1. Friday’s ominous news about coming cuts at Lifespan should make Rhode Island leaders think again about banking on the “meds and eds” to power the state’s economy in the years ahead. There is growing pressure from regulators and insurers for the health-care industry to tighten its belt, a push that got new support from Steve Brill‘s big exposé on hospital prices. The story is similar in higher education (though Brown University could probably charge as much as it wants and still fill the dorms). Down in Washington, apparently the debate is over about whether the federal government should cut back – the only question now is how much austerity and how soon, with health a top target for savings. Researchers in Providence’s vaunted Knowledge District are heavily dependent on the National Institutes of Health and the National Science Foundation, both of which are being cut by the sequester; Rhode Island stands to lose nearly $8 million in funding from the NIH. It all presents a huge challenge, one which Margot Sanger-Katz nailed in a must-read National Journal article about Pittsburgh, a city often held up as an eds-and-meds model for Providence. “The health care boom that is propping up the American economy could eventually come back to haunt us,” she warns. Does Rhode Island have a Plan B?
2. Another reason to worry about the meds-and-eds model: it’s not clear it helps the less educated Rhode Islanders who’ve been hit hard by the recession. Aaron Renn suggested recently, “there’s no flow-through to people who aren’t directly tapped into the knowledge economy itself. … [T]he majority of residents are missing out.” What to do? Harvard’s Ed Glaeser thinks the answer is simple: ”The best policy for local economic development is to attract and train smart people and then get out of their way.”