Pew: Tax revenue exceeds pre-Great Recession levels in 45 states; Medicaid spending increased to 17 percent of combined revenue

Tax revenue has reached or exceeded levels since before the Great Recession in 45 states, the highest number yet, according to updated 50-state data by the Pew Charitable Trusts.

Two states, New Jersey and Oklahoma, recently surpassed their recession-era peaks for the first time since 2008, bringing in 5.9 percent and 1.9 percent more tax dollars, respectively.

Five states still took in less tax revenue in the second quarter of 2019 than before the economic downturn. They are Alaska (83.3 percent below its recession-era peak), Wyoming (30.5 percent below), Florida (6.9 percent below), Ohio (6.2 percent below), and Louisiana (3.9 percent below).

Mississippi and Missouri lost gains made since their peaks 11 years ago – collecting 1.5 percent and 0.4 percent more, respectively – after falling below for multiple quarters, the report notes.

“Among states that had surpassed their recession-era peaks by 2019’s second quarter, recovery ranged from as much as 71 percent higher tax revenue to less than 1 percent and took from as little as one year to achieve to more than 11 years,” the report states.

Despite revenue gains, state spending increased in the area of Medicaid, with Medicaid enrollment increasing by 55 percent from 2008 to 2017, according to data from the Medicaid and CHIP Payment and Access Commission.

Pew notes that as a result of Medicaid expansion, states spent 17.1 percent of their combined revenue on Medicaid in fiscal year 2017 – $228.2 billion – an increase of 3.5 percent from 2016.

Every state except Illinois spent a larger share of its own dollars on Medicaid in 2017 than in 2000, although Illinois’ decline reflects delayed payments, not cost reductions, the report notes.

“A political stalemate over the state budget led to extreme delays in payments to health care providers,” Pew states. “Unpaid bills from 2017 reportedly inflated spending in 2018, though final data were not yet available.”

Percentages of revenue spent on Medicaid reached a new high in 13 states: Arkansas, Colorado, Delaware, Kentucky, Massachusetts, Mississippi, Nebraska, New Hampshire, North Dakota, Oklahoma, Vermont, Virginia, and Wyoming.

Increases varied widely, from less than 1 cent more of each state-generated dollar in Hawaii, Michigan, and Tennessee, to 11.5 cents more in Louisiana.

Six states spent more than one-fifth of their own revenue on Medicaid in 2017: New York (28.7 percent), Rhode Island (23.4 percent), Pennsylvania (22.2 percent), Missouri (22.1 percent), Louisiana (22 percent), and Massachusetts (22 percent). New York spent the largest share of its own revenue on Medicaid in every year of the study period, Pew notes.

“States together spent 17.1 cents of every state-generated dollar in fiscal year 2017 to provide Medicaid health care coverage to low-income Americans – nearly 5 cents more than in fiscal 2000 and the largest amount since that year,” the report states.

In 2017, for the first time, the 31 states that chose to expand Medicaid coverage picked up 5 percent of the costs for roughly 12.2 million additional recipients. States will be responsible for 10 percent of the costs this year.

Previously, the federal government reimbursed states for the full costs of Medicaid expansion.

States that spent the lowest share of their own revenue on Medicaid in 2017 were Utah (5.8 percent), Hawaii (8.2 percent), Nevada (9.4 percent), and Idaho (9.9 percent).

This article was first published by The Center Square.



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