In the past several years, Massachusetts has been experiencing a decline in population. In 2022, alone, Massachusetts lost a net 26,326 taxpayers (fourth highest in the country) to other U.S. states. This has led to staggering losses in adjusted gross income (AGI) for the state. According to the IRS, AGI is “total income minus deductions, or ‘adjustments’ to income that you are eligible to take,” which “includes dividends, capital gains, business and retirement income.” The net AGI loss for Massachusetts in fiscal 2022 was $3.87 billion. There is a clear pattern of taxpayers fleeing Massachusetts, but where are they going?
According to Mass IRS Data Discovery, Massachusetts’ largest net loss was to Florida, a no income tax state. In 2022, Massachusetts lost a net of 7,033 taxpayers to the Sunshine State, largely explained by Florida ranking as the most desirable state to retire in. New Hampshire served as a close second, as Massachusetts lost a net 5,475 taxpayers to their neighbor to the north. A large part of this may be attributed to its close proximity to Massachusetts and having no state income taxes and lower cost of living. A 2017 study showed that 15.3 percent of New Hampshire’s commuting labor force traveled to Massachusetts for work. New Hampshire serves as a convenient location for individuals who are satisfied with their job in Massachusetts, but not the high cost that comes with living in the state. California ranks third, falling significantly below Florida and New Hampshire, as Massachusetts lost a net 2,033 taxpayers to the state in 2022.
Data Retrieved from Mass IRS Data Discovery
Mass IRS Data Discovery makes it apparent that a large portion of migration from Massachusetts is to counties in other states that contain major economic hubs. The largest outflow of taxpayers from Massachusetts to California was to Los Angeles County, San Diego County, San Francisco County and Santa Clara County, all home to major cities. There was also major migration to most New York City boroughs (each borough is a county), Austin, TX, Providence, RI, and Chicago, IL. This is not an exhaustive list, but emphasizes a pattern of Massachusetts taxpayers migrating to urban localities in other states.
All counties in Massachusetts have faced some level of net taxpayer migration to other states, but Middlesex County has seen the biggest net loss, at 5,493 taxpayers. In terms of outflow from the county, an overwhelming majority went to New Hampshire and California, followed closely by Florida and New York, which are states that attract the most Massachusetts taxpayers. The chart below depicts total outflow of taxpayers from Middlesex County.
Data retrieved from Mass IRS Data Discovery.
It is clear that many Massachusetts residents find several other states more desirable. To combat the loss, Massachusetts must adopt policies that reduce taxes and the overall cost of living.
Dana DiChiro is a Roger Perry Government Transparency Intern at the Pioneer Institute for Summer 2024. She is a rising senior studying Government & Politics and Economics at the University of Maryland, College Park.
Migration into and out of a state can have serious consequences on the local economy, as migrants can affect the state’s total wealth, taxable income, and overall economic health. In 2022, Massachusetts had a net loss of tax filers – 26,000 more filers decided to leave the state than make it home, taking with them significant troves of taxable income. Even so, many new residents did decide to move to Massachusetts, so where are they coming from?
A large portion of incoming taxpayers understandably come from New England with $1.8 billion of $9.3 billion in total inflow of adjusted gross income (AGI) coming from New England states, according to MassIRSDataDiscovery. Connecticut and New Hampshire were the largest contributors, accounting for $644 million and $562 million respectively. The 5,895 tax filers who came from Connecticut and 6,131 from New Hampshire make up a significant portion of the 78,146 total filers entering Mass in 2022.
Figure 1: Made from data collected using MassIRSDataDiscovery: 2022
While this represents an increase from the pre-pandemic inflow of AGI from New England ($1.5 billion), net AGI flow shows a different picture. Massachusetts had a net loss of AGI to other New England states of $1.4 billion in 2022, up from approximately $500 million in 2019.
Other than New England, significant areas of AGI inflow for Massachusetts include the census regions of the South, the West, and the rest of the Northeast, totaling respective AGI inflows of $2.1 billion, $1.7 billion, and $2.2 billion. This was driven by New York’s AGI inflow jumping from $863 million in 2019 to $1.35 billion in 2022, Florida’s from $568 million to $1.4 billion, and California’s from $654 million to $1.15 billion.
Figure 2: Made from data collected using MassIRSDataDiscovery: 2022
Interestingly, while Massachusetts did experience growth in taxpayer migration from these states, the scale of new tax filers relocating does not match the significant growth in AGI inflow. Just over 10,000 people migrated from New York to Massachusetts in 2022, up from 8,939 in 2019. Inflow from Florida grew to 6,985 in 2022 from 6,572 in 2019, and California grew from 5,620 to 6,311.
