The Urban Fiscal Crisis in the United States,National Health Insurance,and Municipal Hospitals

Abstract

The fiscal stress which many U.S. cities are currently experiencing, the persistent problems of large-city local government hospitals, the recent decisions for selected public hospital closings in New York City and Philadelphia, and the prospective enactment of a program of national health insurance collectively raise questions about the viability of the nation's major municipal hospitals. While the majority of the nation's 40 largest cities are in a state of economic and demographic decline, the diversity which characterizes their fiscal conditions and their responses to fiscal stress suggests caution in generalizing from the highly publicized New York City experience in assessing the ability of cities to continue to maintain public hospital activities. Indeed, there is considerable evidence to indicate that the staying power of municipal hospitals is quite substantial even in circumstances of severe fiscal stress. Further, analysis of the effect of Medicaid implementation on municipal hospital utilization and of the impact of prospective national health insurance programs on the demand for and supply of medical services suggests that municipal hospitals will continue to be important providers of health care services for many years to come.