31, expenditures for state facility–based services totaled $9.2 billion in FY 2002, rising to $9.4 billion in FY 2003. These amounts represented 2.8 percent of total state health spending in FY 2002 and 2.6 percent in FY 2003 and accounted for 0.8 percent of all state spending in FY 2002 and 2003. State facility–based expenditures comprise monies spent on state-operated long-term care facilities and a variety of other facilities. Long-term care facility expenditures include all costs not covered by Medicaid for either medical treatment or room and board at veterans’ homes and other nursing facilities that receive state support. Other state facilities covered under this category of expenditures might include any of the following:

  • schools for the blind
  • schools for the deaf
  • mental health hospitals
  • facilities for the developmentally disabled
  • substance abuse facilities
  • veterans’ homes
  • rehabilitation facilities

State spending on services provided in state facilities ranged from between 0.7 percent to 19.5 percent of total state health spending in FY 2003. Table 11 provides state facility–based expenditure fund shares for FY 2002 and 2003.


Community-Based Services

Expenditures for community-based services totaled $16.8 billion in FY 2002, rising to $17.1 billion in FY 2003 (see Table 34). Community-based services accounted for 5.1 percent of total state health spending and 4.8 percent of total state health spending in FY 2002 and 2003, respectively, and 1.5 percent of all state spending in both FY 2002 and 2003. Services in this category exclude those eligible for reimbursement under the Medicaid program, which are reported elsewhere. Examples of services covered under this category include the following:

  • rehabilitation services
  • alcohol and drug abuse treatment
  • mental health community services
  • developmental disabilities community services
  • vocational rehabilitation services

States exhibited a wide range of expenditures for community-based services, ranging from 0 to 17.2 percent of total health expenditures in FY 2003. Over two-thirds of the $17.1 billion states spent on community-based services in FY 2003 came from general funds, with the remainder divided between federal funds and other state funds. Table 12 shows community-based services fund shares for FY 2002 and 2003.


Population Health Expenditures

The public health system in this country is made up of a network of federal, state, and local governments. Reflecting the awareness of the need for a greater investment in the nation’s public health infrastructure, a federal grant for bioterrorism beginning in FY 2002 was distributed to state and local governments. The reader should note that funds spent by local governments are not included in the overall amounts, unless they pass through the state budget.

Population health expenditures totaled $17.4 billion in FY 2002, rising to $19.2 billion in FY 2003, and accounted for 5.3 percent of health expenditures in FY 2002 and 5.4 percent of health expenditure in FY 2003. The level in FY 2003 made it the third largest category of state health spending—trailing only Medicaid and state employees’ health benefits. These expenditures accounted for 1.6 percent of total expenditures in FY 2002 and 1.7 percent of total expenditures in FY 2003. State expenditures ranged from $17.1 million to $3.2 billion in FY 2003. As a percentage of total health expenditures, the range was from 1.3 percent to 17.1 percent in FY 2003.

Within population health expenditures for FY 2003, the majority of expenditures were in the promotion of chronic disease control and encouragement of healthy behavior and the protection against environmental hazards. These two categories made up over half of the total population health expenditures. Population health expenditures are collected in the following categories for the purpose of this report (see Tables 35–42).

Prevention of Epidemics and the Spread of Disease

Expenditures for the prevention of epidemics and the spread of disease reflect the activities to control, screen, and monitor infectious diseases such as AIDS and sexually transmitted diseases (STDs). Other costs include immunization, microbiology lab services, licensing for food and lodging establishments, food safety and inspection programs, pest eradication, and control of veterinary diseases, such as mad cow disease, that could affect the food chain.

These expenditures totaled $1.8 billion in FY 2002 and $1.9 billion in FY 2003. Expenditures for states ranged from $2.1 million to $246.7 million in FY 2003 (see Table 36).

Protection against Environmental Hazards

Protection against environmental hazards includes expenditures in programs such as nonpoint source pollution control, leaking underground storage tanks, air quality, water and wastewater disposal systems, environmental labs, solid and hazardous waste management, radon screening, water quality and pollution control, mining regulation, and nuclear power safety. These programs span various state government agencies and are not necessarily operated out of the health departments.

Expenditures for protection against environmental hazards totaled $5.5 billion in FY 2002 and $5.6 billion in FY 2003. Expenditures for protection against environmental hazards ranged from $0.4 million to $773.6 million in FY 2003 (see Table 37).

Injury Prevention

Programs to prevent injuries include those such as product safety, fire injury prevention, highway safety, occupational health, mine and cave safety, and boating and recreational safety. Spending on these programs totaled $966 million in FY 2002, rising to $1 billion in FY 2003 (see Table 38). State spending ranged from $0.0 million to $307 million in FY 2003.

Promotion of Chronic Disease Control and Encouragement of Healthy Behavior

Promotion of chronic disease control and encouragement of healthy behavior includes programs for substance abuse prevention, domestic violence prevention, nutrition, preventive health and promotion, food stamp nutrition education, breast and cervical early detection screening, newborn and childhood screening, maternal and child health block grants, and data collection on disease and health behavior.

Expenditures of some of these programs, such as cancer screening and health promotion and education programs, have been collected in the State Health Care Expenditure Reports for 1997 and 1998–1999 under direct public health–related expenditures.

Expenditures in FY 2002 totaled $5.7 billion, rising to $5.9 billion in FY 2003 (see Table 39). State expenditures in FY 2003 ranged from $6.9 million to $1.8 billion.

Disaster Preparation

Disaster preparation expenditures reflect the costs associated with disaster preparation as they relate to population health and not all disaster preparation. The investment in bioterrorism at the federal level will increase these expenditures in the future. Expenditures totaled $274 million in FY 2002, rising to $702 million in FY 2003 (see Table 40).

Disaster Response

Expenditures for disaster response include the population health costs associated with responding to disasters. FY 2002 expenditures totaled $834 million, rising to $1.6 billion in FY 2003 (see Table 41).

Health Infrastructure

Health infrastructure costs are those associated with maintaining public health services and include health department administration, licensure and certification of health facilities, data analysis, health-related boards and commissions, vital records, forensic services, and lab certification. Some of these costs, such as licensing and regulation of health boards, have been previously collected under public health–related expenditures.


