The Other Side of the Ledger: Federal Health Spending in Metropolitan Economies

September 1, 2004

Executive Summary

Federal health expenditures annually provide billions of dollars to metropolitan economies in the United States. These expenditures support vital healthcare services and have contributed to the development of numerous health services assets in metropolitan areas, including jobs, years of steady sector job growth, relatively higher wages, and multiplier effects that generate billions of additional dollars in local economies.

With these benefits, however, come well-known burdens. Besides the growing demand that health-related costs are placing on government budgets, populations in nearly every state are growing older and public hospitals around the country are struggling to maintain services. To properly manage these risks and to fully harness the tremendous benefits associated with health-related spending, state and local leaders must know more about how health programs affect their economies.

This paper addresses this need by assessing the effects of federal spending in six metropolitan areas, including Atlanta, Milwaukee, Oakland, Philadelphia, San Antonio, and San Diego. We concentrate much of our assessment on the expenditures of the major federal programs—including Medicare, Medicaid, the State’s Children Health Insurance Programs—and the major programs designed to provide health benefits to the military, veterans, and federal employees, as these programs represent the bulk of federal health spending.