Much of this taxpayer migration occurred between urban areas, though this is likely affected by their large populations. According to MassIRSDataDiscovery, of the 6,311 tax filers who moved from California, 3,411 came from Los Angeles County, San Diego County, San Francisco County, and Santa Clara County. New York follows a similar trend with 4,860 of the 10,004 filers who migrated to MA coming from NYC’s five boroughs. Of the 6,985 filers who migrated from Florida, 2,261 were from Broward County (home of Fort Lauderdale), Miami-Dade County, Orange County (home of Orlando), and Palm Beach County.
Figure 3: Shows counties where AGI is coming and going to MA, MassIRSDataDiscovery: 2022
Many people entering MA also settle in urban or suburban areas. According to MassIRSDataDiscovery, of the about 78,000 filers who migrated to Massachusetts in 2022, 22,717 went to Middlesex County, 15,802 to Suffolk County, and 7,102 to Norfolk County, totaling 45,621 people (58 percent of total inflow).
Importantly, inflow from these states is only part of the picture. MassIRSDataDiscovery reports that, overall, Massachusetts gained $78 million in AGI from California but lost 2,023 taxpayers to it in 2022; lost $1.46 billion in AGI and 7,033 taxpayers to Florida; and 7,033 taxpayers as well as $122 million in AGI and 461 citizens to New York. In comparison, in 2019, Massachusetts gained a net 370 citizens and $168 million from New York, lost a net 2,439 citizens and $190 million to California and a net 3,694 citizens and $712 million to Florida. These losses contributed to a total net loss of $3.9 billion in AGI and 26,326 taxpayers in 2022.
About the Author: Raif Boit is a Roger Perry Transparency Intern at Pioneer Institute for the summer of 2024. He is a rising freshman at Harvard College.
With only weeks left in the Massachusetts legislative calendar, there are once again hundreds of proposed bills left for the legislature to deal with. This means lots of backroom talks and deals will be required for the legislature to complete its work before the July 31 recess. Many bills will be passed and many more will be sent to the legislative graveyard – all of it shielded from the light of day.
Among this stack of bills is a health care “market oversight reform” measure passed by the House of Representatives and sent to the Senate. In large measure, H.4643 aims to plug the regulatory loopholes that allowed for-profit Steward Health System’s equity partners to pillage eight local hospitals. Such provisions deserve careful consideration to prevent a similar fiasco.
There is another, not so benign, aspect to H.4643 that may simply slip through under the radar or be lost in the end-of-year stampede. Certain provisions of the bill would weaken the Health Policy Commission (HPC), the state agency charged with controlling the growth of healthcare costs in Massachusetts. These provisions run counter to more than a decade of steady progress made by the HPC to tamp down the growth of healthcare costs and are contrary to tools the HPC has indicated it needs to support its work.
In 2022, healthcare spending in the state was almost $72 billion, or over $10,000 for every resident. A large portion of this $72 billion, is accounted for by Massachusetts hospital revenues. The Commonwealth’s healthcare costs are very high; more oversight and transparency, not less, have to be applied.
In 2012, the state took decisive action to tame healthcare cost growth by establishing an annual cap on the growth of healthcare spending, called the “benchmark,” and setting up an independent agency, the HPC, to control the future growth of healthcare spending.
The benchmark was initially set at 3.6 percent from 2013 to 2017. The actual growth rate for the first five years was 3.4 percent.
From 2018 to 2022, the benchmark was set at 3.1 percent, and actual growth was 4.1 percent in 2018, an annualized rate of 3.2 percent for the Covid years, 2019-2021 and 5.8 percent in 2022[1].
Prior to the HPC, the rate of growth in health care spending was between 6 and 8 percent and projected to continue along that path to 2020. This projection was created by the former Division of Health Care Finance and Policy (DHCFP,) which was a predecessor agency to the Massachusetts Center for Health Information and Analysis created in 2013 (CHIA)[2]. From the HPC’s creation in 2012 to 2022, there has been a savings of over $330 billion in the growth of healthcare costs.
The tools given to the HPC to constrain healthcare cost growth do not have sharp edges. There is no sledgehammer in its arsenal that can be brought to bear on providers, such as major hospitals, to force cost control measures or to limit price increases. The HPC can and does thoroughly investigate hospitals and other providers that exceed the benchmark and directs them to provide plans for corrective action, called “Performance Improvement Plans”.
The HPC also has fining ability of up to $500,000; and it has used all its powers as a bully pulpit to foster a statewide commitment to constrain health care cost growth[3]. Over the years, HPC leaders have made known their desire for the Massachusetts Legislature to “ramp up” the HPC’s regulatory powers. To date, however, neither the House or the Senate has succeeded in doing so[4].
While there are some provisions of H. 4643 that strengthen the HPC, such as increasing its fining ability up to $1,000,000, some provisions would weaken the HPC. Here are a just a few ways that this House bill runs counter to cost control efforts.
