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What is New Hampshire?
Vesta Roy Excellence in Public Service SeriesJanuary 18, 2007
Dennis DelayDeputy Director, NHCPPS
“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”
All of our reportsare available on the web:
www.nhpolicy.orgwww.nhpolicy.org
New Hampshire Center New Hampshire Center for Public Policy Studiesfor Public Policy Studies
Board of Directors
Martin L. Gross, Chair
John B. Andrews
John D. Crosier
Gary Matteson
Todd Selig
Donna Sytek
Georgie A. Thomas
James Tibbetts
Brian Walsh
Kimon S. Zachos
Staff
Steve Norton
Dennis Delay
Ryan Tappin
Doug Hall
“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”
Topics for Presentation
New Hampshire’s People New Hampshire’s Environment New Hampshire’s Economy State Budget Public Education Public and Private Health Care
Spending Corrections and Drug Abuse Local and County Governance
1
Starting in the 1960’s, New Hampshire Population Grew Faster Than the Rest of New England
Source: Chart from Fed Bank of Boston
Population Growth Index – New England and US
New Hampshire Growth Highest in I-93 Corridor
Source: NH Office of State Planning Estimates
Population C hange 2000 to 2005
-27 - 50
50 - 100
100 - 200
200 - 300
300 - 1,000
1,000 - 3 ,000
Three NH Counties Had More Deaths Than Births.
Source: US Census Bureau
Components of NH County Population Change April 1, 2000 to July 1, 2005
International Internal Total Net
Natural Increase Migration Migration Migration
Belknap -24 233 5,105 5,338
Carroll -276 141 3,992 4,133
Cheshire 390 219 2,966 3,185
Coos -576 64 1,088 1,152
Grafton 462 676 1,976 2,652
Hillsborough 11,613 6,719 2,584 9,303
Merrimack 1,776 834 8,238 9,072
Rockingham 7,374 1,328 9,378 10,706
Strafford 2,671 772 3,487 4,259
Sullivan 462 121 2,047 2,168
Total 23,872 11,107 40,861 51,968
Most of NH’s Migrants Come From Massachusetts
NEW HAMPSHIRE NET MIGRATION 2000 to 2005 (Source: NH OSP)
STATE Entered NH From Left NH For: Net Change
MA 92,078 42,692 49,386
ME 14,830 24,868 -10,038
VT 11,175 19,613 -8,438
FL 11,963 11,108 855
NY 10,241 7,379 2,862
CA 7,470 8,435 -965
CT 6,887 5,148 1,739
Foreign 4,182 5,082 -900
PA 4,368 4,707 -339
NJ 4,299 5,414 -1,115
VA 4,056 4,410 -354
TX 3,919 3,490 429
NC 3,328 3,669 -341
RI 2,994 2,573 421
CO 2,487 2,507 -20
SC 1,431 2,535 -1,104
GA 2,160 2,957 -797
TOT** 216,527 186,310 30,217
The New Hampshire population age makeup is shifting, along with the region and the rest of the US.
Source: US Census Bureau
New Hampshire is estimated to have a relatively high median age of the population, exceeding the US median age by 3.1 years
Only Maine and Vermont, among the New England States, have higher population median ages
All New England states have higher population median ages than the United States
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,0000
0 -
04
05
- 0
9
10
- 1
4
15
- 1
9
20
- 2
4
25
- 2
9
30
- 3
4
35
- 3
9
40
- 4
4
45
- 4
9
50
- 5
4
55
- 5
9
60
- 6
4
65
- 6
9
70
- 7
4
75
- 7
9
80
- 8
4
85
+
Census 2000
July 1, 2005
Projection 2010
Projection 2015
The New Hampshire workforce is getting older, but population growth will continue with high “quality of life” and job opportunities
Source: US Census Bureau and New Hampshire Office of Energy and Planning
New England donors give more to secular causes but less to religious causes
0
100
200
300
400
500
600
700
800
900
1000
0 200 400 600 800 1000 1200
Religious giving: average/household (inc. non-donors)
Secular Giving: Average/household (inc. non-donors)
New England
Mid-Atlantic
Great Lakes
SE:Gulf States
Oil States
Plains states
SE:AtlanticMountain:SW
Pacific
(Center on Philanthropy Panel Study Data)
Religious and secular giving, by U.S. Census Region, 2002
Topics for Presentation
New Hampshire’s People New Hampshire’s Environment New Hampshire’s Economy State Budget Public Education Public and Private Health Care
Spending Corrections and Drug Abuse Local and County Governance
1
Global Warming? : Average ‘ice out’ day trend for 27 lakes in the Northeast, 1926-2000
Winter Recreation, Global Warming and New Hampshire
Warm slushy winters mean 6,000 fewer jobs, a loss of 4 percent of North Country winter employment.