Expenditures in FY 2002 totaled $2.4 billion, rising to $2.5 billion in FY 2003. Individual state expenditures ranged from $0.0 million to $238 million in FY 2003 (see Table 42).



Guide to the Tables

Definitions

Fiscal Year 2002
State fiscal year beginning in calendar year 2001 and ending in calendar year 2002.

Fiscal Year 2003
State fiscal year beginning in calendar year 2002 and ending in calendar year 2003.

Actual vs. Appropriated
Data reflect actual expenditures for FY 2002 and 2003.

State General Fund Expenditures
The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes.

Other State Fund Expenditures
Usually, state funds provided for health expenditures through sources other than the general fund.

Federal Fund Expenditures
Funds received directly from the federal government and expended for health. Can include block grants or federal funds obtained by state match.

Health Expenditures
Direct personal health expenditures and population health expenditures (both defined below). Direct expenditures include spending to cover treatment of somatic conditions as well as mental health and substance abuse treatment. These do not include expenditures for subsistence or personal care.

Medicaid Expenditures
Information reported on the CMS-64 report, with the subcategories of the report incorporated and converted to state fiscal year. All Medicaid expenditures are reported under this category. To avoid double counting, Medicaid expenditures are not included in any other responses with the exception of SCHIP expenditures.

State Children’s Health Insurance Program (SCHIP) Expenditures
Information reported on the appropriate CMS reports, with the subcategories of the report incorporated and converted to state fiscal year. Stand-alone SCHIP expenditures reported on the CMS-21 report; Medicaid expansion SCHIP expenditures reported on the CMS-6421 and CMS-6421U reports; and combination SCHIP expenditures reported on the relevant Medicaid or stand-alone program report. SCHIP expenditures were not included in any of the Medicaid expenditures. No cost-share provisions are included.

State Employee Health Insurance Premium Expenditures
Expenditures for premiums for insurance products and direct care as well as administrative expenses for self-insured products. The covered population includes current state employees and dependents, state retirees and dependents, and college and university faculty and employees. “Carved-out” benefits for such services as prescription drugs, mental health treatment, and vision care are also included. Funds from employees in flexible spending (“cafeteria”) accounts are excluded, as is the state employee match. K–12 employees are not included because health care premiums for such employees are usually budgeted through local school districts and therefore are not state costs.

State Employee Health Insurance Premium–Matching Expenditures
The amount state employees pay as a match for health insurance premiums.

State Employee Flexible Spending Account Expenditures
The amount that state employees place in flexible spending accounts to be used for medical/health expenses.

Medical Portion of Workers’ Compensation Expenditures
The amount spent for state employees.

Medicare Payroll Tax Expenditures
The amount contributed by state employees to the Medicare fund. (“State employees” is defined in the same way as under “State Employee Health Insurance Premium Expenditures,” above.)

Corrections Health Care Expenditures
Personal health expenditures, including spending to cover treatment of somatic conditions as well as mental health and substance abuse treatment. These do not include expenditures for subsistence, personal care, or general public health services (except direct health care services). Expenditures for adults and juveniles are reported separately.

Higher Education Health Expenditures
State support to fund the operation of state university–based teaching hospitals, including any state funds for health care premiums or coverage of teaching hospital employees. Includes state funds for professional education (such as residency programs) conducted in combination with clinical practice. Excludes physician loan-repayment programs, other incentive programs, student health clinics, and state funds for degree-granting programs in any health professions.

State Insurance and Access Expansion Expenditures
State funding for high-risk pools and insurance subsidies. Also includes health coverage extended through insurance programs funded by the state alone and through public-private partnerships.

State Facility–Based Services Includes state-operated long-term care facilities expenditures and other state facility expenditures; both are defined immediately below.

State-Operated Long-Term Care Facilities Expenditures
All costs not covered by Medicaid for veterans’ homes and other nursing facilities that receive state support. Includes medical treatment, room and board, and other costs.

Other State Facility Expenditures
State funds spent for health services provided in a state facility. Facilities may include schools for the blind, schools for the deaf, mental health hospitals, facilities for the developmentally disabled, substance abuse facilities, and rehabilitation facilities. These expenditures do not include funds spent on services eligible for Medicaid reimbursement, which are reported under Medicaid.

Community-Based Services Health Expenditures
State funds spent on health services provided in a community setting. Examples include rehabilitation services, alcohol and drug abuse treatment, mental health community services, developmental disabilities community services, and vocational rehabilitation services. These expenditures do not include funds spent on services eligible for Medicaid reimbursement, which are reported under Medicaid.

Direct Public Health Care Services
Includes local health clinics, Ryan White AIDS Grant expenditures, and Indian health. Expenditures may include funds spent on pharmaceutical assistance for the elderly; childhood immunization; chronic disease hospitals and programs; hearing aid assistance; adult day care for persons with Alzheimer’s disease; health grants; services for medically handicapped children; the Women, Infant, and Children (WIC) program; pregnancy outreach and counseling; chronic renal disease treatment programs; AIDS testing; breast and cervical cancer screening; tuberculosis (TB) programs; emergency health services; adult genetics programs; and phenylketonuria (PKU) testing.

Direct Personal Health Expenditures
Direct personal health expenditures is composed of therapeutic goods or services rendered to treat or prevent a specific disease or condition in a specific person. This includes spending to cover somatic conditions as well as mental health and substance abuse treatment.

Population Health Expenditures
Prevention of Epidemics and the Spread of Disease: Includes programs such as AIDS and other STD control, screening, outreach, and monitoring, including data collection and registries; immunization, including the cost of vaccine and infrastructure only; infectious disease control, including analysis and monitoring; emerging infections; microbiology lab services; food and lodging licensing and inspection; food safety and inspection; fish consumption advisory, pest eradication (such as rats, roaches, and mosquitoes); and veterinary diseases affecting the food chain, such as mad cow.

Protection against Environmental Hazards: Includes programs such as lead poisoning (excludes treatment of individuals); nonpoint source pollution control; leaking underground storage tanks; air quality; environmental lab; solid and hazardous waste management (includes Brownfields and Super Fund); hazardous material training; EPA indoor radon; water quality/pollution control (includes safe drinking water, safe fishing, swimming, etc.); chemistry lab services and analysis for state agencies; water and waste water disposal systems; mining regulation, effects, and reclamation; pesticide regulation and disposal; wood dust intervention; and nuclear power safety.

