States reeling under rising healthcare costs

The deleterious effect of rising Medicaid expenditures on state budgets is widely understood. What’s less appreciated is the impact of employee healthcare costs on state finances. State and local government employees make up about 12% of the labor force, according to the U.S. Bureau of Labor Statistics, and have been subject to the same health insurance premium increases as other employers. A recent report by the Kaiser Family Foundation notes that family premiums have more than doubled over the past 20 years, and Kaiser Health News has cited this trend as factor in teacher’s strikes occurring in a number of states in 2018. These trends have prompted Fitch Ratings to predict that healthcare costs will crowd out education, transportation, public safety, housing and environmental programs and negatively affect the credits of some states and localities.