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A research report analyzing I.T. spending by state and local health agencies predicts steadily increasing outlays during the next five years. According to the report, issued by Herndon, Va.-based Deltek, a research and services firm, spending will grow from $16.6 billion in 2012 to just over $19 billion in 2017. The expansion amounts to a 3 percent annual growth rate in I.T. spending.

Deltek says that key drivers of the reimbursement expansion include efforts to implement health insurance exchanges under federal health reform and to trim waste and overpayments to providers. In that light, states are in line with federal goals to reduce Medicaid fraud and waste, a summary of the report notes.

“After a sustained period of increases in state and local I.T. expenditures for health and human services, state and local governments have reached the point where they must bend the cost curve in terms of spending on benefits administration,” the summary says. “State and local agencies will again look to technology to meet sustained elevated demand for benefits services.”

One area of likely growth is the expansion of means-tested benefit programs, the report says. In other words, states will use I.T. to reconfigure benefit packages and attempt to ratchet down costs by re-allocating costs to consumers.

Deltek's State & Local Health Care and Social Services Market, 2012-2017 report is available for purchase at www.GovWin.com/HC-SS. The retail price is $3,900.