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GAO: Health Costs Threaten State And Local Governments

By Staff Writer

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The cost of insuring the health of employees, retirees and poor people could swamp state and local government finances starting in the 2020s.

Analysts at the U.S. Government Accountability Office make that prediction in a review of state and local finances.

Government finance discussions in the United States tend to focus on the federal government.

But the 50 state governments and 87,525 U.S. local governments collected a total of about $1.4 trillion in taxes and fees in 2006 and about $400 billion in grants, loans and loan guarantees from the federal government, GAO officials report.

GAO projections suggest that employee and retiree health coverage programs, Medicaid and other state health programs will start throwing state and local budgets out of balance in about 15 years, the officials write.

Between now and 2050, the fiscal gap will have a value of about $11 trillion in 2007 dollars, officials estimate.

“We calculated that to close the fiscal gap would require action today equal to a 15.2% tax increase or a 12.9% reduction in spending financed by non-grant revenues,” officials write.

A copy of the GAO report is available

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