Special Healthcare Taxing Districts

Background

Locally generated special healthcare taxes are an important component of community infrastructure, but their impact on the health status of populations has not been systematically addressed.

Methods

Florida counties were segmented on the basis of the use/nonuse of locally generated tax dollars for health care during the 1992–1996 period and analyzed in 2004. Linear mixed-effects regression analysis was used to test a model in which taxing behavior served as the primary predictor variable for total age-adjusted and selected cause-specific mortality. Race/ethnicity, rurality, poverty, access to a public hospital, and physician availability were controlled.

Results

Local taxation was associated with lower total age-adjusted mortality, and lower mortality for the major causes of death, except stroke, when compared to the state mean. Local taxation is protective relative to total age-adjusted mortality (odds ratio [OR]=0.63, 95% confidence interval [CI]=0.40–0.98) and age-adjusted mortality from chronic obstructive lung disease (OR=0.50, CI=0.32–0.79), cancers (OR=0.53, CI=0.34–0.084), and intentional injury (OR=0.50, CI=0.38–0.92).

Conclusions

Locally generated tax revenues used for the provision of healthcare services are consistently associated with improved health outcomes of major public health importance. The means by which this advantage is achieved will require additional research.

Introduction

Health outcomes have been studied on two levels: the macro level, which is concerned with measuring the determinants of health from the perspective of their impact on a population, or community, and the micro level, which examines the impact of efficiency, effectiveness, and equity on health outcomes at the system, organizational, or patient level. The element that links these levels of analysis, and is a substantial factor in each, is infrastructure. Public health systems research investigators have begun to address the components of community infrastructure which may ultimately result in measurable improvements in population health status.¹ Scutchfield et al.² determined that certain public health capacity characteristics such as funding, organizational leadership, and the development of partnerships with nonproviders were related to process measures of performance as measured by the Centers for Disease Control and Prevention’s (CDC) National Public Health Performance Standards assessment instrument. More recently, Mays et al.³ examined the association of institutional, financial, and community characteristics of local public health delivery systems and the performance of essential services. These analyses suggest that communities with certain capacities resulting from sufficient infrastructure are more likely to perform certain services. The important assumption of course, is that these infrastructure-driven activities result in measurable improvements in important public health outcomes, such as reductions in morbidity and mortality. The ultimate value achieved by investment in infrastructure, therefore, will be determined by the extent to which evidence-based program-to-outcome relationships are demonstrated.⁴

One important contributory factor to the development of infrastructure, although largely unstudied, is the local special taxing district. The establishment of these districts has historically been a mechanism used by county and municipal governments to meet specific single-purpose, programmatic service demands, while maintaining local control. The primary purpose of the special districts has been to provide capital, facilities, and services in a defined locality that were unavailable through state funding sources or federal community planning and development funds. The authority to tax, issue bonds, and assess fees enables the districts to support unique community requirements, while effectively maintaining fiscal independence from local general purpose governments. In Florida, 55 types of special taxing districts have been established to date, ranging from animal control, mosquito control, and libraries to sports authorities, utilities, and water management districts.5, 6 In all 67 Florida counties, any number of these districts may exist, each with unique governance, budgets, and caps with respect to their ad valorem taxing authority and non–ad valorem assessment collections.

Special districts with a healthcare purpose were originally developed to fund the construction of facilities and service infrastructure to provide medical care for the indigent. Consequently, public hospitals have historically received a substantial portion of their income from local taxes, fees, and assessments generated under the auspices of hospital or healthcare special taxing districts. Since the first legislatively established hospital special districts in the early 1920s, health districts in Florida have expanded in response to unique local needs, often to include the full continuum of care from screening and primary care to sophisticated tertiary-care inpatient settings, skilled nursing, and home care.⁷ The local nature of healthcare special districts has resulted in some counties having as many as four separately chartered healthcare special districts, while one special district is representative of three contiguous rural counties. Twenty-one counties have no healthcare special district participation at all.⁸

As the role of the special healthcare taxing district has evolved considerably from its original focus on support for a public hospital largely intended for the indigent, and alternative methods of healthcare financing have been introduced in the private sector (e.g., managed care), the advisability of local investment in the form of special taxing districts has come under intense scrutiny.⁹ Policy options considered for the taxing districts in Florida have included retaining the current districts in their present form, a uniform statewide system for smoothing the observed disparities in local investment, returning the special districts to the control of the general purpose (i.e., county) governments, and, finally, privatization or complete elimination of the special districts altogether.¹⁰

Absent from these discussions has been any comprehensive assessment of the impact of these districts on the health outcomes of the communities in which they operate. The objectives of this study, therefore, were to compare the socioeconomic and demographic characteristics of counties that had active special healthcare taxing districts with those counties that had no taxing authority or had the authority but were not exercising it (i.e., not collecting taxes), and to determine whether the active healthcare taxing districts demonstrated a measurable impact on the health status of the populations they serve.