How should the costs of teaching hospital missions be financed?
The answer to this question is difficult to determine because, as described above, the current system by which these missions are financed is a mélange of implicit and explicit subsidies, none of which is based on a clear notion of what is being paid for. Private payers historically have provided an implicit subsidy through higher payment rates than necessary to cover the costs of their patients. This subsidy, however, is subject to market pressures, which have intensified over the past decade (although they may be decreasing somewhat now). Relying on this approach renders teaching hospital missions extremely vulnerable to factors that might be unrelated to society s need for them. Moreover, the implicit nature of these subsidies means that they may not be in fact, they probably are not targeted to the appropriate facilities. The explicit subsidy employed by Medicare also has its problems. First, as described above, there is disagreement as to the specific missions that are being suppo
