Analysis of the 2006 Ryder Cup’s likely economic impact on the country of Ireland, prepared jointly by Anderson Economic Group of East Lansing, Michigan, and Anarach Consulting, or Dublin, Ireland.
Anderson Economic Group, LLC, is an economic consulting firm with offices in Chicago, Illinois; East Lansing, Michigan; and Los Angeles, California. We have prepared this independent analysis of the likely economic impact of the proposed 2016 Summer Olympics in Chicago, and are making it publicly available before the IOC announcement date of October 2, 2009.
We are preparing this study to provide other Chicago-area businesses, as well as taxpayers and policymakers, a realistic assessment of the actual costs and benefits of hosting the games. Our analysis of past major events, and our past evaluations of the value of sports-related and other businesses, gives us a unique position to carefully examine this question.
Boosters of large sporting events and stadium construction have sometimes claimed economic benefits that later proved far too good to be true. However, our analyses of both sports franchises, and cities in which sporting teams oper-ate, show that some events can provide economic benefits that far exceed the costs. Given the scale of the Olympics, and the exposure it would give to Chi-cago on a world stage, it is certainly worth carefully considering the costs, risks, and benefits.
We have used a rigorous methodology to estimate the likelly economic impact of events like the 2016 Summer Olympics.
The Michigan Association of United Ways and the Community Economic Development Association of Michigan commissioned Anderson Economic Group to analyze the economic benefits to local economies of the Earned Income Tax Credit (EITC) in Michigan. This report builds upon our two previous reports and uses new data to estimate the usage of the EITC among low-income households, and the net economic impact by county due to new spending from EITC refunds.
The Michigan Quality Home Care Campaign (MQHCC) is a coalition of senior citizen advocacy groups, home care providers, community groups, and religious leaders that represents the interests of state home care workers. In 2006, the MQHCC commissioned Anderson Economic Group to analyze the costs and benefits of the State of Michigan increasing the wages of Home Help workers. In that 2006 report we hypothesized that a wage increase for Home Help workers would lead to cost savings for the State of Michigan as higher wages would improve the quality of Home Help care and increase the usage of this program over more expensive state-funded nursing facility care. This update to our 2006 report analyzes whether the cost savings to the State we projected three years ago actually happened.
The State of Michigan provides long-term care (LTC) for low-income individuals through Medicaid, a program funded jointly by federal and state governments. In FY 2008, Michigan spent a majority (80%) of its LTC budget paying for care delivered in nursing facilities. The remaining LTC expenditures funded home- and community-based programs, including Home Help. Home Help provides eligible persons in-home assistance with Activities of Daily Living (ADL), such as such as eating and grooming, and Instrumental Activities of Daily Living (IADL), such as taking medication and meal preparation. To be eligible for the program, individuals must be financially eligible for Medicaid and need help with one or more ADLs or IADLs. In FY 2008, an average of 52,623 individuals each month received care through the Home Help program. Government expenditures for Home Help were $251 million in FY 2008—12.5% of all Medicaid long-term care expenditures in Michigan.
We found that the cost savings we originally projected in our 2006 report likely under-estimate the actual savings to the State of Michigan due to the increases in Home Help usage since FY 2005. Specifically we found:
- Participation in the Home Help program increased faster than we originally projected.
The average monthly number of Home Help beneficiaries increased 16.5% from 45,166 to 52,623 between fiscal years 2005 and 2008. This meant an average annual increase in the number of beneficiaries of 5.2%, compared to the 4% we projected in 2006.
- Home Help is less expensive than nursing facility care.
The State of Michigan spent $47,096 per year less on average providing home based care for Home Help clients than it did caring for Medicaid LTC clients in nursing facilities. While the average annual cost per beneficiary of the Home Help program increased slightly at $240, the average cost per beneficiary of nursing facility care increased significantly during the three period with the state paying $4,954 more in FY 2008 than in did in FY 2005.
- Administrative costs for Home Help have fallen every year since FY 2005.
Administrative and case management costs per Home Help beneficiary fell from $439 in 2005 to $355 in 2008, falling in each intervening year. In FY 2008, administrative costs made up 7.4% of total program expenditures.
- The State of Michigan is saving more than we originally projected.
Home Help is paid for jointly by federal and state governments. In FY 2008, the federal government paid 58.1% of Home Help expenditures. After updating our fiscal impact model with actual numbers of beneficiaries in each program and the cost per beneficiary, the overall government savings is likely $34.3 million in FY 2008, with $8.2 million in savings for the State of Michigan. This is higher than the original projections of $32.6 million federal and state savings and $7.6 million for Michigan’s General Fund.
While we cannot say that the wage increase by itself caused the increased usage of Home Help and the subsequent savings to the state government, a significant increase in Home Help usage has followed the wage increase. Administrative costs are down for the program and more people are using this program. These results are consistent with the reasons for expecting cost savings that we stated in our 2006 report: higher wages leading to lower turnover (lowering administrative costs) and increased usage of Home Help over more expensive nursing facility care. This clearly benefits taxpayers as the State is able to save money by increasing the usage of Home Help over Medicaid-funded nursing facility care.
The University Research Corridor (URC) is an alliance of Michigan’s three largest academic institutions: Michigan State University, the University of Michigan, and Wayne State University. The purpose of this alliance is to accelerate economic development in Michigan by educating students, attracting talented workers, supporting innovation, and facilitating the transfer of technology to the private sector.
In May of each year, the URC releases a report on a special topic that is important to Michigan’s economy. This summer (July 2009) marks the ten year anniversary of the founding of the Life Sciences Corridor, a collaboration among the URC universities and the Van Andel Institute, where the state committed to invest $1 billion in life sciences research and development (R&D) over a 20-year period. This report analyzes how this industry has changed since the founding of the Life Sciences Corridor, and how URC activities—research and development, education, and collaboration with private industry—support the growth of the life sciences industry.
Community Mental Health Service Programs provide mental health services for Michigan residents across the state. Many persons with mental illness use the public system since many private insurance plans do not adequately cover mental health services and many residents cannot afford these services on their own. In recent years, a reduction in funding from the state government’s General Fund has resulted in fewer Michigan residents receiving mental health care services. There are people who would benefit from services but are currently not receiving them. Specifically, those on waiting lists for services, those who have a long-standing un-met need, and residents who have historically received mental health care services but are no longer receiving them due to budget cuts. The Michigan Association of Community Health Boards retained Anderson Economic Group (AEG) to conduct an independent analysis of the costs and benefits of providing mental health services to all Michigan residents who need them.