Study finds sharp increase in correctional department health spending between 2001 and 2008

State correctional departments saw a dramatic rise in spending on healthcare over the last decade, leading more states to outsource care and experiment with other ways to reduce costs.

In one of the few studies that have attempted to quantify how much is spent on healthcare in jails, prisons and other facilities, researchers from the Pew Charitable Trusts found that most states saw a sharp increase between 2001 and 2008, with a median increase of 52%. In a dozen states, costs grew more than 90% during that time period.

The report, part of the State Health Care Spending Project—an initiative of Pew and the John D. and Catherine T. MacArthur Foundation—used the most recent data available from the U.S. Bureau of Justice Statistics.

Spiraling healthcare spending has compelled states to consider outsourcing care to private vendors. Companies such as Corizon, Wexford Health Sources, Correct Care Solutions and Centurion Managed Care have been the beneficiaries of this move, and have been called in to manage healthcare services on a capitated basis, creating greater predictability for state and local governments.

Other cost-saving initiatives include telehealth and medical or geriatric parole policies.

The authors did not attempt to quantify how much money is saved under outsourcing contracts. The report does, however, point to states like California, which has saved $24 million a year since consolidating its specialist care contracts under Health Net Federal Services, a publicly traded managed-care organization, in 2011. Between 2001 and 2008, California saw an 84% rise in correctional healthcare spending.

States that expand Medicaid under the Patient Protection and Affordable Care Act--which extends coverage to low-income childless adults--stand to benefit from an influx of federal dollars to pay for prisoners care. California, for example, may save as much as $70 million a year, according to the Pew report.

The report attributes the rise in healthcare spending to a number of factors, including a 15% increase in state prison populations. But it also points out that per-inmate spending also increased 32% between 2001 and 2008, owing to factors including aging inmates and the general increase in healthcare costs overall.

That's at least in part because the number of prisoners who are 55 and older increased 94% between 2001 and 2008. Those inmates tend to incur even higher healthcare costs than the general aging population because of inadequate preventive care, according to Maria Schiff, director of the State Health Care Spending Project.

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