The Regional Impact of Health Care Reform--with a Focus on New England

by Jane Sneddon Little with Michael D. Jud
July/August 1994

The United States has begun the huge task of reforming its health care system and many individuals have already begun to consider the likely impact of health care reform on their state's economy. Given the momentum of change in the private sector and at the state level, the U.S. health care system will never be the same again, with or without federal legislation. Because New England is the U.S. region most dependent on employment in health care services, concerns about the impact of health care reform are particularly acute in this area.

Accordingly, this article presents a preliminary analysis of the regional impact of health care reform. The country's concerns seem clear enough and its financing options~ are limited enough to permit examining the regional impact of reform using the Clinton Administration's Health Security Act as an illustrative example. The study concludes that reform under the Health Security Act or any other viable plan could lead to a not insignificant shift of economic resources and activity away from most New England states, in large part because this generally highincome region will help fund improved access and subsidized premium payments in other parts of the country. Nonetheless, within the decade, health reform will provide net savings within the region and the nation. Recognizing the redistributional challenges in store, New England leaders and taxpayers must seek to use their share of these savings in ways that promote the economic vitality of the region.

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