Local Government Responsibilities in Health Care

[Pages:36]Local Government Responsibilities In Health Care

U.S. Advisory Commission

on Intergovernmental Relations Washington, DC 20575

M-192 July 1994

U.S.Advisory Commission on

Intergovernmental Relations 800 K Street, NW South Building Suite 450

Washington, DC 20575 (202) 653-5640

FAX (202) 653-5429

ii U.S. Advisory Commission on Intergovernmental Relations

EXECUTIVE SUMMARY

Local governments have a large and growing role in national health care, and they must be included in any plans for implementing reforms. Whether policies and standards are set by the federal and/or state governments, local governmentsdeliver many health services, especially those directed at vulnerable populations.

Unless local officials are involved early in planning for implementation of health care reforms, unnecessary delays and problems may result, with serious effects on people who depend on local governments for health care services.

In this report--local Government Responsibilities in HeolfhCore-ACIRreviews local expenditures for health care, their relation to health care reform, and the needs for additional information. Highlights

0 Local governments spend an estimated $85 billion per year on health care services-about one of every eight dollars spent by local governments.The biggest expenditures are for: (1) locally owned and operated hospitals, $32.8 billion (1992); (2) employee health care, $31.1 billion (1993); (3) retiree health care, $2.6 billion (1993);

U.S. Advisory Commission on Intergovernmental Relations iii

(4) public health services, $13.7 billion (1992); and

(5) local share of Medicaid, $4.6 billion (1993).

Local government spending on health is growing rapidly. In just one year (1991 to 1992), spending on hospitals and public health increased 9.1 percent and 8.9percent, far exceeding the overall 4.9 percent increase in local government spending.

Counties, cities, and special districts in 41 states and the District of Columbia own and operate 1,405acute care hospitals. In addition, local governments in 25 states operate 195 institutions that provide hospital-related services. These governments spent over $30 billion in 1991, or an average of $21.3 million per hospital owned.

Local public hospital spending is financed predominantly from charges$22.8billion or about 75 percent in 1991. The charges are paid by Medicare, Medicaid, other third-party payers, and self-payers. The remaining $7.2 billion was financed by a combination of local own-source revenues and federal or state intergovernmental transfers.

Local governments spent $13.7 billion

on public health services in 1992. State

aid financed about $6.4 billion of local

Dublic health mending.

I

Y

0 Counties are the principal providers of public health services, at an estimated cost of $9.1 billion in 1991. Cities followed at $2.9 billion and special districts at $.6 billion.

0 Counties have some responsibility for Medicaid financing in 22 states. Counties in 15 states spent $4.6 billion on Medicaid in 1993. The local shares range from about 50 percent in Arizona and New York to 1percent or less in five states.

0 Local governments have more than 10 million full-time and part-time employees. These governments provided health insurance for approximately 9.1 million employees in 1993, at an estimated cost of about $31 billion.

0 Local governments provide health insurance for an estimated 1.6 million re-

tirees at a cost of about $2.6 billion.

There are wide variations between states in the health care services local governments provide and in how they are financed. For example, in Texas, 160 local governments own and operate hospitals, at a cost of $2.2billion; Maryland has no locally owned hospitals.

It will be important in considering national health care reform to recognize the importance of the local government health care role as well as the different effects that changes will have on local governments depending on the type and size of government and the state in which they are located.

iv U.S. Advisory Commission on Intergovernmental Relations

PREFACE AND ACKNOWLEDGMENTS

National debates about health care reform are focused primarily on the roles of the federal and state governments in financing, administering, and regulating health care systems. The roles of local governments have received little attention. In part, this is because it is hard to evaluate how reform proposals will affect the large numbers of local governments with their diverse health care responsibilities, about which there is a lack of information. Nevertheless, health care reform will affect local governments, and they will play a role in effective implementation. This report reviews the information that ACIR has collected about local

expenditures for health care, and discusses the need for additional information.

The report was written by Philip M. Dearborn, Director of Government Finance Research at the Advisory Commission on Intergovernmental Relations. He was assisted by Jill Gibbons, ACIR Finance Analyst.

The Commission would like to thank all those who reviewed and commented on the report, or provided other information, especially: Cathie Eifelberg, Government Finance Officers'

Association; Dave Garrison, U.S. Department of Health and Human Services; John Goetz, Moodys Investors Service; Thomns Joseph, National Association of Counties; Ann Kernpinski, American Federation of State, County, and Municipal Employees; Sue Madden, Public Health Foundation; Marie Monmd, American Federation of State, County, and Municipal Employees; Doug Peterson, National League of Cities; Nanp Rawding, National Association of County Health Officials; Lisa Rovin, U.S.Department of Health and Human Services; Mary Uyeda, National As-

sociation of Counties; and Heniy Wuls,U. s.Bu-

reau of the Census. Joan Casey edited the report. The charts were

prepared by Mark Schreiner, an Intern at ACIR. Stephanie Richardson and Cheryl Fortineau assisted in preparing the report for publication.

The Commission and its staff take full responsibility for the contents of the report, which was approved by the Commission on June 17, 1994.

William E. Davis 111 Executive Director

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vi U.S. Advisory Commission on Intergovernmental Relations

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