33 percent fewer skiers visit NH. Snowmobile registration license
fees drop by almost 30 percent. Total loss in ski ticket, fishing
license and snowmobile registrations is $13 million.
Source: www.carboncoalition.org
Topics for Presentation
New Hampshire’s People New Hampshire’s Environment New Hampshire’s Economy State Budget Public Education Public and Private Health Care
Spending Corrections and Drug Abuse Local and County Governance
1
NH Income per person grew faster than US in 1970-80’s.
Source: US Bureau of Economic Analysis
Ratio of Personal Income per Capita - NH to US
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
..but wealth is not evenly distributed among counties.
Source: US Bureau of Economic Analysis
New Hampshire Growing Faster than US or Region Since 2001
Real Gross State ProductIndex to 2001=100
80.00
85.00
90.00
95.00
100.00
105.00
110.00
115.00
1997 1998 1999 2000 2001 2002 2003 2004 2005
US NEW ENGLAND New Hampshire
New HampshireUS
New England
Source: Bureau of Economic Analysis
Real Estate Eclipses Manufacturing in Contribution to GDP
NH GDP by Selected Components(Millions of Current Dollars)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1997 1998 1999 2000 2001 2002 2003 2004 2005
Manufacturing
Real Estate, Rental and Leasing
FIRE
Retail
Health Care
Construction
Education
Source: Bureau of Economic Analysis
New Hampshire affordability better than the 1980’s.
Critical Ratio of Housing Prices to Income
2.00
3.00
4.00
5.00
6.00
7.00
8.00
1960 1970 1980 1989 1990 2000 2003 2004 2005 2006
United States New Hampshire
Sources: Census Bureau and Bureau of Economic Analysis
Northern New England Scores Well
Northern New England Economic Scoreboard for 2006Ranking among the 50 states(Rank of '1' is best; for example 1 is lowest tax rate, highest income, etc.)
ME NH VTCategories Rank Rank RankFavorable State and Local Tax Climate (low burden on income 2004) 43 1 39Standard of Living (by poverty rate) 27 1 3Most Livable State (Morgan Quitno, 2006) 17 1 4Child and Family Well Being (Annie E. Casey Foundation, 2005) 7 1 2Healthiest State (Morgan Quitno, 2006) 4 2 1Safest State (Morgan Quitno, 2006) 2 4 3Education – College Degree or better (2004) 40 4 8Education – High School Degree or better (2004) 27 6 7Per Capita Income (2005) 37 6 25Smartest State (Morgan Quitno, 2005-6) 5 15 1
Topics for Presentation
New Hampshire’s People New Hampshire’s Environment New Hampshire’s Economy State Budget Public Education Public and Private Health Care
Spending Corrections and Drug Abuse Local and County Governance
1
Distribution of 2007 General Fund Appropriations by Major Components of the Government
Education, $217,555,760 ,
16%
Health and Human Services, $626,817,876 ,
44%
General Government,
$292,825,224 , 21%
Admin of Justice and Public Prtn, $217,790,891 ,
16%
Transportation, $2,958,949 , 0%
Resource Protection and Development,
$43,904,834 , 3%
4
Comparison of Aggregate Growth (1997-2007)
Percent Growth Over 10 Years1997-2007
69.2%72.9%
54.1% 55.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Gross StateProduct
Personal Income CPI & PopulationCombined
General FundAppropriations
Per
cent
Incr
ease
7
Change in Inflation Adjusted Per Capita Appropriation 1997-2007
($30.00)
($20.00)
($10.00)
$0.00
$10.00
$20.00
$30.00
$40.00
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85
Ch
ang
e in
Per
Cap
ita
Ap
pro
pri
atio
n
Medicaid Provider Payments
Retirement System
Special Education
School Building Aid
Corrections
AFDC GrantsNH Hospital
Mental Health Services
State Sewer Aid
Ski Operations
Municipal Revenue Sharing
10
Feast and Famine: 1997-2007 Change in General Fund Appropriations (in $2007 per capita)
($90.94)
$10.20$11.91$15.36$29.17
$32.86
($110.00)
($90.00)
($70.00)
($50.00)
($30.00)
($10.00)
$10.00
$30.00
$50.00
MedicaidProvider
Payments
RetirementSystem
SpecialEducation
SchoolBuilding Aid
Dept ofCorrections
Rest ofBudget
11
Summary: NH General Fund Spending 1997-2007
•Budget up 55.4% in 10 years
•Slightly more than inflation and population growth … and less than economy.
