When health care costs go up, it doesn’t just mean that people spend more money on health care. It means they have less money to spend on everything else. You can see this in people’s personal budgets, and you can also see it in our state budget.
Nearly a third of all the money in the budget that Governor Patrick signed this morning goes to health care. Back in 2001, health care spending accounted for just 20 percent of spending, which meant that a larger portion could go to other things like early education, transportation improvements, environmental protection, and child welfare.
Over the last 15 years, the overall size of our state budget has been relatively consistent. It’s gone up a bit when the economy is flush, and down again when the economy has struggled, but for every $100 people earn in Massachusetts, $6.50 to $7 is generally used to fund state programs.
When you break this spending into health care and non-health care components, though, you can see how much has changed beneath the stable surface. For every $100 people earn in Massachusetts today, $2 goes to health care programs and $4.60 to everything else in the state budget. Back in 2001, those numbers were $1.50 and $5.50.
There are other good reasons to try to rein in health care costs, including the fact that while the United States spends twice as much as other advanced nations, we don’t have better access to care or longer life expectancy. But we can add this to the list: Spending on health care limits our ability to fund other programs in our state budget. One place where you see the effect is in local aid to cities and towns, which has fallen 44 percent since 2001. Funding for higher education, too, has dropped 20 percent.
Last year, lawmakers and the governor tried to tackle this problem head-on. Patrick fought unsuccessfully for a $2 billion revenue package to support investments in education and transportation. The Legislature had more luck, passing a groundbreaking bill to try to cap health care cost growth. That effort is one of many reasons to be optimistic that the growth of health care costs will soon slow.
But for now, health care costs still make up more than 30 percent of spending, and so long as that remains the case, health care will continue to squeeze out funding for lots of other things in our state budget.