First, as originally structured, HPC commissioners could not be drawn from the hospital, insurance or pharmaceutical sectors. The whole purpose of the HPC is to lower the growth of healthcare costs, and it was deemed that institutions that control and benefit from higher prices should not be the decision makers regarding controlling costs.
H.4643 takes direct aim at the composition of the Commission and seeks to have representatives of hospitals and the pharmaceutical industries appointed to make decisions on both the benchmark itself and corrective actions taken against providers. In addition, H. 4643 eliminates a Commission seat for a purchaser of healthcare services, such as an employer. The means there is no seat on the HPC for those who pay the prices providers and drug providers charge. This would be a result contrary to the HPC’s mission to restrain healthcare price growth.
Another troubling feature of H.4643 is that it would have the unintended consequence of driving up hospital prices. It provides a rate increase floor for community hospitals whose rates are traditionally lower than the payment levels of larger hospitals. However, there is no corresponding price ceiling for the highest paid hospitals. It seems clear that a regulatory regime that includes a floor, but no ceiling would result in higher prices that would get passed on to consumers and small employers.
Third, the healthcare benchmark is set once a year by the HPC, per its enabling legislation, and compliance reviews by the HPC are performed on an annual basis. H.4643 seeks, by statute, to replace the state’s annual benchmark set by the HPC with a benchmark that is the average of three years growth. The HPC would be unable to issue an order for a corrective Performance Improvement Plan (PIP) unless an entity’s average growth in revenues/expenditure exceeds the three-year average benchmark. And, PIPs would be extended for 3 years from the current period of 18 months. These changes do little to help constrain the growth of healthcare costs, but they do give providers more flexibility to deviate, perhaps significantly, from cost control scrutiny. They also take away the power of the HPC to set the annual benchmark according to a statutorily established public process as has been the case for over a decade.
As the legislative session comes to a not very transparent close, the Senate has an opportunity to eliminate the features in the House bill that will drive up healthcare costs. It is too late in the season for a comprehensive bill to serve as a vehicle for serious cost containment. Unfortunately, that task may simply have to be left for yet another year. But for now, the Senate can see to it that no harm is done to the HPC and work another day to strengthen the HPC’s tools to restrain healthcare cost growth.
[1] CHIA Annual Reports 2014-2024
[2] Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, 2007
[3] www.commonwealthfund.org/publications/case-study/2020/mar/massachusetts-health-policy-commission-spending-growth
[4] SHNS, “Health care costs in Mass. rose sharply again in 2022,” Colin A. Young, March 13, 2024.)
“She’s a good girl. She helps me a lot. She has big, big dreams. I don’t have the money, but she has big dreams. I hope she’s going to get everything, but she works so hard. She works so hard in school.”
“Our family is needing to make some really big sacrifices because we believe this is important, and so, we’re basically going to do whatever it takes… Sometimes we look at each other and go ‘I don’t know if I can do it again another month…’”
“A lot of the families have to sacrifice and work multiple jobs… And just scraping together enough money to just make tuition, just the basics.”
“It is discriminatory, that parents who want to choose an alternative to public school for their children, would not in any way receive any compensation for that, whether it be tax credit, whether it be a voucher…”
In the 1840s, nativist movement leaders formed official political parties and local chapters of the national Native American Party (later the American Party), although they continued to be commonly known as the Know-Nothing Party. Politicians sought to insert provisions into state constitutions against Catholics who refused to renounce the pope. The Know-Nothing movement brought bigotry and hatred to a new level of violence and organization.
The party’s legacy endured in the post-Civil War era, with laws and constitutional amendments it supported, still today severely limiting parents’ educational choices. A federal constitutional amendment was proposed by Speaker of the House James Blaine prohibiting money raised by taxation in any State to be under the control of any religious sect; nor shall any money so raised or lands so devoted be divided between religious sects or denominations. These were then named the Blaine Amendments of 1875.
in recent decades, often in response to challenges to school choice programs, the U.S. Supreme Court has demonstrated great interest in examining the issues of educational alternatives and attempts limit parental options. Massachusetts plays a key role in this debate. The Bay State was a key center of the Know-Nothing movement and has the oldest version of Anti-Aid Amendments in the nation, as well as a second such amendment approved in 1917. Two-fifths of Massachusetts residents are Catholic, and its Catholic schools outperform the state’s public schools, which are the best in the nation.
In the past several years, Massachusetts has been experiencing a decline in population. In 2022, alone, Massachusetts lost a net 26,326 taxpayers (fourth highest in the country) to other U.S. states. This has led to staggering losses in adjusted gross income (AGI) for the state. According to the IRS, AGI is “total income minus deductions, or ‘adjustments’ to income that you are eligible to take,” which “includes dividends, capital gains, business and retirement income.” The net AGI loss for Massachusetts in fiscal 2022 was $3.87 billion. There is a clear pattern of taxpayers fleeing Massachusetts, but where are they going?