• Programmatically:
•In real terms: “Feast AND Famine”
•5 entitlement functions driving expenditure growth
•Aside from 5 growth areas, net reduction in real spending for remainder of budget. 26
Business Enterprise Tax
9%
Meals & Rooms Tax
14%
"Medicaid Enhancement"
14%
Utility Tax0%
Dog & Horse Racing
0%
Estate & Legacy Tax
1%
Dog & Horse Racing0%
Park Revenue0%
Board and Care Fees
1%
Interest & Dividends Tax
5%
SecuritiesRevenue
2%
Court Fines & Fees2%
Business Profits Tax
15%
Communications Tax5%
Tobacco Tax5%
Other6%
Insurance Tax6% Real Estate
Transfer Tax8%
Liquor Sales8%
Total:$1,391.6 million
General Fund Revenue by Source FY 2005
29
General Fund Revenue ($ million) New Versus Old Revenues
2005
Old Source
Old RateNew
SourcesIncreased
Rates
Beer Tax $12.20 $12.40 $12.40Board and Care Fees $14.50 $15.60 $15.60Business Profits Tax $111.00 $196.60 $196.60Business Enterprise Tax $0.00 $114.10 $114.10Estate & Legacy Tax $24.30 $11.70 $9.70 $1.90Insurance Tax $43.10 $88.70 $88.70Securities Revenue $0.00 $27.90 $27.90Interest & Dividends Tax $40.70 $67.90 $67.90Liquor Sales $55.10 $112.60 $112.60Meals & Rooms Tax $83.80 $186.50 $163.20 $23.30Park Revenue $7.30 $0.00Dog & Horse Racing $10.50 $3.50 $3.50Real Estate Transfer Tax $32.30 $107.80 $75.50 $32.30Communications Tax $12.80 $70.00 $10.30 $59.70Tobacco Tax $38.20 $73.20 $33.60 $39.50Utility Tax $8.20 $6.30 $6.30Court Fines & Fees $22.60 $25.50 $25.50Savings Bank Tax $12.60 $0.00Other $33.10 $85.00 $59.60 $25.40"Medicaid Enhancement" $0.00 $186.30 $186.30Total $562.20 $1,391.60 $881.00 $413.50 $97.10
Revenue Source 1990 2005
Compound annual rate of increase:
3.4%33
NH General Fund Revenues (Current $)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
State Fiscal Year
Mill
ion
s o
f D
olla
rs
Taxes and rates in place in 1988
Mediscam
New taxes
Increased rates
$543
$881
34
NH General Fund Taxes as % of Gross State Product, 1971-2005
1.50%
1.75%
2.00%
2.25%
2.50%
2.75%
3.00%
3.25%
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Year
Includes all regular state GF taxes but does not include Medicaid enhancement, tobacco settlement, rebates, etc.