Injury Prevention: Includes programs such as childhood agriculture safety and health; safety; consumer product safety; firearm safety; fire injury prevention; injury prevention or surveillance; defensive driving; highway safety; highway design safety; crash outcome data evaluation; mine and cave safety; on-site safety and health consultation; workplace violence prevention; occupational health; safe schools; boating and recreational safety; and monitoring of childhood fatalities or accidents.

Promotion of Chronic Disease Control and Encouragement of Healthy Behavior: Includes programs such as substance abuse prevention/intervention; domestic violence/family violence awareness; family planning education; abstinence; tobacco prevention; nutrition; fluoridation; preventive health and promotion; child abuse prevention, including shaken baby syndrome; refugee preventive health; food stamp nutrition education; safe and drug-free schools; health education; nutrition education; student preventive health services; breast and cervical cancer early detection and screening (not treatment); newborn and childhood screening, detection, and intervention; Title V Maternal and Child Health (MCH) Block Grant (excluding direct personal health care services); and data collection on disease and health behavior.

Disaster Preparation: Includes programs such as disaster preparedness and bioterrorism. This includes only the population health costs associated with disaster preparation, not all disaster preparation costs.

Disaster Response: Includes such programs as water, food, and mental health response. Excludes such programs as housing and employment assistance. This includes only the population health costs associated with disaster response, not all disaster response costs, such as road repair.

Health Infrastructure: Includes programs such as local ambulance services training; health department administration; infrastructure for public health services; equipment quality—x-ray, mammogram, etc.; licensure and certification of health facilities; emergency medical system; planning, licensing, training, data analysis, and standards; nursing home survey and inspections; CPR and first aid; all health-related boards, councils, or commissions; health practitioner continuing education; licensure functions for regulated health professionals; licensing boards and regulatory oversight; physician and other provider loan programs for underserved communities; health plan, provider and facility quality reporting; vital records—births, deaths, marriages, and divorces; forensic services; and lab certification.

General Notes

The 2002–2003 State Health Expenditure Report is a cooperative effort between the Milbank Memorial Fund, the Reforming States Group (RSG), and the National Association of State Budget Officers (NASBO). The survey was sent to governors’ state budget officers in the 50 states and the territory of Puerto Rico.

The report presents aggregate and individual data on the states’ direct personal health expenditures in the following categories: Medicaid, the State Children’s Health Insurance Program (SCHIP), state employees’ health benefits, corrections, higher education, insurance and access expansion, direct public health, state facility–based services, community-based services, and population health. These categories include expenditures to cover treatment of physical health conditions as well as mental health and substance abuse services, but generally exclude expenditures for subsistence and personal care. Spending detailed in this report for direct public health, corrections, higher education, community-based services, and state facility–based services, therefore, does not represent the totality of spending in these areas but rather only direct personal health expenditures in these categories. Some states did not report direct health expenditures in all categories. Total state budget information detailed on the state profiles was obtained from NASBO’s 2003 State Expenditure Report.

Some methodological issues arose regarding the reporting of state expenditures in the various categories. These issues include the following:

Medicaid
The amounts reported are those reflected on the CMS-64 form and converted to state fiscal year. These amounts differ from the figures contained in NASBO’s 2003 State Expenditure Report because the figures in the present report include administrative costs.

SCHIP
The amounts reported are those reflected on the various CMS forms and converted to state fiscal year.

State Employees’ Health Benefits
Some states were unable to break out state employee health-related expenditures by fund source and included only total fund expenditures for state employees’ health benefits.

Corrections
Because of variations among states, the data reported might include different items. For example, some juvenile corrections services are operated by counties with state support via grants; some juvenile health expenditures are funded through grants to county child welfare programs; and expenditure data may or may not include data on county correctional systems.

Higher Education Health
Because of variations in state operations, the data reported may reflect different types of higher education health expenditures for different states. For example, not all states have teaching hospitals associated with their medical schools; the expenditures may include hospital employee benefits costs in some states but not others; and some states’ higher education health expenditures may include operating costs while others may not.

Direct Public Health
The data do not include all expenditure information for state health departments, and most states reported a variety of different programs in the expenditure data.

Demographic Data
States were asked to include faculty and staff of state-owned and state-related colleges and universities.




State Health Spending by Region

Table 14: Total State Health Expenditures, Fiscal 2002 and 2003
Table 15: Medicaid Expenditures, Fiscal 2002 and 2003
Table 16: Total SCHIP Expenditures, Fiscal 2002 and 2003
Table 17: SCHIP Medicaid Expansion Expenditures, Fiscal 2002 and 2003
Table 18: SCHIP Stand-Alone Expenditures, Fiscal 2002 and 2003
Table 19: Total State Employee Health Expenditures, Fiscal 2002 and 2003
Table 20: State Employee Health Premium Expenditures, Fiscal 2002 and 2003
Table 21: State Employee Health Premium–Matching Expenditures, Fiscal 2002 and 2003
Table 22: State Employee Flexible Spending Account Expenditures, Fiscal 2002 and 2003
Table 23: Medical Portion of Workers’ Compensation Expenditures, Fiscal 2002 and 2003
Table 24: Medicare Payroll Tax Expenditures, Fiscal 2002 and 2003
Table 25: Total Corrections Health Care Expenditures, Fiscal 2002 and 2003
Table 26: Adult Corrections Health Care Expenditures, Fiscal 2002 and 2003
Table 27: Juvenile Corrections Health Care Expenditures, Fiscal 2002 and 2003
Table 28: Higher Education Health Expenditures, Fiscal 2002 and 2003
Table 29: Insurance and Access Expansion Expenditures, Fiscal 2002 and 2003
Table 30: Direct Public Health Care Service Expenditures, Fiscal 2002 and 2003
Table 31: Total State Facility–Based Services Health Expenditures, Fiscal 2002 and 2003
Table 32: State-Operated Long-Term Care Facility Expenditures, Fiscal 2002 and 2003
Table 33: Other State Facility Expenditures, Fiscal 2002 and 2003
Table 34: Community-Based Services Health Expenditures, Fiscal 2002 and 2003
Table 35: Total Population Health Expenditures, Fiscal 2002 and 2003
Table 36: Prevention of Epidemics and the Spread of Disease Expenditures, Fiscal 2002 and 2003
Table 37: Protection against Environmental Hazards Expenditures, Fiscal 2002 and 2003
Table 38: Injury Prevention Expenditures, Fiscal 2002 and 2003
Table 39: Promotion of Chronic Disease Control and Encouragement of Healthy Behavior Expenditures, Fiscal 2002 and 2003
Table 40: Disaster Preparation Expenditures, Fiscal 2002 and 2003
Table 41: Disaster Response Expenditures, Fiscal 2002 and 2003
Table 42: Health Infrastructure Expenditures, Fiscal 2002 and 2003
Table 43: Shares of Health Expenditures as a Percent of Total Health Expenditures, Fiscal 2002 and 2003
Table 43 (continued)
Table 44: Shares of Health Expenditures as a Percent of Total State Expenditures, Fiscal 2002 and 2003
Table 44 (continued)
Table 45: State Percentage Expenditure Change by Category of Health, Fiscal 2002 to 2003
Table 46: Total State Expenditures—Capital Inclusive, Fiscal 2002 and 2003
Table 47: Annual Percentage Change in Total State Expenditures, Fiscal 2002 and 2003
Table 48: 2002 State Demographics
Table 49: 2003 State Demographics
Table 50: State Health Expenditures as a Percent of State Gross Product, Fiscal 2002




