States Past Spending Coming Back to Haunt Them

Posted by Merrill Matthews in Arizona on Feb 8th, 2010 | no responses

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Earlier in the decade, most states’ income exceeded their expenditures and so the states had several options: give it back to the taxpayers, put it into a “rainy day” fund, or spend it. As we know, most of the states decided to spend it. Now that we are in the midst of a significant budget crisis for most states, those decisions are coming back to haunt them, and as a result, states like Arizona are looking to cut very deeply, starting with two key health care programs.

First, the state is looking to eliminate its Children’s Health Insurance Program — a program funded jointly between federal and state governments. The program is expensive and many studies have shown that much of the money is spent in replacing private coverage with state coverage (25 to 50 percent according to a Government Accountability Office study). Arizona is also looking to end the Arizona Health Care Cost Containment System — Arizona’s version of Medicaid. These significant cuts would remake the state’s social welfare system. The moves would also protect the states from additional costs if current versions of federal reform do move forward.

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