35
Balancing the NH General Fund, 1979-2007
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,60019
79
198
1
198
3
198
5
198
7
198
9
199
1
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
State Fiscal Year
Mill
ion
s o
f D
olla
rs
Non-tax Revenue:Medicaid EnhancementTobacco SettlementFlexible Federal Grant (2003-04)
General Fund Expenditures
Merrill
Gregg
Sununu
Gallen
Shaheen
Lynch
Benson
Regular General Fund Taxes and Revenues
36
Does New Hampshire Have a Structural Deficit?
“New Hampshire can be characterized as having a long-term structural deficit in the sense that for a given scope of programs and revenue system, expenditures grow automatically faster than revenues.”
KPMG Peat Marwick
February 13, 1992
44
So What? Recognize need to scale back on state activities OR
recognize the necessity to raise tax rates or add new taxes to maintain a constant level of services.
Results in more detailed review of all state programs every biennium because there is always a looming shortfall.
Reduces possibility of surpluses for investment in desirable one-time projects.
Makes long-term strategic planning more difficult.
45
Budget Conclusions?
Absent significant policy changes, historic growth in primary drivers of state budget will continue.
Over the past 15 years, ‘natural’ revenue growth has been outpaced by appropriations constant changes to tax structure including increased rates and new taxes.
Absent significant policy changes which slow growth in primary drivers, appropriations likely to outstrip revenue growth revenue structure changes or ‘tinkering.’
Both revenue and expenditure side driven by economic changes ….
46
Topics for Presentation
New Hampshire’s People New Hampshire’s Environment New Hampshire’s Economy State Budget Public Education Public and Private Health Care
Spending Corrections and Drug Abuse Local and County Governance
1
Property Taxes By Function 1997-2005
$417 $438 $468 $478 $514 $543 $594 $639 $694
$1,101$1,174
$537$660
$718$816
$932
$1,147$1,206
$460$458
$499$499
$495
$383$372
$116$116
$116$129
$154$160
$178
$180$192
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1997 1998 1999 2000 2001 2002 2003 2004 2005
Tax Year
Do
llar
s (i
n m
illi
on
s)
County
State School
Local School
Municipal
The “Adequacy” Reform Began in 1998
• Legislature passed HB999 - new state “adequacy” aid in response to NH Supreme Court ruling in Claremont II
• Old “Foundation Aid” of $66 million was repealed
• Raised/introduced taxes for education
• Re-introduced statewide property tax for schools in tax year 1999 at $6.60 rate
• Distributed $407 million for school year 1999/2000
• Legislature has regularly amended and changed the amount of aid and the distribution formula.
• Reform sought to comply with ‘Claremont II’ thru:• greater pupil equity• greater taxpayer equity
Change in Pupil Equity
How have the differences in spending per pupil among the school districts that were cited by the Supreme Court changed since the reform?
Expenditure Per Elementary Pupil 1999-2000
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
1 8 15 22 29 36 43 50 57 64 71 78 85 92 99 106 113 120 127 134 141 148 155 162 169 176 183 190 197 204 211 218
Towns sorted in order from low to high
$ P
er P
up
il
State Average: $6,254
NOTE: These figures do not include capital costs, debt service, transportation, or food service costs
Highest: Waterville Valley $14,922
Lowest: Weare $5,339
Expenditure Per Elementary Pupil 2004-2005
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
1 8 15 22 29 36 43 50 57 64 71 78 85 92 99 106 113 120 127 134 141 148 155 162 169 176 183 190 197 204 211 218
Towns sorted in order from low to high
$ P
er P
up
il
State Average: $9,406
NOTE: These figures do not include capital costs, debt service, transportation, or food service costs
Highest: Waterville Valley $21,870
Lowest: Franklin $5,983
Expenditure Per Elementary Pupil 1999, 2001, 2003, 2005
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
$22,000
1 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 145 154 163 172 181 190 199 208 217
Towns (each year independently sorted in order from low to high)
$ P
er P
up
il
2005200320011999
Before 1999 reform
+61.4%
+66.7%
+81.0%
Expenditure Per Elementary Pupil 1999, 2005
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
1 9 17 25 33 41 49 57 65 73 81 89 97 105 113 121 129 137 145 153 161 169 177 185 193 201 209 217
Towns (each year independently sorted in order from low to high)
$ P
er P
up
il a
s %
of
Sta
te M
edia
n
1999 2005
Change in Taxpayer Equity
How have the differences in tax rates among the towns that were cited by the Supreme Court changed since the reform?
