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that's about all I know, maybe Stormy will have more on it.
I have some knowledge of bankruptcy law, but it is somewhat limited. I am a finance geek, not an attorney.
Bankruptcy laws do vary greatly from state to state. Many states protect your home and one vehicle in bankruptcy - others do not (I believe), still others limit the value of the protected asset. (So you don't get to keep your Mansion.
From what I have seen, most people who file for bankruptcy for the stated reason of excess medical bills, probably would have ended up in bankruptcy anyway. Often, they are living beyond their means and the additional medical bill is the straw that breaks the camel's back. If not for the medical bills, something else would have eventually broken them.
I did not quite understand the reference to state budget fluctuations - or were you referring to Medicaid eligibility there?