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Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop (2019)

Chapter: 5 Informing Sound Population Health Tax Policy in the Current Environment

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Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
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5

Informing Sound Population Health Tax Policy in the Current Environment

In the final panel of the workshop, Alan Gilbert, director of Global Government and NGO Strategies at General Electric Company (GE) Ventures, and Anne De Biasi, director of policy development at TFAH, discussed examples of practical programs and tax strategies currently being deployed in communities to meet their population health needs. (Highlights are presented in Box 5-1.)

Gilbert noted that GE has more than 300,000 employees worldwide, about 150,000 of which are in the United States. About 10 years ago, GE was spending about $3 billion per year on health care costs in the United States, he said. Starting in some of the communities where GE has large populations of employees—such as Cincinnati, Ohio; Erie, Pennsylvania; and Houston, Texas—GE began thinking about the large health care costs the business was incurring as a private-sector entity, as well as the population health issues facing the broader population. There is a huge business opportunity for companies to start addressing social determinants of health, he said, and he suggested that population health is beginning to emerge as a new business model. Seeing a need, GE launched a program in nine communities across the country to train community leaders to develop cross-sector collaborations for population health improvement. He noted that sustainability is always a concern, and that efforts often wane when the original funding ends. He suggested that the tax incentives being discussed at the workshop can help to close this sustainability gap.

TFAH is similarly concerned about the sustainability of resources for cross-sector work to advance population health, De Biasi said. She

Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×

recalled the menu of financing structures for population health initiatives discussed by Milstein (see Table 1-1) and observed that tax policy is an area of opportunity that manifests differently from the other options listed. TFAH has been focused on diversification of funding. Like any other business, population health initiatives need to braid together various different funding streams to be sustainable over the long term, she said. TFAH has been working to identify and develop the infrastructure needed to braid those different funding streams, and De Biasi mentioned the Healthy Communities Funding Hub model as an example of a structure to coordinate funds.

De Biasi said she considers funding for population health relative to three main areas: social determinants of health; other evidence-based policies and interventions (including primary prevention and community-level prevention); and infrastructure for multisector, local, braided efforts to improve community health. She described several current examples of how tax policy is being leveraged to fund population health initiatives in these areas, categorized by type of incentive (tax expenditures, taxes, and provider assessments), and to whom the incentive is targeted (corporations or individuals).

Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×

TAX EXPENDTURE CASE EXAMPLES1

Corporate Tax Incentives: Sojourner Family Peace Center

De Biasi described the Sojourner Family Peace Center in Milwaukee, Wisconsin, as an example of funding population health interventions with tax expenditures aimed at corporations. The Sojourner Family Peace Center is based on the family justice center model, which combines domestic violence programs (including a 54-bed shelter) with law enforcement, medical services, and behavioral health services. A variety of different tax policies were leveraged to create the family justice center, including the new markets tax credit (NMTC), community benefit, state building commission funds, and private donations.

Sojourner Family Peace Center began as a partnership between the domestic violence agency, Sojourner House, and Children’s Hospital of Wisconsin, De Biasi explained. Together, they applied for and received a grant for more than $10 million from the State of Wisconsin Building Commission. She noted that Sojourner was not able to apply for funding from the Building Commission Fund on its own; however, the hospital agreed to move the application forward to the State Building Commission. Sojourner Family Peace Center received $4.4 million from the NMTC, as well as a $3.8 million contribution from Children’s Hospital for the project, and an additional $8 million in philanthropic donations was generated to fund the project. Together, $26.7 million was raised, resulting in the construction of the Sojourner Family Peace Center. Today, the Center is debt free. In addition to covering the costs of their operations in the Center, the hospital has agreed to share the operating costs for some of the smaller agencies operating out of the building. Sojourner Family Peace Center is an example of combining a range of different tax policies to meet a critical need in the community, De Biasi said.

State Charitable Giving Tax Credits

An example of a tax expenditure aimed at individuals is state charitable giving tax credits, such as the Arizona Charitable Tax Credit that gives individuals a tax credit for donations to qualified anti-poverty organizations. De Biasi did not discuss charitable giving tax credits in detail as tax credits were discussed by Becker (see Chapter 3).

___________________

1 This section is the rapporteur’s synopsis of the presentation made by Anne De Biasi of TFAH, and the statements have not been endorsed or verified by the National Academies of Sciences, Engineering, and Medicine.

Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×

TAX CASE EXAMPLES

Colorado Marijuana Tax: School Behavioral Health Services

Colorado has long recognized the need to invest in behavioral health services for its children, De Biasi said. The state is dealing with significant rates of substance abuse and suicide among young people. Delivering behavioral health services in schools is an effective, evidence-based approach to address these issues, particularly when combined with a population health approach that uses multitiered systems of support to ensure a positive school climate, she said.

The Colorado marijuana tax is an example of using a selective excise tax and a sales tax aimed at individuals to finance population health interventions. The revenue from the marijuana tax is supporting the hiring of psychologists, social workers, counselors, and nurses who provide behavioral health and substance use prevention services. The tax revenue directly funds these positions, professional development and training, and resources to implement evidence-based programs for substance use prevention including universal screening, De Biasi explained.

This tax approach has been very successful in terms of the increasing volume of behavioral health services delivered in schools, De Biasi said. Marijuana tax revenue totaled $3 million in the first year and $2.28 million in the second and third years, funding programs in 66 middle and high schools, 44 full-time employees (FTEs) (i.e., staff positions), and 22 grantees. Revenue for the fourth year totaled nearly $12 million, funding 150 FTEs, and adding more schools, including elementary schools, and additional grantees.