Equalized Tax Rates for Education 1998
$0
$5
$10
$15
$20
$25
$30
$35
one dot for each town (sorted low to high)
Eq
ual
ized
Rat
e (p
er $
1,0
00)
1998
Equalized Tax Rates for Education 1998, 1999
$0
$5
$10
$15
$20
$25
$30
$35
one dot for each town (sorted low to high separately for each year)
Eq
ual
ized
Rat
e (p
er $
1,0
00)
1998
1999
Equalized Tax Rates for Education 1998, 1999(compared to median town)
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
one dot for each town (sorted low to high separately for each year)
Rat
io o
f ta
x ra
te t
o m
edia
n t
ow
n t
ax r
ate
1998
1999
Taxpayer equity:In 1998 the tax rate in the sixth highest town was 6.46 times the rate in the sixth lowest town. In 1999 the tax rate in the sixth highest town was 2.55 times the rate in the sixth lowest town. Reform greatly increased inter-town taxpayer equity, primarily by raising the rates in the towns with lower taxes relative to the median.
Equalized Tax Rates for Education 1998, 1999, 2005(compared to median town)
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
one dot for each town (sorted from low to high separately for each year)
Rat
io o
f ta
x ra
te t
o m
edia
n t
ow
n t
ax r
ate
1999
1998 Taxpayer equity:The change in taxpayer equity brought about by the reform of 1999 was almost entirely reversed by 2005. If the trends of 1999-2005 continue for three or four more years, the relative distribution of tax rates for education will be the same as they were immediately before reform in 1999.
2005
Change in Taxpayer Equity
The initial increase in taxpayer equity in 1999 has nearly all eroded away.
Change in Pupil Equity
No change in pupil equity ever occurred.
New Hampshire's high school dropout rates have begun to decline
Source: New England Public Policy Center
Topics for Presentation
New Hampshire’s People New Hampshire’s Environment New Hampshire’s Economy State Budget Public Education Public and Private Health Care
Spending Corrections and Drug Abuse Local and County Governance
1
Expenditures on Personal Health Care and Public Schools in NH
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Year
Do
llar
s (i
n m
illi
on
s)
Personal Health Care Expenditures
Public School Expenditures
In 1981, spending on health care was 2.0 times spending on public schools
In 2005, spending on health care was 3.6 times spending on public schools
NH Total Health Expenditure as % of Gross State Product (GSP)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Year
Projected
Actual
During recessions, the expansion of the economy slows but health care spending continues to increase, so it consumes more of the GSP. The "ratcheting" effect is visible in this chart.
Estimated Personal Health Care Spending in NH, 2006(in $ million)
$2,747
$2,359
$417
$335
$936
$110
$679
$170
$384
Hospital Care
Physicians, Clinics, & Other Professional
Services
Dental Services
Home Health Care
Prescription Drugs
Durable Equipment
Nursing Home Care
Other Personal Health Care Total:
$8,137 million
Other Non-durables
“Regions experiencing the largest spending gains were not those realizing the greatest improvements in survival. Factors yielding the greatest benefits to health were not the factors that drove up costs.” Health Affairs 25 (2006)
Hospitals and physicians are competing for profitable services, making costly investments in the latest medical technologies. These market forces are largely going unchallenged by insurers and regulators (Center for Health Systems Change, Issue Brief No. 97)
Elliot Fisher’s Work suggest some services are ‘unnecessary.’
Are we getting value?
