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1994.03.01 : State-by-State Study of HSA

FOR IMMEDIATE RELEASE                   Contact: HHS Press Office
Tuesday, March 1, 1994                           (202) 690-6343

                 HHS RELEASES STATE BY STATE STUDY 
                     OF THE HEALTH SECURITY ACT 


     Enactment of President Clinton's Health Security Act will
provide substantial financial relief to state governments,
according to the results of a study released today by the U.S.
Department of Health and Human Services. 

     "States are clearly among the winners under the Health
Security Act.  These studies show that the combination of
guaranteed private insurance, long-term care coverage and effective
cost containment under the President's plan results in considerable
savings to state governments as well as to American workers and
businesses in these states,"  said Kenneth E. Thorpe, Deputy
Assistant Secretary for Planning and Evaluation/Health Policy,
author of the study.

     Savings result from three primary sources: coverage of
Medicaid beneficiaries in private health plans; reduced costs to
states due to the new home and community-based care benefit; and
savings in state governments' costs of covering their employees. 
The study also examines changes in each state's private health care
costs, providing estimates of savings to businesses and workers in
each state.    

     The state-by-state studies show that states will experience
significant savings under the Medicaid program by enrolling
beneficiaries in private health plans, where costs would increase
at a slower rate.  In recent years, record-high growth rates in the
Medicaid program have consumed a growing portion of state budgets,
taking state resources away from other priorities, such as
education, fighting crime, expanding job training, and improving
roads and highways.  

     In 1993, states spent more money on health care than they did
on tax-financed higher education.  In the last three years, state
Medicaid costs have grown from just over 8 percent of state budgets
in 1990 to 12 percent in 1993, and are projected to consume nearly
18 percent of state budgets in the year 2000.  

     States will achieve additional savings in the provision of
long-term care services.  The Health Security Act provides new
federal funds for home and community-based care for the elderly and
the disabled.  

     States will also benefit from a reduced rate of growth in
health insurance expenditures for public employees as well as the
relief from the costs of early retiree health care.  The Health
Security Act uses competition among health care providers to help
reduce the rate of growth in insurance premiums. 

     The findings are supported by the studies completed by the
private consulting firm of Lewin-VHI and the Congressional Budget
Office (CBO).  While neither has done individual state level
analyses, both Lewin-VHI and CBO show even greater overall savings
to states than are projected in the HHS study.

NOTE:     Copies of state impact reports are available from the HHS
Press Office.