NCPA - National Center for Policy Analysis

Health Care and its Financial Costs to States

July 8, 2015

With new spending commitments for Medicaid and growing long-term obligations for pensions and health care benefits, states must be ever vigilant to consider both the short- and long-term consequences of policy decisions. Understanding how each state is performing in regard to a vari­ety of fiscal indicators can help state policymakers as they make these decisions.

By looking at states' basic financial statistics on revenues, expenditures, cash, assets, liabilities, and debt, states may be ranked according to how easily they will be able to cover short term and long-term bills, including pensions.

Top Five States:

  • Alaska
  • North Dakota
  • South Dakota
  • Nebraska
  • Florida

While these states are considered fiscally healthy relative to other states because they have significant amounts of cash on hand and relatively low short-term debt obligations, each state faces substantial long-term challenges concerning its pension and health care benefits systems.

Bottom Five States:

  • Illinois
  • New Jersey
  • Massachusetts
  • Connecticut
  • New York

High deficits and debt obligations in the forms of unfunded pensions and health care benefits continue to drive each state into fiscal peril. Each holds tens, if not hundreds, of billions of dollars in unfunded liabilities -- constituting a significant risk to taxpayers in both the short and the long term.

Most states are nearly back to normal since the Great Recession, although there are troubling signs that many states are still ignoring the risks on their books, mainly in underfunded pensions and health care benefits.

Source: Eileen Norcross, "Ranking States by Fiscal Condition," Mercatus Center, July 7, 2015.

 

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