% of All Health Care Paid by Sources, 1965-2014
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Year
Public Funding
Out-of-Pocket
Insurance
Other Private Sources
Source: National Health Expenditure Accounts, Centers for Medicare and Mericaid Services
projected
Estimated Source of Funds Personal Health Care in US, 2006
Other Public8%
Medicaid16%
Other Private4%
Medicare22%
Insurance36%
Out-of-Pocket14%
Public Sources
46%
Private Sources
54%
Note: Some of the spending that is categorized as private insurance actually originates from public funds: insurance for teachers, postal employees, and other government workers.
We spend more on health care at the end of our lives.
Mean Health Care Expenses per Person, United States, 2004
$1,285 $1,357
$2,631
$5,224
$8,906
$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000$9,000
$10,000
Under 6 6 to 17 18 to 44 45 to 64 65 andover
Source: www.ahrq.gov Medical Expenditure Panel Survey
Cost-Shifting•The allocation of unpaid costs of care delivered to one patient population through above-cost revenue collected from other patient populations.
•For hospitals, nursing facilities and physicians, the historical cause of cost shifting has been below-cost reimbursement rates paid by PUBLIC programs and uncompensated care losses due to charity care and bad debt.
Why are These TrendsImportant?
Health Insurance Status, NH Residents 2003
Purchased insurance6%
Military3%
Medicare12%
Medicaid5%
Uninsured10%
Employer based insurance
64%
Source: 2004 Current Population Survey, US Bureau of the Census, http://pubdb3.census.gov/macro/032005/health/h05_000.htm
Differences Differences Among EmployersAmong Employers
Provide many employees a health insurance benefit• Large employers• Manufacturers• High wage and full time employers
Provide few employees a health insurance benefit• Small employers• Construction, retail sales, hospitality• Low wage and part time employers
The former are effectively subsidizing the latter through family policies and cost-shifting by health care providers.
Can you name the employers in your community that are shifting the health care costs of their employees onto you?
Revenue Structure of a Health Care Provider
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
% of Gross Charges by Payer
% o
f C
ost
Pai
d
Insurance45%
Self-Pay7%
Medicare41%
Medicaid7%
0% 100%
If all payers pay 100% of COST, then the provider will break even.(If all pay 104% of cost, the provider will have a 4% operating margin)
Revenue Structure of a Health Care Provider
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
% of Gross Charges by Payer
% o
f C
ost
Pa
id
Insurance45%
Self-Pay7%
Medicare41%
Medicaid7%
0% 100%
Revenue above 100%
Shortfalls
Hospital Cost-Shifting in 2004(Aggregate of 26 NH Acute Care Hospitals)
0%
50%
100%
150%
200%
250%
Percent of Gross Charges
Pay
men
t as
Per
cen
t o
f C
ost
3rd Party Payers (insurance)44%
Medicare40%
Medicaid7%
bad debt & charity
5%
self-pay<1%
Total amount cost-shifted: $300 million Net operating gain: $131 millionOperating margin: 5.9%
other4%
206%
Hospital Charge $10,000
Actual Cost of Service $4,854Cost-shift surcharge (26.5%) $1,284For operating margin (11.5%) $561Claim to be paid $6,699
Claim to pay $6,699Insurer admin/profit (17.6%) $1,179Premium required $7,878
Premium as % of cost of service 162%
Insurance Premium to Pay for Hospital Service, 2004
8.6%
11.1%
5.5%
12.8%/7.4%3.7%11.3%
-18.8%
0.5%
1.7%
1.7% -2.6%
3.7%
4.0%
-1.1%0.6%
17.8%/10.8%8.5%
9.0%
4.9%
5.3%
3.4%
0.3%
1.5%
4.3%
7.4%
26 Acute Care Hospitals2004 Operating Margins
(post-tax margins shown in green)
ProsperousRegion
IntermediateRegion
StrugglingRegion
2.0%
Cost-Shifting• Cost-shifting also occurs in nursing homes, physician offices, clinics, and other providers.
• The degree of cost-shifting in nursing homes is greater than in hospitals, but not yet quantified.
• The degree of cost-shifting in private practices is unknown because there are no complete financial reports. Anecdotal evidence would indicate that for some practices it is greater than in hospitals, while for other practices it is minimized by declining to serve some patients.
