Export-oriented sectors of health care appear to • impose high local costs, • be bound up with high local costs, or • be subsidized by routine local care • Is this true? • We don’t know. • But it seems clear that more money for business as usual is not sustainable, and that fewer dollars for health care delivery in Massachusetts will harm exports IF the two are indeed intimately connected. Massachusetts leads the nation in • • • • Physicians/capita (2nd in residents/capita) Share of hospital care in teaching hospitals Reliance on hospitals for outpatient visits NIH research dollars/capita (4.5 * U.S.) Hospital industry claims • Hospitals’ net bills (charges) to out-ofstaters in 1998 were $447 million • NIH + private research ($1.4 B + $4-600 M) • Medical school tuition ($104 M) • Medical instruments and pharmaceuticals • Health care is a “stalled engine of economic growth.” – Balanced Budget Act of 1997 (Medicare) – Medicaid payments Hospital industry demands • More money – Higher Medicaid payments to all hospitals – Higher state free care payments Another view • What is the connection between higher payments to hospitals and protecting exports? • Do Massachusetts hospitals and doctors have cost problems or revenue problems? Fully 2/3 of excess Massachusetts hospital costs of $1.75 billion in 1989 ($3.1 billion in 2000) not explained by durably legitimate factors such as • Research • Resident training • Service to out- ofstaters • Higher wages • Older population • Case mix • Greater commitment to outpatient care What are the real health industry exports? • Research, mainly – NIH – Industry--Rx and technology • Teaching, uncertain • Service to out-of-staters, surprisingly trivial Out-of-state patients do not generate great income • Net health care exports were 2.7 percent of personal health spending in 1991. • Gross exports were 5.2 percent of personal health spending, just above the national average of 4.8 percent. • Massachusetts outflow was fourth lowest in U.S., after California, Hawaii, and Texas. (Basu, 1996) Exports and health care: the connection • To what extent does delivery of health care to Massachusetts residents subsidize exports like research and teaching? (We don’t assuredly know.) • To what extent can exports be protected--or even enhanced--while making health care delivery affordable for all, and while stabilizing all needed caregivers? (We must find a way to do so.) Burdens of high health costs • Research and teaching (and heavy reliance on teaching hospitals) increase costs of care for all who live, work, or do business in Massachusetts. • Higher health insurance premiums put all Massachusetts employers at a competitive disadvantage--not as much today as higher housing costs, but not negligible. Shaping affordable health care for all while protecting exports • Possible? (What’s the alternative?) • If so, how? Affordably stabilizing Massachusetts health care is vital to protecting exports • More money for business as usual is not a durably affordable foundation for stability • Targeted financial relief for hospitals and nursing homes is essential. Across the board payment hikes are not affordable. • Subsidizing exports through higher premiums payments is neither efficient nor affordable. Shaping affordable care for all • Stabilize all needed caregivers • Entitle all residents to care • Empower and require physicians to spend available dollars carefully, to provide needed services within available budget • In short run, save administrative waste through single payor and similar approaches Protecting exports • Identify exports much more carefully. • Which are largely distinct from patient care and which are closely bound up with patient care? • Distinct in which sense? Some activities may take place in different places, but may involve the same people or draw on the same institutional foundations.