Explanatory Notes Submitted by Particular States by Region

New England

Connecticut

Medicaid: Connecticut “gross appropriates” Medicaid funds. All funding required to operate the program is appropriated directly to state agencies from the state’s general fund, and all federal funds received for this program are deposited directly to the state treasury and are not available to state agencies for additional spending. Connecticut’s FMAP rate for Medicaid is 50 percent.

SCHIP Stand-Alone: Connecticut “gross appropriates” SCHIP funds, referred to in Connecticut as the HUSKY B program. All funding required to operate the program is appropriated directly to state agencies from the state’s general fund, and all federal funds received for this program are deposited directly to the state treasury and not available to state agencies for additional spending. Connecticut’s FMAP rate for SCHIP is 65 percent.

State Employee Health Premium: We have categorized our expenditures as “general funds” and “other funds.” The other funds category comprises all sources other than the general fund; note that we are unable to break out federal funds from the other funds category.

State Employee Health Premium-Matching: The source of funds cannot be broken out, so we have displayed the number in the total category.

Medicare Payroll Tax: The source of funds cannot be broken out, so we have displayed the number in the total category.

Adult Corrections: For the purposes of this survey, we have defined adults as those over 18 years of age. We are unable to break out health care expenditures for juveniles and adults in the adult correction system; note, therefore, that expenditures for this item include both adults and juveniles. Expenditures also include mental health forensic inpatient expenditures for those found not guilty by reason of insanity and committed to the care and custody of the Department of Mental Health and Addiction Services’ Whiting Forensic Division.

Juvenile Corrections: For the purposes of this survey, we have defined juveniles as those up to and including 18 years of age. We are unable to break out health care expenditures for juveniles and adults in the adult correction system; note, therefore, that expenditures for both adults and juveniles are included in adult corrections expenditures. The amounts shown in this answer are for health care expenditures for juvenile justice youths in the care and custody of the state Department of Children and Families.

Higher Education Health: As per past years, we are not reporting expenditures in this category. However, please note that general fund expenditures for medical education at the University of Connecticut Health Center—a research and teaching facility that also provides care to the community—totaled $75.3 million in state fiscal year 2002 and $73.2 million in state fiscal year 2003.

Demographics 2002: State Population: FY 2002 state population from U.S. Census Bureau’s American Community Survey Profile for 2002 (http://www.census.gov/acs/www/Products/Profiles/Single/2002/ACS/Tabular/040/04000US091.htm). Adult Inmates: We are defining adult inmates as those over age 18. Juveniles Incarcerated: We are defining juveniles as those up to and including 18 years of age. Of the total depicted, 160 in fiscal year 2002 are in the care and custody of the state Department of Children and Families. Medicaid Caseload: Medicaid caseload as of June of given fiscal year. SCHIP Enrollment: SCHIP enrollment as of June of given fiscal year.

Demographics 2003: State Population: FY 2003 state population data from U.S. Census Bureau for July 1, 2003. Adult Inmates: We are defining adult inmates as those over age 18. Juveniles Incarcerated: We are defining juveniles as those up to and including 18 years of age. Of the total depicted, 116 in fiscal year 2003 are in the care and custody of the state Department of Children and Families. Medicaid Caseload: Medicaid caseload as of June of given fiscal year. SCHIP Enrollment: SCHIP enrollment as of June of given fiscal year.

Massachusetts

Demographics 2002 and 2003: SCHIP Enrollment: Included in Medicaid Caseload.

New Hampshire

Higher Education Health: The survey figures do not include the state university system, which under RSA 187-A is managed by the board of trustees.

Demographics 2002 and 2003: State Employees: The survey figures do not include the state university system, which under RSA 187–A is managed by the board of trustees.

Rhode Island

Medicaid: Includes disproportionate share distributions to community hospitals, which were not included in Spring Survey, March 2004. The other state funds category records local match to special education expenditures in public school systems.

Demographics 2002 and 2003: SCHIP Enrollment: Data not available.

Vermont

Total Corrections: Data not available.

Adult Corrections: Data not available.

Juvenile Corrections: Data not available.

Total Population Health: Data not available.

Disaster Response: Data not available.

Mid-Atlantic

Delaware

Medical Portion of Workers’ Compensation: Data not available.

Disaster Response: Data not available.

Maryland

SCHIP Stand-Alone: Includes all SCHIP administrative costs as per CMS 12 reports.

New Jersey

Medical Portion of Workers’ Compensation: The amount in fiscal 2002 is the amount paid to private insurance companies.

Higher Education Health: This represents the University of Medicine and Dentistry of New Jersey’s total costs; institutional submitted data do not enable breakout of the portion applicable solely to the University Teaching Hospital.

Demographics 2002 and 2003: State Employees: Paid full-time employees (excludes Higher Education employees and part-time employees).