According to Mass IRS Data Discovery, Massachusetts’ largest net loss was to Florida, a no income tax state. In 2022, Massachusetts lost a net of 7,033 taxpayers to the Sunshine State, largely explained by Florida ranking as the most desirable state to retire in. New Hampshire served as a close second, as Massachusetts lost a net 5,475 taxpayers to their neighbor to the north. A large part of this may be attributed to its close proximity to Massachusetts and having no state income taxes and lower cost of living. A 2017 study showed that 15.3 percent of New Hampshire’s commuting labor force traveled to Massachusetts for work. New Hampshire serves as a convenient location for individuals who are satisfied with their job in Massachusetts, but not the high cost that comes with living in the state. California ranks third, falling significantly below Florida and New Hampshire, as Massachusetts lost a net 2,033 taxpayers to the state in 2022.
Data Retrieved from Mass IRS Data Discovery
Mass IRS Data Discovery makes it apparent that a large portion of migration from Massachusetts is to counties in other states that contain major economic hubs. The largest outflow of taxpayers from Massachusetts to California was to Los Angeles County, San Diego County, San Francisco County and Santa Clara County, all home to major cities. There was also major migration to most New York City boroughs (each borough is a county), Austin, TX, Providence, RI, and Chicago, IL. This is not an exhaustive list, but emphasizes a pattern of Massachusetts taxpayers migrating to urban localities in other states.
All counties in Massachusetts have faced some level of net taxpayer migration to other states, but Middlesex County has seen the biggest net loss, at 5,493 taxpayers. In terms of outflow from the county, an overwhelming majority went to New Hampshire and California, followed closely by Florida and New York, which are states that attract the most Massachusetts taxpayers. The chart below depicts total outflow of taxpayers from Middlesex County.
Data retrieved from Mass IRS Data Discovery.
It is clear that many Massachusetts residents find several other states more desirable. To combat the loss, Massachusetts must adopt policies that reduce taxes and the overall cost of living.
Dana DiChiro is a Roger Perry Government Transparency Intern at the Pioneer Institute for Summer 2024. She is a rising senior studying Government & Politics and Economics at the University of Maryland, College Park.
Migration into and out of a state can have serious consequences on the local economy, as migrants can affect the state’s total wealth, taxable income, and overall economic health. In 2022, Massachusetts had a net loss of tax filers – 26,000 more filers decided to leave the state than make it home, taking with them significant troves of taxable income. Even so, many new residents did decide to move to Massachusetts, so where are they coming from?
A large portion of incoming taxpayers understandably come from New England with $1.8 billion of $9.3 billion in total inflow of adjusted gross income (AGI) coming from New England states, according to MassIRSDataDiscovery. Connecticut and New Hampshire were the largest contributors, accounting for $644 million and $562 million respectively. The 5,895 tax filers who came from Connecticut and 6,131 from New Hampshire make up a significant portion of the 78,146 total filers entering Mass in 2022.
Figure 1: Made from data collected using MassIRSDataDiscovery: 2022
While this represents an increase from the pre-pandemic inflow of AGI from New England ($1.5 billion), net AGI flow shows a different picture. Massachusetts had a net loss of AGI to other New England states of $1.4 billion in 2022, up from approximately $500 million in 2019.
Other than New England, significant areas of AGI inflow for Massachusetts include the census regions of the South, the West, and the rest of the Northeast, totaling respective AGI inflows of $2.1 billion, $1.7 billion, and $2.2 billion. This was driven by New York’s AGI inflow jumping from $863 million in 2019 to $1.35 billion in 2022, Florida’s from $568 million to $1.4 billion, and California’s from $654 million to $1.15 billion.
Figure 2: Made from data collected using MassIRSDataDiscovery: 2022
Interestingly, while Massachusetts did experience growth in taxpayer migration from these states, the scale of new tax filers relocating does not match the significant growth in AGI inflow. Just over 10,000 people migrated from New York to Massachusetts in 2022, up from 8,939 in 2019. Inflow from Florida grew to 6,985 in 2022 from 6,572 in 2019, and California grew from 5,620 to 6,311.
Much of this taxpayer migration occurred between urban areas, though this is likely affected by their large populations. According to MassIRSDataDiscovery, of the 6,311 tax filers who moved from California, 3,411 came from Los Angeles County, San Diego County, San Francisco County, and Santa Clara County. New York follows a similar trend with 4,860 of the 10,004 filers who migrated to MA coming from NYC’s five boroughs. Of the 6,985 filers who migrated from Florida, 2,261 were from Broward County (home of Fort Lauderdale), Miami-Dade County, Orange County (home of Orlando), and Palm Beach County.
