How are the budgets for the federal, state, and local governments affected by rising health care costs?

The budgets of federal, state, and local governments are negatively affected by rising and unpredictable health care expenditures. In the past two decades, spending for health care through Medicare and Medicaid has been the fastest-growing segment of the federal budget. To pay for these rising expenditures, the government must either raise taxes or reduce the portion of the budget used for national defense, education, environmental programs, scientific research, and other spending categories. The states are finding it difficult to cover their share of the Medicaid bill. Most of them have been forced to raise their tax rates and search for new sources of revenue, and many of them have reduced spending on nonhealth programs such as infrastructure maintenance, welfare, and education. Local governments face similar budget strains in trying to finance public health services, hospitals, and clinics.