New York

Medicaid: Administrative costs are not included in Medicaid expenditures. For state-to-state comparison purposes, the other state funds category includes the local share of Medicaid costs that total approximately $5 billion in fiscal 2001–2002 and approximately $6 billion in fiscal 2002–2003.

State Employee Health Premium-Matching: Employee payments come from payroll deductions.

State Employee Flexible Spending Account: Employee payments come from payroll deductions.

Insurance and Access Expansion: Includes Family Health Plus and Cystic Fibrosis. Does not include Child Health Plus or the off-budget “Healthy NY” program initiative created by the Health Care Reform Act of 2000. For state-to-state comparison purposes, the other state funds category for Family Health Plus includes the local costs of access expansion that totaled approximately $2 million in fiscal 2001–2002 and $97 million in fiscal 2002–2003.

Disaster Preparation: Disaster preparation expenditures reflect statewide disaster preparation initiatives. Every state agency has in place a disaster response plan (contingency plan).

Disaster Response: Disaster response reflects expenditures that flowed through the New York State Financial Plan related to the World Trade Center disaster.

Demographics 2002 and 2003: Juveniles Incarcerated: Juveniles may be incarcerated under two different state agencies—the Office of Children and Family Services or the Department of Corrections. The Office of Children and Family Services counts juveniles who are in state custody and placed in state-operated facilities or placed in voluntary agencies. The Department of Corrections counts inmates under the age of 21. Medicaid Caseload: Medicaid caseload includes people receiving benefits under the Disaster Relief program and Family Health Plus program. State Employees: State employees are counted as full-time equivalent employees funded from all funds, including part-time and temporary employees, but excluding seasonal, legislative and judicial employees.

Pennsylvania

Medicaid: Uses governor’s budget reports of actual expenditures for relevant years rather than CMS 64 report. There may be a slight double count with state employee health premiums and Medicare payroll taxes for state employees. The expenditures shown here include Medicaid program administration that would include the cost of employee health care premiums.

Total SCHIP: SCHIP is totally separate in Pennsylvania from Medicaid. Based on governor’s budget rather than CMS 64 report.

State Employee Health Expenditures: State employee health includes both active health plan and retired employee health program. The amount includes contributions from independent agencies. Not all university faculty and employees are included, just those covered by collective bargaining agreements for the state System of Higher Education.

Medical Portion of Workers’ Compensation: Information is on a calendar year basis.

Medicare Payroll Tax: Medicare payroll tax data only include agencies on the Commonwealth payroll system, not SHHE, Treasury, Auditor General, Legislature, Judiciary, or School Building Authority.

Juvenile Corrections: Pennsylvania has a dual juvenile system with about half the youth being maintained in county or private facilities. The state shares in the health care cost through grants to county child welfare programs but the amount is unknown.

State-Operated Long-Term Care Facilities: Reflects veterans’ homes. Geriatric mental health facility included in Medicaid or other state facility categories. Geriatric cost in prisons not included.

Community-Based Services: Includes community alternatives to nursing home care for older Pennsylvanians. This is in addition to the Medicaid waiver included in total Medicaid expenditures.

Protection against Environmental Hazards: Includes all program and administrative costs for the Department of Environmental Protection.

Great Lakes

Michigan

State Employee Health Premium: Figures do not include college and university faculty and staff.

State Employee Health Premium-Matching: The amounts for employee contributions in each year are indicated in the other state funds category but are not state funds; rather these funds are employee contributions for matching health premiums.

State Employee Flexible Spending Account: The amounts for employee contributions in each year are indicated in the other state funds category but are not state funds; rather these funds are employee contributions for matching health premiums.

State-Operated Long-Term Care Facilities: Figures are for long-term care services in veterans’ facilities.

Community-Based Services: The Medicaid mental health managed care waiver costs are reported with Medicaid expenditures.

Demographics 2002 and 2003: State Employees: State employee figures include permanent positions per pay periods ending June 22, 2002, and June 21, 2003. Figures do not include university staff.

Ohio

Medicaid: Federal reimbursements for Medicaid and other human service programs are included in the general revenue fund.

State Employee Health Premium-Matching: Data not available.

Medical Portion of Workers’ Compensation: Data not available.

Higher Education Health: University employees are not state employees in Ohio, and their data are not included in this survey.

Wisconsin

Demographics 2002: State Employees: Data as of January 11, 2003.

Demographics 2003: Medicaid Caseload: Data do not include Seniorcare (Senior Pharmacy Assistance program). Data do include new Family Planning Waiver program implemented in January 2003. Of the 545,762 recipients, 23,338 are enrolled in the Family Planning Waiver program.

Plains

Iowa

Adult Corrections: Amounts do not include information from the Community Based Correction Institutions.

Disaster Preparation: Amount includes state spending on Disaster Response.

Disaster Response: Amount is reported together with Disaster Preparation.

Demographics 2002 and 2003: State Employees: Regents Institutions employee count does not include student employees.

Minnesota

Promotion of Chronic Disease Control and Encouragement of Healthy Behavior: In the previous edition of the State Health Care Expenditure Report, the other funds category in FY 2001 should have been $15.3 million not $1,533.0 million. This also reduces the total funds in this category to $63.8 million. There should also be a similar reduction in the reported total population health spending for Minnesota in Table 35 for FY 2001.

Missouri

Medicaid: Data are from the CMS 64 report used for federal reporting of Medicaid expenditures. The split between the general fund and other state funds is an estimate. Medicaid does not track the general fund versus other state funds in its reporting. Medicaid expenditures include administrative costs.

Total SCHIP: Data are from the CMS 64 report used for federal reporting of Medicaid expenditures. The split between the general fund and other state funds is an estimate. Medicaid does not track the general fund versus other state funds in its reporting. Medicaid expenditures include administrative costs.

SCHIP Medicaid Expansion: Data are from the CMS 64 report used for federal reporting of Medicaid expenditures. The split between the general fund and other state funds is an estimate. Medicaid does not track the general fund versus other state funds in its reporting. Medicaid expenditures include administrative costs.

State Employee Health Premium: Data do not include college and university faculty and employees.

State Employee Health Premium-Matching: Includes data for the Missouri Department of Conservation. These data were not included in the fiscal 2000–2001 health expenditures survey.

State Employee Flexible Spending Account: Data are for calendar years 2002 and 2003. Fiscal year data are not available.