Figure 3: Shows counties where AGI is coming and going to MA, MassIRSDataDiscovery: 2022
Many people entering MA also settle in urban or suburban areas. According to MassIRSDataDiscovery, of the about 78,000 filers who migrated to Massachusetts in 2022, 22,717 went to Middlesex County, 15,802 to Suffolk County, and 7,102 to Norfolk County, totaling 45,621 people (58 percent of total inflow).
Importantly, inflow from these states is only part of the picture. MassIRSDataDiscovery reports that, overall, Massachusetts gained $78 million in AGI from California but lost 2,023 taxpayers to it in 2022; lost $1.46 billion in AGI and 7,033 taxpayers to Florida; and 7,033 taxpayers as well as $122 million in AGI and 461 citizens to New York. In comparison, in 2019, Massachusetts gained a net 370 citizens and $168 million from New York, lost a net 2,439 citizens and $190 million to California and a net 3,694 citizens and $712 million to Florida. These losses contributed to a total net loss of $3.9 billion in AGI and 26,326 taxpayers in 2022.
About the Author: Raif Boit is a Roger Perry Transparency Intern at Pioneer Institute for the summer of 2024. He is a rising freshman at Harvard College.
With only weeks left in the Massachusetts legislative calendar, there are once again hundreds of proposed bills left for the legislature to deal with. This means lots of backroom talks and deals will be required for the legislature to complete its work before the July 31 recess. Many bills will be passed and many more will be sent to the legislative graveyard – all of it shielded from the light of day.
Among this stack of bills is a health care “market oversight reform” measure passed by the House of Representatives and sent to the Senate. In large measure, H.4643 aims to plug the regulatory loopholes that allowed for-profit Steward Health System’s equity partners to pillage eight local hospitals. Such provisions deserve careful consideration to prevent a similar fiasco.
There is another, not so benign, aspect to H.4643 that may simply slip through under the radar or be lost in the end-of-year stampede. Certain provisions of the bill would weaken the Health Policy Commission (HPC), the state agency charged with controlling the growth of healthcare costs in Massachusetts. These provisions run counter to more than a decade of steady progress made by the HPC to tamp down the growth of healthcare costs and are contrary to tools the HPC has indicated it needs to support its work.
In 2022, healthcare spending in the state was almost $72 billion, or over $10,000 for every resident. A large portion of this $72 billion, is accounted for by Massachusetts hospital revenues. The Commonwealth’s healthcare costs are very high; more oversight and transparency, not less, have to be applied.
In 2012, the state took decisive action to tame healthcare cost growth by establishing an annual cap on the growth of healthcare spending, called the “benchmark,” and setting up an independent agency, the HPC, to control the future growth of healthcare spending.
The benchmark was initially set at 3.6 percent from 2013 to 2017. The actual growth rate for the first five years was 3.4 percent.
From 2018 to 2022, the benchmark was set at 3.1 percent, and actual growth was 4.1 percent in 2018, an annualized rate of 3.2 percent for the Covid years, 2019-2021 and 5.8 percent in 2022[1].
Prior to the HPC, the rate of growth in health care spending was between 6 and 8 percent and projected to continue along that path to 2020. This projection was created by the former Division of Health Care Finance and Policy (DHCFP,) which was a predecessor agency to the Massachusetts Center for Health Information and Analysis created in 2013 (CHIA)[2]. From the HPC’s creation in 2012 to 2022, there has been a savings of over $330 billion in the growth of healthcare costs.
The tools given to the HPC to constrain healthcare cost growth do not have sharp edges. There is no sledgehammer in its arsenal that can be brought to bear on providers, such as major hospitals, to force cost control measures or to limit price increases. The HPC can and does thoroughly investigate hospitals and other providers that exceed the benchmark and directs them to provide plans for corrective action, called “Performance Improvement Plans”.
The HPC also has fining ability of up to $500,000; and it has used all its powers as a bully pulpit to foster a statewide commitment to constrain health care cost growth[3]. Over the years, HPC leaders have made known their desire for the Massachusetts Legislature to “ramp up” the HPC’s regulatory powers. To date, however, neither the House or the Senate has succeeded in doing so[4].
While there are some provisions of H. 4643 that strengthen the HPC, such as increasing its fining ability up to $1,000,000, some provisions would weaken the HPC. Here are a just a few ways that this House bill runs counter to cost control efforts.
First, as originally structured, HPC commissioners could not be drawn from the hospital, insurance or pharmaceutical sectors. The whole purpose of the HPC is to lower the growth of healthcare costs, and it was deemed that institutions that control and benefit from higher prices should not be the decision makers regarding controlling costs.
H.4643 takes direct aim at the composition of the Commission and seeks to have representatives of hospitals and the pharmaceutical industries appointed to make decisions on both the benchmark itself and corrective actions taken against providers. In addition, H. 4643 eliminates a Commission seat for a purchaser of healthcare services, such as an employer. The means there is no seat on the HPC for those who pay the prices providers and drug providers charge. This would be a result contrary to the HPC’s mission to restrain healthcare price growth.
