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.”