Medicare Payroll Tax: Data do not include college and university faculty and employees.

Juvenile Corrections: Represents all children in Division of Youth Services treatment facilities (Title XIX and State Medical).

Total Population Health: The State Emergency Management Agency (SEMA) does not segregate first responder training and exercise expenditures into health and non-health care expenditures.

Demographics 2002 and 2003: State Employees: Higher education employees are not included.

Nebraska

State Employee Health Premium-Matching: Amounts withheld from employee salaries/wages then paid to vendor from single source.

State Employee Flexible Spending Account: Amounts withheld from employee salaries/wages then expended from single source.

Medical Portion of Workers’ Compensation: Medical portion of workers’ compensation is billed to agencies by administrative services agency as part of overall workers’ compensation assessments. When medical expenses are paid, they are paid from a single source.

South Dakota

State Employee Flexible Spending Account: We are unable to provide data by funding source.

Medical Portion of Workers’ Compensation: We are unable to provide data by funding source.

Southeast

Alabama

State Employee Health Premium: Does not include colleges and universities. Their portion does not flow through the state system. Totals are actual figures; breakout by fund type is estimated by across-the-board percentages.

State Employee Health Premium-Matching: Does not include colleges and universities. Their portion does not flow through the state system. Totals are actual figures; breakout by fund type is estimated by across-the-board percentages.

State Employee Flexible Spending Account: Does not include colleges and universities. Their portion does not flow through the state system. Totals are actual figures; breakout by fund type is estimated by across-the-board percentages.

Medical Portion of Workers’ Compensation: Does not include colleges and universities. Their portion does not flow through the state system. Totals are actual figures; breakout by fund type is estimated by across-the-board percentages. Fiscal year 2002 expenditures include $1.9 million of prior year costs paid in fiscal year 2002.

Medicare Payroll Tax: Does not include colleges and universities. Their portion does not flow through the state system. Totals are actual figures; breakout by fund type is estimated by across-the-board percentages.

Higher Education Health: No direct funding of university hospitals or higher education employee health insurance premiums. Amounts shown are reported expenditures of state university hospitals.

Insurance and Access Expansion: This is paid via insurance assessments and premiums paid by individuals.

Demographics 2002 and 2003: State Employees: Does not include colleges and universities.

Arkansas

Higher Education Health: Amounts shown include capital expenditures.

Demographics 2002 and 2003: SCHIP Enrollment: Included in Medicaid caseload.

Florida

State Employee Health Premium: The portion paid from federal funds is included in the other state funds category. Florida’s accounting system does not track expenditures by federal and state funds.

State Employee Health Premium-Matching: Unable to provide data by funding source.

State Employee Flexible Spending Account: Unable to provide data by funding source.

Medicare Payroll Tax: Unable to provide data by funding source.

Higher Education Health: Unable to provide data by funding source.

Insurance and Access Expansion: Includes non-Title XXI eligible Kidcare expenditures. Other state funds include $13.5 million in tobacco settlement funds for the 2001–2002 fiscal year; $15 million of the corporations cash reserves and $7 million in family premiums for the 2002– 2003 fiscal year. The family premiums are not budgeted through state accounts so they are not included in the total.

Demographics 2002 and 2003: Juveniles Incarcerated: Numbers include the average number of juveniles committed to programs (under incarceration) within the specified fiscal year. State Employees: Numbers do not include the state university system or temporary and contractual employees.

Kentucky

State Employee Health Premium-Matching: It is unknown how much university employees paid for their matching share of health insurance premiums.

State Employee Flexible Spending Account: It is unknown how much university employees deposited into flexible spending accounts.

Mississippi

State Employee Health Premium: Excludes K–12 employees. Fund source is not available. State and School Employees Health Plan only— source fiscal 2002, fiscal 2003 actuarial reports.

State Employee Health Premium-Matching: Excludes K–12 employees. Fund source is not available. State and School Employees Health Plan only—source fiscal 2002, fiscal 2003 actuarial reports.

Medical Portion of Workers’ Compensation: State agencies self-insured workers’ compensation trust only—does not include all state entities. Fiscal year amounts extrapolated from calendar year data collected from Mississippi Workers’ Compensation Commission annual reports.

Demographics 2002 and 2003: Juveniles Incarcerated: Data not available.

South Carolina

Medical Portion of Workers’ Compensation: Based on the number of cases closed in the fiscal year. It is reported by total medical paid when the carrier files a Form 19 to close the claim.

Insurance and Access Expansion: Data not available.

Tennessee

Total SCHIP: Tennessee operates a Medicaid waiver program with an expansion population. The traditional SCHIP population is served under the TennCare program. Expenditures are included in the Total Medicaid expenditures.

Virginia

Higher Education Health: The Commonwealth of Virginia provides state funding to the University of Virginia and Virginia Commonwealth University to support the operation of Family Practice Residency Programs and Family Practice medical student programs. For fiscal year 2002, the total was $9,047,709. For fiscal year 2003, the total was $9,487,151.

In addition, the Commonwealth of Virginia provides state funding to support two university-related teaching hospitals: the University of Virginia Medical Center (UVAMC) and the Virginia Commonwealth University Health System Authority (VCUHSA).

The two teaching hospitals, or academic health centers, receive no direct state funding to support the operation of state university–based teaching hospitals or related health activities. In order to maximize federal Medicaid funding, the Commonwealth appropriates all state funding for its two teaching hospitals to the Department of Medical Assistance Services (DMAS). The majority, if not all, is provided to support indigent care services and related health activities at each hospital.

Typically, hospitals must meet certain criteria to receive federal disproportionate share funding (DSH). In order to qualify for DSH in Virginia, 15 percent of the total patient days must be Medicaid eligible. Once the hospitals meet this criterion, they are eligible for additional dollars under what Virginia refers to as “regular DSH.” In addition, the two university teaching hospitals are eligible for “enhanced DSH.” The Medicaid State Plan defines both formulas, which determine the amount of funding provided to each of the two state academic health centers. The “enhanced” funding is provided only to UVAMC and VCUHSA in recognition of the costs of training medical students in a teaching facility.

Southwest

Arizona

Medicare Payroll Tax: Data not available.

Juvenile Corrections: Data not available.

Higher Education Health: Data not available.