Another troubling feature of H.4643 is that it would have the unintended consequence of driving up hospital prices. It provides a rate increase floor for community hospitals whose rates are traditionally lower than the payment levels of larger hospitals. However, there is no corresponding price ceiling for the highest paid hospitals. It seems clear that a regulatory regime that includes a floor, but no ceiling would result in higher prices that would get passed on to consumers and small employers.
Third, the healthcare benchmark is set once a year by the HPC, per its enabling legislation, and compliance reviews by the HPC are performed on an annual basis. H.4643 seeks, by statute, to replace the state’s annual benchmark set by the HPC with a benchmark that is the average of three years growth. The HPC would be unable to issue an order for a corrective Performance Improvement Plan (PIP) unless an entity’s average growth in revenues/expenditure exceeds the three-year average benchmark. And, PIPs would be extended for 3 years from the current period of 18 months. These changes do little to help constrain the growth of healthcare costs, but they do give providers more flexibility to deviate, perhaps significantly, from cost control scrutiny. They also take away the power of the HPC to set the annual benchmark according to a statutorily established public process as has been the case for over a decade.
As the legislative session comes to a not very transparent close, the Senate has an opportunity to eliminate the features in the House bill that will drive up healthcare costs. It is too late in the season for a comprehensive bill to serve as a vehicle for serious cost containment. Unfortunately, that task may simply have to be left for yet another year. But for now, the Senate can see to it that no harm is done to the HPC and work another day to strengthen the HPC’s tools to restrain healthcare cost growth.
[1] CHIA Annual Reports 2014-2024
[2] Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, 2007
[3] www.commonwealthfund.org/publications/case-study/2020/mar/massachusetts-health-policy-commission-spending-growth
[4] SHNS, “Health care costs in Mass. rose sharply again in 2022,” Colin A. Young, March 13, 2024.)
Massachusetts is Losing Thousands of Taxpayers a Year. Where Are They Going?
/in Blog, Blog: Economy, Blog: Transparency, Featured /by Dana DiChiroIn the past several years, Massachusetts has been experiencing a decline in population. In 2022, alone, Massachusetts lost a net 26,326 taxpayers (fourth highest in the country) to other U.S. states. This has led to staggering losses in adjusted gross income (AGI) for the state. According to the IRS, AGI is “total income minus deductions, or ‘adjustments’ to income that you are eligible to take,” which “includes dividends, capital gains, business and retirement income.” The net AGI loss for Massachusetts in fiscal 2022 was $3.87 billion. There is a clear pattern of taxpayers fleeing Massachusetts, but where are they going?
According to Mass IRS Data Discovery, Massachusetts’ largest net loss was to Florida, a no income tax state. In 2022, Massachusetts lost a net of 7,033 taxpayers to the Sunshine State, largely explained by Florida ranking as the most desirable state to retire in. New Hampshire served as a close second, as Massachusetts lost a net 5,475 taxpayers to their neighbor to the north. A large part of this may be attributed to its close proximity to Massachusetts and having no state income taxes and lower cost of living. A 2017 study showed that 15.3 percent of New Hampshire’s commuting labor force traveled to Massachusetts for work. New Hampshire serves as a convenient location for individuals who are satisfied with their job in Massachusetts, but not the high cost that comes with living in the state. California ranks third, falling significantly below Florida and New Hampshire, as Massachusetts lost a net 2,033 taxpayers to the state in 2022.
Data Retrieved from Mass IRS Data Discovery
Mass IRS Data Discovery makes it apparent that a large portion of migration from Massachusetts is to counties in other states that contain major economic hubs. The largest outflow of taxpayers from Massachusetts to California was to Los Angeles County, San Diego County, San Francisco County and Santa Clara County, all home to major cities. There was also major migration to most New York City boroughs (each borough is a county), Austin, TX, Providence, RI, and Chicago, IL. This is not an exhaustive list, but emphasizes a pattern of Massachusetts taxpayers migrating to urban localities in other states.
All counties in Massachusetts have faced some level of net taxpayer migration to other states, but Middlesex County has seen the biggest net loss, at 5,493 taxpayers. In terms of outflow from the county, an overwhelming majority went to New Hampshire and California, followed closely by Florida and New York, which are states that attract the most Massachusetts taxpayers. The chart below depicts total outflow of taxpayers from Middlesex County.
Data retrieved from Mass IRS Data Discovery.
It is clear that many Massachusetts residents find several other states more desirable. To combat the loss, Massachusetts must adopt policies that reduce taxes and the overall cost of living.
Dana DiChiro is a Roger Perry Government Transparency Intern at the Pioneer Institute for Summer 2024. She is a rising senior studying Government & Politics and Economics at the University of Maryland, College Park.
At a Glance: Who Moved to Massachusetts in 2022?
