Things have changed

HHS secretary Alex Azar speaks at the American Enterprise Institute

"We've learned from mistakes" is a common theme in recent policy presentations around Washington dealing with long-standing public problems. The solutions offered seem familiar as well, though possibly "Versions 2.0" that address earlier policy failures.

Government should make public policy where problems persist due to market failures i.e. where the private actions of buyers and sellers don't resolve some widespread public need. (Frustratingly, there is no metric for when the market fails. It's a matter of perception. One way of distinguishing conservatives from liberals is where and how often they perceive market failures.) Health care's market failure occurs because consumers lack information about price and quality they need to make informed decisions, because health insurance policies usually mean consumers aren't price-sensitive anyway, and because the traditional fee-for-service model creates incentives for providers to over-treat patients. Infrastructure's market failure occurs because while roads, bridges, sewer pipes and such are excludable in theory, in practice everyone gets to use them so generating profits is impossible. Basic research's market failure occurs because, as Maria Zuber of the National Science Board pointed out at the Bipartisan Policy Council last week, the payoffs are uncertain and occur in the very long term at a time when corporate shareholders have come to expect returns quarterly.

Governments, however, are not always effective in filling the breach when markets fail. Freed from the need to make a profit, political institutions must nevertheless be responsive to the public, or at least to the attentive portion of it. Moreover, without market price signals, it is difficult for governments accurately to perceive returns-on-investment, particularly when officeholders are feeling pressure from the public. No government in the world is flush enough to provide everyone with everything they might need. The amoral market does not allocate health care in any morally-satisfying way, but any health care system has to set limits on coverage, and that's a lot harder when it's as explicit as it is in a policy context. Infrastructure suffers because while new construction can be politically rewarding, routine maintenance is not, so funding is a constant losing battle. Basic research, on the other hand, sounds exotic and often goes down blind alleys, so it makes an easy target for people who target government "waste, fraud and abuse."

"Fixing health care" panel at American Enterprise Institute, 16 May

A panel at the American Enterprise Institute this week promoted private sector initiatives in health care aimed at reducing inflation, which has taken this sector of the economy from 8 percent of U.S. gross domestic product in 1980 to nearly 20 percent today without any observable advantage over other advanced democracies. Two themes that emerged from an energetic and wide-ranging discussion were providing at least primary care through Accountable Care Organizations (ACOs) as an alternative to fee-for-service medicine, and reducing expenditures by catching problems earlier through what Rashika Fernandapulle of Iora Health termed "high-impact relationship-based care." I've been hearing both of these for 25 years or more. Accountable Care Organizations, as defined by Kaiser Health News, are "networks that coordinate patient care and become eligible for bonuses when they deliver that care more efficiently." They are a key cost control tactic of the Affordable Care Act. They sound a lot like Health Management Organizations (HMOs), which were authorized in 1973, and when employer-based plans shifted in their direction on a large scale in the 1990s helped to restrain the growth of costs, but over time became infamous for denial of care. "Some people say ACOs are HMOs in drag," the Urban Institute's Kelly Devers told Kaiser, but there is more flexibility provided to patients in choosing specialists and there are more regulations to ensure the cost savings don't impact the quality of care.

Infrastructure panel at National Association of Counties, 17 May

A panel at the National Association of Counties celebrated Infrastructure Week by exploring the potential of public-private partnerships. John Porcari, a former transportation official now with the consulting firm WSP, suggested that private firms are essential to design and maintenance of infrastructure which are harder for governments to fund. Of course these sorts of partnerships are not new. The panel didn't mention the expansion of Stapleton Airport which was a byword for governmental failure in the 1990s, but they did raise Chicago's 2009 privatization of parking services, which has become a byword for bad contracting (see Kaehny 2009, Cohen and Farmer 2014). Indeed, today's Post reports on malfeasance by a contractor on Metro's Silver line that was reported by a whistleblower. Moderator Adie Tomer of the Brookings Institution raised other problems of the past, including overstretched city staff being outgunned in information and focus by the contractor and unable to do proper oversight, and contractors left in the lurch by sudden policy changes. The panelists noted these problems were widely understood, and could be anticipated in program design and process, as well as through intergovernmental information sharing. They commended value capture as a means of funding infrastructure spending (including ongoing maintenance), and praised its inclusion in the Trump administration's infrastructure recommendations.

(Source: chemistry.stackexchange.com)

Last week's panel at the Bipartisan Policy Council agreed on the need for government to fund basic scientific research; Erik K. Fanning, CEO of Aerospace Industries Association, added the need to educate "a well-prepared dynamic workforce." Again, these are long-standing policies, but our national commitment is being questioned even as "Chinese and Europeans are also making scientific research and development investments." 

• Spending caps for the Department of Defense, the major source of basic research funding, are "coming back with a vengeance in FY20." 
• Education funding at both federal and state levels is under the gun (see Olen 2018 for the U.S. Department of Education, and widespread protests in many states). 
• President Trump has not nominated anyone to head the Office of Science and Technology Policy (see Waldman 2018 on why this matters). 

The United States, says panelist Maria Zuber of the Massachusetts Institute of Technology, "has to decide whether it wants to be a leader or a participant" as other countries adopt "our playbook for economic prosperity." So, needing a means of taking research to the next level in order to maintain our edge, we find ideological game-playing.

The policy panels were optimistic about market mechanisms in health care and public-private infrastructure partnerships, and at least the possibility of more assertive science policy. When pushed by the moderators, several of them were less optimistic that substantive policy could be achieved any time soon. I'd like to think that the reasons for earlier policy failures--including resistance to health care rationing, economic as well as political incentives that conflict with the general public interest, and budget pressures--have been addressed in the current versions of these approaches. I'm still working on actually thinking that, however.

SOURCES

The Bipartisan Policy Council hosted "Investing in the Nation's Future--A Renewed Commitment to Federal Science Funding" on 8 May 2018. Speakers were Erik K. Fanning (Aerospace Industries Association), Mark S. Berry (Georgia Power), John Keller (University of Iowa), Michael L. Telson (General Atomics), Maria Zuber (Massachusetts Institute of Technology and National Science Board).

The American Enterprise Institute hosted "Fixing Health Care: Driving Value Through Smart Purchasing and Policy" on 16 May 2018, co-sponsored with the Brookings Institution, Pacific Business Group on Health, and University of Southern California Schaeffer Center for Health. Speakers were Alex Azar (U.S. Secretary of Health and Human Services), Kevin Bozic (University of Texas Medical School), Rushika Fernandopulle (Iora Health), Mai Pham (Anthem), Jeffrey White (Boeing), Lanchee Chen (Hoover Institution), Chris Jennings (Jennings Policy Strategies), Mark Miller (Laura and John Arnold Foundation), Gail Wilensky (Project HOPE), Joseph Antos (AEI) and Paul Ginsburg (USC Schaeffer).

The National Association of Counties hosted "Collaborate to Build: Modernizing Infrastructure Policies to Advance Public-Private Partnerships" on 17 May 2018, co-sponsored with the Brookings Institution Metropolitan Policy Program. Speakers were Roy Charles Brooks (Tarrant County, Texas, and President of NACo), Elliott Bouillion (Resource Environmental Solutions LLC), Judah Gluckman (DC Office of Public-Private Partnerships), John Porcari (WSP) and Adie Tomer (Metropolitan Policy Program).

SEE ALSO:

James Morone, The Devils We Know: Us and Them in America's Raucous Political Culture (Kansas, 2014). Chapter 3 addresses the need for and political response to health care rationing.

Richard Rose, Lesson-Drawing in Public Policy: A Guide to Learning Across Time and Space (CQ Press, 1993)