New Mexico

Medical Portion of Workers’ Compensation: Data not available in fiscal 2003.

Oklahoma

Medicaid: Title XIX expenditures were reported on the CMS 64.9 report (line 6)—Gross Expenditures; for the revenue breakout for Title XIX, assumed this would be the same breakout as reported on the Oklahoma Health Care Authority’s financials.

SCHIP Medicaid Expansion: Title XXI expenditures were reported on the CMS 64.9 report (line 6)—Gross Expenditures; for the revenue breakout for Title XXI, the blended federal share rate was used for both years, assumed the remaining revenue was general funds.

State Employee Health Premium: Data provided by Accounting Division (payroll codes) of the Office of State Finance. The information for FY 2002 and FY 2003 could not be provided by funding source due to the complications created by the transfer of all funding to a payroll transfer fund from which the final payments were made.

State Employee Health Premium-Matching: Data provided by Accounting Division (payroll codes) of the Office of State Finance. The information for FY 2002 and FY 2003 could not be provided by funding source due to the complications created by the transfer of all funding to a payroll transfer fund from which the final payments were made.

State Employee Flexible Spending Account: Data provided by Accounting Division (payroll codes) of the Office of State Finance. The information for FY 2002 and FY 2003 could not be provided by funding source due to the complications created by the transfer of all funding to a payroll transfer fund from which the final payments were made.

Medical Portion of Workers’ Compensation: We were unable to get a response from the agency that handles these expenditures.

Medicare Payroll Tax: Data provided by Accounting Division (payroll codes) of the Office of State Finance. The information for FY 2002 and FY 2003 could not be provided by funding source due to the complications created by the transfer of all funding to a payroll transfer fund from which the final payments were made.

Adult Corrections: Expenditures for inmate medical care (including substance abuse treatment) provided by the Department of Corrections, University Hospital Authority, and the Department of Mental Health and Substance Abuse Services.

Juvenile Corrections: Expenditures as reported by the Office of Juvenile Affairs.

Higher Education Health: In fiscal 1998, the university hospitals were privatized through a long-term lease of the operations to Columbia HCA. The expenditures shown represent state appropriations provided to the private vendor for indigent health and support of graduate medical education.

Insurance and Access Expansion: Total spent for the state’s high risk pool from funds other than premiums. The state-mandated assessment on insurance companies is counted as “other state funding.”

State-Operated Long-Term Care Facilities: Includes expenditures for the Department of Veterans Affairs. All other state-operated long-term care facilities are funded with Medicaid.

Other State Facilities: Includes expenditures for the Department of Mental Health and Substance Abuse Services (state mental hospitals) and the J.D. McCarty Center.

Community-Based Services: Includes expenditures for the Department of Rehabilitation Services, the J.D. McCarty Center, and community-based mental health and substance abuse services for the Department of Mental Health and Substance Abuse Services.

Protection against Environmental Hazards: Includes expenditures for the Department of Health, the Department of Environmental Quality, the Conservation Commission, the Department of Mines, the Corporation Commission, and the Water Resources Board.

Injury Prevention: Includes expenditures for the Department of Health, Oklahoma Liquefied Petroleum Gas Board, Department of Public Safety, Department of Wildlife Conservation, Department of Labor, and the Oklahoma Commission on Children and Youth.

Promotion of Chronic Disease Control and Encouragement of Healthy Behavior: Includes expenditures for the Department of Health, Department of Mental Health and Substance Abuse Services, and the Department of Public Safety.

Disaster Preparation: Includes expenditures for the Department of Health and Civil Emergency Management.

Disaster Response: Includes expenditures for the Department of Mental Health and Substance Abuse Services and Civil Emergency Management.

Health Infrastructure: Includes expenditures for the Department of Health, the Department of Mental Health and Substance Abuse Services, the Board of Medicolegal Investigations, the Physician Manpower Training Commission, the Board of Examiners for Nursing Home Administrators, the Chiropractic Examiners Board, the Cosmetology Board, the Board of Dentistry, the Embalmers and Funeral Directors Board, the Board of Medical Licensure and Supervision, the Board of Nursing, the Optometry Board, the Osteopathic Examiners Board, the Perfusionists Board, the Board of Pharmacy, the Board of Podiatric Medical Examiners, the Psychologists Board, the Licensed Social Workers Board, and the Speech-Language Pathology and Audiology Board.

Demographics 2002 and 2003: Juveniles Incarcerated: The number of juveniles incarcerated as reported in the previous survey for FY 2000 and fiscal 2001 was overstated due to a misinterpretation of the definition. The correct number of juveniles incarcerated as of June 30, 2000, was 396 and the same number, 396, was incarcerated on June 30, 2001. The overstatement represents a frequency count by age and race of all juveniles incarcerated during the year. Medicaid Caseload: Title XIX recipients for an unduplicated count from the County Summary reports ending June 30, 2002, and June 30, 2003 (less SCHIP)—provided by Oklahoma Health Care Authority. SCHIP Enrollment: Fiscal 2002 SCHIP recipients are taken from the fiscal 2002 and fiscal 2003 Oklahoma Health Care Authority Annual Reports. State Employees: State employee figures represent the average FTE for each of the two fiscal years and the total includes higher education FTEs.

Texas

Promotion of Chronic Disease Control and Encouragement of Healthy Behavior: In the previous edition of the State Health Care Expenditure Report, Texas inadvertently overstated its expenditures in this category by $164.3 million in total funds in FY 2000 and $171.4 million in total funds in FY 2001. There should also be similar reductions in the reported total population health spending for Texas in Table 35 for 2000 and 2001.

Injury Prevention: In the previous edition of the State Health Care Expenditure Report, Texas Department of Transportation inadvertently included the cost of highway capacity, grade separations, and maintenance along with highway safety programs in this category of population health expenditures. The magnitude of the overstatement is not known, but these programs are not included in the data reported for fiscal years 2002 and 2003 reported in this edition.

Rocky Mountain

Colorado

Medicaid: Fiscal year 2003 does not include $46.7 million total funds of Medicaid expenses incurred in fiscal year 2003 but not paid until fiscal year 2004 (50 percent general fund, 50 percent federal fund).

State Employee Health Premium: Expenditures are tracked by total fund amounts in Colorado’s financial data warehouse. Specific fund sources are not available at this time.