/in Blog, Blog: Transparency, Economic Opportunity /by Raif BoitMigration into and out of a state can have serious consequences on the local economy, as migrants can affect the state’s total wealth, taxable income, and overall economic health. In 2022, Massachusetts had a net loss of tax filers – 26,000 more filers decided to leave the state than make it home, taking with them significant troves of taxable income. Even so, many new residents did decide to move to Massachusetts, so where are they coming from?
A large portion of incoming taxpayers understandably come from New England with $1.8 billion of $9.3 billion in total inflow of adjusted gross income (AGI) coming from New England states, according to MassIRSDataDiscovery. Connecticut and New Hampshire were the largest contributors, accounting for $644 million and $562 million respectively. The 5,895 tax filers who came from Connecticut and 6,131 from New Hampshire make up a significant portion of the 78,146 total filers entering Mass in 2022.
Figure 1: Made from data collected using MassIRSDataDiscovery: 2022
While this represents an increase from the pre-pandemic inflow of AGI from New England ($1.5 billion), net AGI flow shows a different picture. Massachusetts had a net loss of AGI to other New England states of $1.4 billion in 2022, up from approximately $500 million in 2019.
Other than New England, significant areas of AGI inflow for Massachusetts include the census regions of the South, the West, and the rest of the Northeast, totaling respective AGI inflows of $2.1 billion, $1.7 billion, and $2.2 billion. This was driven by New York’s AGI inflow jumping from $863 million in 2019 to $1.35 billion in 2022, Florida’s from $568 million to $1.4 billion, and California’s from $654 million to $1.15 billion.
Figure 2: Made from data collected using MassIRSDataDiscovery: 2022
Interestingly, while Massachusetts did experience growth in taxpayer migration from these states, the scale of new tax filers relocating does not match the significant growth in AGI inflow. Just over 10,000 people migrated from New York to Massachusetts in 2022, up from 8,939 in 2019. Inflow from Florida grew to 6,985 in 2022 from 6,572 in 2019, and California grew from 5,620 to 6,311.
Much of this taxpayer migration occurred between urban areas, though this is likely affected by their large populations. According to MassIRSDataDiscovery, of the 6,311 tax filers who moved from California, 3,411 came from Los Angeles County, San Diego County, San Francisco County, and Santa Clara County. New York follows a similar trend with 4,860 of the 10,004 filers who migrated to MA coming from NYC’s five boroughs. Of the 6,985 filers who migrated from Florida, 2,261 were from Broward County (home of Fort Lauderdale), Miami-Dade County, Orange County (home of Orlando), and Palm Beach County.
Figure 3: Shows counties where AGI is coming and going to MA, MassIRSDataDiscovery: 2022
Many people entering MA also settle in urban or suburban areas. According to MassIRSDataDiscovery, of the about 78,000 filers who migrated to Massachusetts in 2022, 22,717 went to Middlesex County, 15,802 to Suffolk County, and 7,102 to Norfolk County, totaling 45,621 people (58 percent of total inflow).
Importantly, inflow from these states is only part of the picture. MassIRSDataDiscovery reports that, overall, Massachusetts gained $78 million in AGI from California but lost 2,023 taxpayers to it in 2022; lost $1.46 billion in AGI and 7,033 taxpayers to Florida; and 7,033 taxpayers as well as $122 million in AGI and 461 citizens to New York. In comparison, in 2019, Massachusetts gained a net 370 citizens and $168 million from New York, lost a net 2,439 citizens and $190 million to California and a net 3,694 citizens and $712 million to Florida. These losses contributed to a total net loss of $3.9 billion in AGI and 26,326 taxpayers in 2022.
About the Author: Raif Boit is a Roger Perry Transparency Intern at Pioneer Institute for the summer of 2024. He is a rising freshman at Harvard College.
Do No Harm to the Health Policy Commission
/in Blog, Blog: Healthcare, Blog: Healthcare Transparency, Featured, Health Care, Healthcare, News, Price Transparency /by Barbara AnthonyWith only weeks left in the Massachusetts legislative calendar, there are once again hundreds of proposed bills left for the legislature to deal with. This means lots of backroom talks and deals will be required for the legislature to complete its work before the July 31 recess. Many bills will be passed and many more will be sent to the legislative graveyard – all of it shielded from the light of day.
Among this stack of bills is a health care “market oversight reform” measure passed by the House of Representatives and sent to the Senate. In large measure, H.4643 aims to plug the regulatory loopholes that allowed for-profit Steward Health System’s equity partners to pillage eight local hospitals. Such provisions deserve careful consideration to prevent a similar fiasco.
There is another, not so benign, aspect to H.4643 that may simply slip through under the radar or be lost in the end-of-year stampede. Certain provisions of the bill would weaken the Health Policy Commission (HPC), the state agency charged with controlling the growth of healthcare costs in Massachusetts. These provisions run counter to more than a decade of steady progress made by the HPC to tamp down the growth of healthcare costs and are contrary to tools the HPC has indicated it needs to support its work.