If all jobs, healthcareand population grew at thesame rate the lines wouldoverlap perfectly.
Growth in Jobs, Healthcare Jobs and Population (Normalized to 1990)
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
All JobsHealthcarePopulation
Healthcare and the Economy
Healthcare is clearly an important contributor to the economic system in New Hampshire.
This does not ‘eliminate’ the need to bring focused attention to growth in health care• Opportunity Cost (are these really the jobs we
want?)
• Question of value still remains primary
Topics for Presentation
New Hampshire’s People New Hampshire’s Environment New Hampshire’s Economy State Budget Public Education Public and Private Health Care
Spending Corrections and Drug Abuse Local and County Governance
1
NH Prisoner Population, 1981-2005
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,75019
81
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Year
Pri
son
ers
24
Admissions to NH State Prisons by Type of Crime, FY 81 - FY 05
0
200
400
600
800
1000
1200
1400
FY81FY82
FY83FY84
FY85FY86
FY87FY88
FY89FY90
FY91FY92
FY93FY94
FY95FY96
FY97FY98
FY99FY00
FY01FY02
FY03FY04
FY05
Nu
mb
er o
f A
dm
issi
on
s
Violent crimesSex offenses
Misc. non-violent crimes
Property crimes
Drug manufacture, sale, or possession
Parole & probation violations
25
Teen Drug Abuse in NH Higher than National Average
Marijuana use among NH youth is higher than the national average
0%
10%
20%
30%
40%
50%
60%
Ever Used Current Use Binge Drinking Current Use
Marijuana Alcohol Cocaine
(students aged 12-20)
UN
Topics for Presentation
New Hampshire’s People New Hampshire’s Environment New Hampshire’s Economy State Budget Public Education Public and Private Health Care
Spending Corrections and Drug Abuse Local and County Governance
1
One-third of NH residents live in a town with a traditional town meeting.
Percentage of NH Population by Form of Governance: 2002
No Meeting Traditional Meeting
Official Ballot
Municipalities
Count of Municipalities 15 171 48
Percent of State Population 36% 33% 31%
School Districts
Count of Districts 10 102 64
Percent of State Population 26% 22% 52%
Nursing homes and human services account for biggest differences in per capita NH county spending.
County Expenditures Per Capita by Function
$0 $100 $200 $300 $400 $500 $600 $700
Coos
Sullivan
Belknap
Merrimack
Cheshire
Carroll
Strafford
Grafton
Rockingham
Hillsborough
Cou
nty
Annual Expenditure per Capita (2002-04 average)
Nursing Human Services Corrections Public Safety Gen. Govt. Other
The number of households filing first-time requests for elderly exemptions has grown…
Figure 1: New applications for exemptions by age group, 2000-2005
310 286
450528
637599
154153
179
249
323
270
182
121
176
212
293
265
0
200
400
600
800
1000
1200
1400
2000 2001 2002 2003 2004 2005
Nu
mb
er
of
ap
pli
ca
nts
65 -74 75 - 79 80 +
..but the Elderly Exemption shifts a very small part of total tax burden.
Year
Elderly Exemptions
Average Tax
Reduction
Total Exemption
Value
Percent of Total Tax
Commitment
2000 $1,043 $11,790,112 0.68%
2001 $1,175 $13,228,659 0.70%
2002 $1,259 $14,119,392 0.70%
2003 $1,379 $16,085,368 0.74%
2004 $1,523 $18,135,378 0.78%
2005 $1,596 $18,964,536 0.80%
Questions?
All of our reportsare available on the web:
www.nhpolicy.orgwww.nhpolicy.org
New Hampshire Center New Hampshire Center for Public Policy Studiesfor Public Policy Studies
Board of Directors
Martin L. Gross, Chair
John B. Andrews
John D. Crosier
Gary Matteson
Todd Selig
Donna Sytek
Georgie A. Thomas
James Tibbetts
Brian Walsh
Kimon S. Zachos
Staff
Steve Norton
Dennis Delay
Ryan Tappin
Doug Hall
“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”