State Employee Health Premium-Matching: Expenditures are tracked by total fund amounts in Colorado’s financial data warehouse. Specific fund sources are not available at this time.

State Employee Flexible Spending Account: Expenditures are tracked by total fund amounts in Colorado’s financial data warehouse. Specific fund sources are not available at this time.

Medical Portion of Workers’ Compensation: Expenditures are tracked by total fund amounts in Colorado’s financial data warehouse. Specific fund sources are not available at this time.

Medicare Payroll Tax: Expenditures are tracked by total fund amounts in Colorado’s financial data warehouse. Specific fund sources are not available at this time.

Higher Education Health: Includes only residency training programs. No premium payments for Health Science Center employees are included since the HSC receives block grant funding through the University of Colorado governing board.

Demographics 2002 and 2003: State Employees: Includes only full-time employees both a part of the State Personnel System and exempt employees including higher education institutions.

Idaho

Higher Education Health: Idaho does not have state university teaching hospitals.

Montana

State Employee Health Premium: The 2000–2001 report included both state and employee expenditures. The 2002–2003 report includes only employee expenditures.

Direct Public Health: The 2000–2001 report did not include Indian Health Services expenditures. The 2002–2003 report includes these expenditures.

Protection against Environmental Hazards: The 2000–2001 report did not include complete data. The 2002–2003 expenditures are significantly higher because all relevant expenses have been included.

Demographics 2002 and 2003: Medicaid Caseload: The 2000–2001 report reported an unduplicated count of recipients, not the count as of the last day of the year. The 2002–2003 report reports the caseload count as of June 30 of each year. Therefore, even though Montana’s caseload has in fact risen each of the last four years, the reporting change will reflect a decrease in caseload. This is inaccurate.

Utah

Medical Portion of Workers’ Compensation: For fiscal 2002 and fiscal 2003, these figures represent all state spending on workers’ compensation. A breakdown of just the medical portion of these costs was not available.

Demographics 2002 and 2003: Juveniles Incarcerated: Figures represent total number of juveniles served during the year, not an average monthly count or a point in time figure. Medicaid Caseloads: In previous years, Utah reported total number served during the year. These figures are the number of clients enrolled at the end of the fiscal year.

Far West

Alaska

State Employee Health Premium: Data not available.

State Employee Health Premium-Matching: Data not available.

State Employee Flexible Spending Account: Data not available.

Medicare Payroll Tax: Data not available.

Higher Education Health: Data not available.

Hawaii

Higher Education Health: Data not available.

Disaster Preparation: Data not available.

Disaster Response: Data not available.

Oregon

State Employee Health Premium: Previous years’ data did not seem to include premiums for Oregon University System employees. It is impossible to determine the fund type. The other state funds category is used for consistency with previous submissions.

State Employee Health Premium-Matching: It is impossible to determine the fund type. The other state funds category is used for consistency with previous submissions.

State Employee Flexible Spending Account: It is impossible to determine the fund type. The other state funds category is used for consistency with previous submissions.

Medical Portion of Workers’ Compensation: This is what is known in workers’ compensation as “medical paid.” It includes neither vocational/rehabilitation costs nor disability/fatality award amounts. There is no way to figure out the fund split. Apparently, previous years’ data were a mistake.

Medicare Payroll Tax: It is impossible to determine the fund type. The other state funds category is used for consistency with previous submissions.

Higher Education Health: Data include the state university–based teaching hospital only. Data reported for fiscal years 1998–2001 included all operations at the hospital, including hospital operations, all teaching programs, and statewide outreach programs.

Insurance and Access Expansion: Program expenses only; does not include administration.

Direct Public Health: Numbers in the previous versions did not include WIC Nonlimited funds (food vouchers).

State-Operated Long-Term Care Facilities: The first occupant was not in until 1998. Also, reimbursement money might have gone directly to the contractor who managed the home for Vets in those early years. Now all the money flows to Vets and then Vets pays the contractor. If there was a big increase, we were probably underreporting previously because we only reported what went through on our books.

Other State Facilities: Although both years have institution costs reported in both Medicaid totals and other state facilities expenditures, the 2000–2001 report has far more costs reported in Medicaid totals. State fiscal year 2000–2001 was contained in the 1999–2001 biennium, which had 85.5 million MUPL (Medicaid) financing in OMHAS institutions. This portion of the institution costs would have been reported in Medicaid totals and not other state facilities expenditures. In the 2001–2003 biennium, MUPL financing ended for these institutions. There are still Medicaid costs being reported in Medicaid totals, but only for the geriatric and children populations.

Disaster Preparation: Data from state police recorded in the other state funds category for consistency with previous submissions. Expenditures assumed at the same level in 2002 and 2003 (information is available for FY 2002 only). This does not include Oregon Department of Forestry (firefighting): cannot separate population-related expenses; they are not prevalent anyway.

Disaster Response: Data from state police recorded in the other state funds category for consistency with previous submissions. Expenditures assumed at the same level in 2002 and 2003 (information is available for FY 2002 only). This does not include Oregon Department of Forestry (firefighting): cannot separate population-related expenses; they are not prevalent anyway.

Health Infrastructure: This time, includes forensics and all health-related boards. Data in previous surveys seem to only include Department of Human Services. No specific source for DHS data.

Demographics 2002 and 2003: State Employees: State employees are counted as full-time equivalent employees.





Individual State Profiles by Region

The states are sorted by the following census regions:

New England
Connecticut
Maine
Massachusetts
New Hampshire
Rhode Island
Vermont

Mid-Atlantic
Delaware
Maryland
New Jersey
New York
Pennsylvania

Great Lakes
Illinois
Indiana
Michigan
Ohio
Wisconsin

Plains
Iowa
Kansas
Minnesota
Missouri
Nebraska
North Dakota
South Dakota

Southeast
Alabama
Arkansas
Florida
Georgia
Kentucky
Louisiana
Mississippi
North Carolina
South Carolina
Tennessee
Virginia
West Virginia

Southwest
Arizona
New Mexico
Oklahoma
Texas

Rocky Mountain
Colorado
Idaho
Montana
Utah
Wyoming

Far West
Alaska
California
Hawaii
Nevada
Oregon
Washington



DOI # 10.1599/05NASBO







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