In 2022, healthcare spending in the state was almost $72 billion, or over $10,000 for every resident. A large portion of this $72 billion, is accounted for by Massachusetts hospital revenues. The Commonwealth’s healthcare costs are very high; more oversight and transparency, not less, have to be applied.
In 2012, the state took decisive action to tame healthcare cost growth by establishing an annual cap on the growth of healthcare spending, called the “benchmark,” and setting up an independent agency, the HPC, to control the future growth of healthcare spending.
The benchmark was initially set at 3.6 percent from 2013 to 2017. The actual growth rate for the first five years was 3.4 percent.
From 2018 to 2022, the benchmark was set at 3.1 percent, and actual growth was 4.1 percent in 2018, an annualized rate of 3.2 percent for the Covid years, 2019-2021 and 5.8 percent in 2022[1].
Prior to the HPC, the rate of growth in health care spending was between 6 and 8 percent and projected to continue along that path to 2020. This projection was created by the former Division of Health Care Finance and Policy (DHCFP,) which was a predecessor agency to the Massachusetts Center for Health Information and Analysis created in 2013 (CHIA)[2]. From the HPC’s creation in 2012 to 2022, there has been a savings of over $330 billion in the growth of healthcare costs.
The tools given to the HPC to constrain healthcare cost growth do not have sharp edges. There is no sledgehammer in its arsenal that can be brought to bear on providers, such as major hospitals, to force cost control measures or to limit price increases. The HPC can and does thoroughly investigate hospitals and other providers that exceed the benchmark and directs them to provide plans for corrective action, called “Performance Improvement Plans”.
The HPC also has fining ability of up to $500,000; and it has used all its powers as a bully pulpit to foster a statewide commitment to constrain health care cost growth[3]. Over the years, HPC leaders have made known their desire for the Massachusetts Legislature to “ramp up” the HPC’s regulatory powers. To date, however, neither the House or the Senate has succeeded in doing so[4].
While there are some provisions of H. 4643 that strengthen the HPC, such as increasing its fining ability up to $1,000,000, some provisions would weaken the HPC. Here are a just a few ways that this House bill runs counter to cost control efforts.
First, as originally structured, HPC commissioners could not be drawn from the hospital, insurance or pharmaceutical sectors. The whole purpose of the HPC is to lower the growth of healthcare costs, and it was deemed that institutions that control and benefit from higher prices should not be the decision makers regarding controlling costs.
H.4643 takes direct aim at the composition of the Commission and seeks to have representatives of hospitals and the pharmaceutical industries appointed to make decisions on both the benchmark itself and corrective actions taken against providers. In addition, H. 4643 eliminates a Commission seat for a purchaser of healthcare services, such as an employer. The means there is no seat on the HPC for those who pay the prices providers and drug providers charge. This would be a result contrary to the HPC’s mission to restrain healthcare price growth.
Another troubling feature of H.4643 is that it would have the unintended consequence of driving up hospital prices. It provides a rate increase floor for community hospitals whose rates are traditionally lower than the payment levels of larger hospitals. However, there is no corresponding price ceiling for the highest paid hospitals. It seems clear that a regulatory regime that includes a floor, but no ceiling would result in higher prices that would get passed on to consumers and small employers.
Third, the healthcare benchmark is set once a year by the HPC, per its enabling legislation, and compliance reviews by the HPC are performed on an annual basis. H.4643 seeks, by statute, to replace the state’s annual benchmark set by the HPC with a benchmark that is the average of three years growth. The HPC would be unable to issue an order for a corrective Performance Improvement Plan (PIP) unless an entity’s average growth in revenues/expenditure exceeds the three-year average benchmark. And, PIPs would be extended for 3 years from the current period of 18 months. These changes do little to help constrain the growth of healthcare costs, but they do give providers more flexibility to deviate, perhaps significantly, from cost control scrutiny. They also take away the power of the HPC to set the annual benchmark according to a statutorily established public process as has been the case for over a decade.
As the legislative session comes to a not very transparent close, the Senate has an opportunity to eliminate the features in the House bill that will drive up healthcare costs. It is too late in the season for a comprehensive bill to serve as a vehicle for serious cost containment. Unfortunately, that task may simply have to be left for yet another year. But for now, the Senate can see to it that no harm is done to the HPC and work another day to strengthen the HPC’s tools to restrain healthcare cost growth.
[1] CHIA Annual Reports 2014-2024
[2] Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, 2007
[3] www.commonwealthfund.org/publications/case-study/2020/mar/massachusetts-health-policy-commission-spending-growth
[4] SHNS, “Health care costs in Mass. rose sharply again in 2022,” Colin A. Young, March 13, 2024.)