ABSTRACT
US state governments play a major role in financing health care, and they figure prominently in proposals for restructuring the health system. This chapter considers health programs as one of several sources of fiscal stress for states. It analyzes the problem of measuring the proportion of state resources devoted to health services. The chapter reviews how this question has been addressed in the past and proposes a new, better approach for answering it. It provides a brief discussion on the capacity of the states to finance a larger share of health care spending. The chapter also considers only part of the impact of health care spending on the states— that is, in terms of their role as providers and financiers of health services for citizens. It examines the state fiscal crisis of the early 1990s, including major causes of the crisis and evidence that the crisis is continuing.