De Biasi pointed out that these tax revenues are being braided together with many other sources of funding, including Medicaid (for services in schools where students are Medicaid eligible), grants from Kaiser Permanente to school districts, a Project Aware Grant from the Substance Abuse and Mental Health Services Administration, a state personnel development grant, and a state bullying prevention and education grant. Braided together, these sources allow schools to have more personnel and services, and supports work on school climate and culture.

Florida Property Tax: Children’s Services Council

The Children’s Services Councils in Florida were established in 1945 to fund the infrastructure needed to ensure that children and families are healthy. There are two types of Children’s Services Councils, De Biasi explained. For one, a property tax is assessed specifically to fund the organization. This tax is assessed by a government entity with property taxing authority that is established by county citizens through a vote. For

Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×

the other, a portion of the county property tax revenue is allocated as a budget line item.

Children’s Services Councils operate throughout Florida. They fund organizations that serve children and families according to the needs of the particular county, to ensure that children are healthy, safe, and prepared to learn (e.g., nurse–family partnership, early learning programs, after-school programs, summer programs, juvenile justice). The average annual cost is relatively low at $25 to $80 per taxpayer, De Biasi said.

Children’s Services Councils are organizations with the infrastructure to be able to braid funding streams together, De Biasi said. The property tax dollars pay for this infrastructure. Children’s Services Councils coordinate with other programs and secure funding from other sources (e.g., Florida Kid Start, Healthy Start Coalitions, Healthy Families, School Readiness funds) and regrant it to the nonprofit organizations in the county that are doing the work on the ground. In addition to administering funds to child and family programs, Children’s Services Councils collect information and statistical data across programs, monitor program and provider performance, lead local strategic planning, and are accountable and transparent to the taxpayers in their county. Ultimately, Children’s Services Councils serve as a hub of child advocacy in the county by convening partners and providing leadership, coordination, and oversight.

PROVIDER ASSESSMENT CASE EXAMPLES

Massachusetts Determination of Need Program

A determination of need, also called certificate of need process, is required in some states before a health care entity can undertake a capital expenditure (e.g., construction of a new building, purchase of an magnetic resonance imaging [MRI] machine). The intent is to ensure that there is not price inflation, and that there is appropriate access at a reasonable cost to the taxpayer.

The Massachusetts Determination of Need program requires the applicant to spend the equivalent of at least 5 percent of the total capital expenditure of the project to fund community-based health initiatives that address social determinants of health locally, and align with priority goals of the state health improvement plan. Current goals address health issues such as substance use, diabetes, obesity, mental illness, chronic disease with a focus on cancer, and heart disease, De Biasi noted. A portion of the hospital contributions also fund a statewide community-based health initiative to help provide the evidence and tools for the interventions to the local communities. She added that the Determination of Need is meant to work in conjunction with the state’s waiver.

Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×

Medicaid Waiver Matches

Medicaid 1115 Delivery System Reform Incentive Payments (DSRIP) are being used to reform delivery systems and restructure payments to providers toward a pay-for-performance model. The financing of DSRIP is complex, but the main point made by De Biasi was that the nonfederal share of the cost of DSRIP initiatives, which is the state funding that must match the federal share, is being financed through taxes in many cases. Oregon, for example, assesses a specific provider tax to fund their state share (their match) of the DSRIP waiver. She added that these are very large, multibillion-dollar waivers. Another financing option used by many states are intergovernmental transfers. These are transfers of funds among different public agencies, De Biasi said, and are essentially local taxes. States are asking public hospitals and state university hospitals to send funds to the state on a voluntary basis as a match to the waiver. Their incentive to do this is that the waiver is in their best interest, she said. Arizona used these techniques to finance their Medicaid expansion. In addition, she said that the hospitals were permitted to count the funds they were assessed for the intergovernmental transfer toward their community benefit.

Massachusetts Prevention and Wellness Trust Fund

The Massachusetts Prevention and Wellness Trust was a one-time assessment on large hospitals and large health insurers, De Biasi said. The Trust was established in 2012 and the assessment raised $60 million to be used over 4 years to support prevention and health promotion through grants for local community initiatives and workplace wellness. Fundable activities included enhancing community–clinical relationships, addressing community members’ barriers to optimal health, identifying health-related community resources, tracking referrals to community resources, and using quality improvement to strengthen community–clinical processes and linkages. They also set priority health areas according to their state health improvement plan, including tobacco use, childhood asthma, hypertension, and elder falls prevention. Optional categories included obesity, diabetes, oral health, and substance use.

ADVANCING TAX POLICY FOR POPULATION HEALTH

These are just a few examples of tax policies that already exist that can provide ideas for other localities or states looking to leverage tax policy to advance population health, De Biasi concluded. The examples show the value of leveraging new opportunities, such as a new tax (e.g., a marijuana tax in states where there has been legalization). Think broadly

Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×

about options from one-time provider assessments to ongoing taxes, she said. In all of the examples, she said, it was important to design the business case for the audience. Building political will is also key to success, and the value of having a champion in the community that can marshal that political will cannot be underestimated. Gilbert added that many ideas that end up in the federal arena start at the local and state levels.

Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×

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Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×
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Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×
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Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×
Page 57
Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×
Page 58
Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×
Page 59
Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×
Page 60
Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×
Page 61
Suggested Citation:"5 Informing Sound Population Health Tax Policy in the Current Environment." National Academies of Sciences, Engineering, and Medicine. 2019. Exploring Tax Policy to Advance Population Health, Health Equity, and Economic Prosperity: Proceedings of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/25237.
×
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The National Academies of Sciences, Engineering, and Medicine’s Roundtable on Population Health Improvement has been focused on the subject of dependable resources for population health since its inception in 2013. On December 7, 2017, the roundtable convened a workshop to explore tax policy as it relates to advancing population health, health equity, and economic prosperity. This publication summarizes the presentations and discussions from the workshop.

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