TY - JOUR AU - Gershberg,Alec Ian AU - Grossman,Michael AU - Goldman,Fred TI - Health Care Capital Financing Agencies: The Intergovernmental Roles of Quasi-Government Authorities and the Impact on the Cost of Capital JF - National Bureau of Economic Research Working Paper Series VL - No. 7221 PY - 1999 Y2 - July 1999 UR - http://www.nber.org/papers/w7221 L1 - http://www.nber.org/papers/w7221.pdf N1 - Author contact info: Alec I. Gershberg Associate Professor Milano: The New School for Management and Policy 72 Fifth Ave New York, NY 10011 Tel: 212/229-5311x 1412 Fax: 212/229-5404 E-Mail: gersh@newschool.edu Michael Grossman Ph.D. Program in Economics City University of New York Graduate Center 365 Fifth Avenue, 5th Floor New York, NY 10016-4309 Tel: 212/817-7959 Fax: 212/817-1597 E-Mail: mgrossman@gc.cuny.edu Fred Goldman 10 West 66th Street, Apt 6A New York, NY 10023 Tel: 212/595-7110 Fax: 212/579-2977 E-Mail: fred.goldman@gmail.com AB - During the decade 1983-1992, approximately 1.4 trillion dollars of municipal bonds were sold in 87 thousand separate issues, primarily to finance capital projects for education, electric power, transportation, health care, housing and other public and private purpose activities. Approximately two-thirds of these financings were originated by financing authorities, quasi-government agencies which are the creation of state legislatures. Despite the growing role played by quasi-public authorities in capital finance, their impacts have not been studied systematically. We first describe the issuers of tax-exempt debt in the health sector and then derive measures for describing the mix of issuers between state and local levels, and between both government and quasi-government sectors. We present abbreviated test results of the impact that different mixes have on the cost of capital. First, competition is good: using a Herfindahl index analysis we show that states with less concentrated issuers have a lower cost of capital than those with a more concentrated market, including state-level finance monopolies. On the other hand, we cannot assert unequivocally that market deconcentration in and of itself should be a goal. For instance, there are economies of scale in the health care finance industry that allow larger (often state-level) issuers to lower the cost of capital. ER -