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)

Digital privacy and our common life

(swiped from vox.com. Used without permission)

The ordinary American thinks of themselves as a customer, when in the business model of many of the companies, they're just a product. They're just trying to gather information about you in order to re-sell it to yet another third party who you don't know at all and had never any intention of doing any business with.

--Senator Ed Markey (D-MA) on National Public Radio, 4/10/2018

Mark Zuckerberg testifies down the street this week at hearings before the House Energy and Commerce and Senate Commerce Committees (Timberg and Romm 2018). Facebook has come under renewed scrutiny, again, because of revelations that the sketchy marketing firm Cambridge Analytica obtained data from tens of millions of Facebook users without their consent. Last weekend, I saw that Chicago is plastered with ads promising Facebook will be doing more to combat fake news and data mining (cf. Frenkel and Singer 2018). Weirdly, I haven't seen any of these ads in Washington.

Source: European Parliament

A couple weeks ago, with considerably less fanfare than Zuckerberg's appearance, Birgit Sippel, member of the European Parliament from Germany, told an audience at the Brookings Institution that while the EU is considering greater privacy protection, ultimately we must choose between two models of media. Sippel is the rapporteur for the EU's new General Data Protection Regulation, which requires more disclosure to individuals about use of their personal data, and increases penalties for violations (Brandom 2018). She additionally made strong statements in favor of individual control over what personal information is tracked, compiled and available to marketers during the course of the hour-long interview with Cameron F. Kerry of Brookings.

For me, the key take-away from Sippel's talk was that if there is going to be information, it must be gathered, and somehow the gathering must be paid for. In the days of newspapers, information was gathered by reporters and assembled by editors, all of whom were paid staff of the paper. To access the information, readers had to pay for a newspaper. (Truth in anachronism: We get daily delivery of a paper Post while we're in Washington; at home in Iowa, we subscribe to both the Cedar Rapids Gazette and the New York Times.) If we access the news on the Internet for free, there needs to be an alternative funding model, and for various reasons the model that has emerged involves tracking clicks and selling that information. Facebook, which has emerged from a number of long-forgotten competitors to dominate the electronic public square, is "free and always will be" because they make money selling the information they collect on their users.

My first reaction is that these are not the only two models available, though for practical reasons they may be the most likely outcomes. There are at least three other ways that you can get information:

1. Commercial broadcasting model. Broadcast radio and television stations are funded by advertising, so their material is free to the listener/viewer. The bet is that they can attract enough of the right kinds of users that advertisers are willing to pay dearly for access to them. Internet ads exist, although so do ad blockers.
2. Public broadcasting model. Public radio stations, and most other non-commercial operations, don't sell advertising, though corporate underwriting is increasingly approaching a distinction without a difference. The Corporation for Public Broadcasting gets a vanishingly small subsidy from the U.S. government, but for the most part public radio depends on the good will of user-donors. Wikipedia and Greater Greater Washington, to name a couple sites I frequent, make appeals for donations, but I don't know how successful they are.
3. Library model. If I wanted to read a daily newspaper growing up, I had to use the school library or the public library. Libraries are funded by governments or institutions and available to users, most of whom have paid taxes or tuition that funds the library. As Jane a.k.a. "The Other Dr. Nesmith" has pointed out, libraries combine the resources of the community to achieve "a whole world of resources just waiting to be used," far more than even a Zuckerberg could afford to purchase on his own.

Funded by taxes and donations:
Cedar Rapids Downtown Library grand opening, 2013

I want people to be paid, and paid well, for the work they do, but...

In my blogging, and in the course preparation I do in my paid job, I've become accustomed to having a large array of resources at my fingertips. I read sources with hot links, and use them myself, assuming that interested readers can follow their curiosity to more information about whatever aspect of the subject grabs them. I contribute to Greater Greater Washington and Strong Towns, and have even thrown the occasional ducat at Wikipedia, but I simply cannot fund all the web resources I use. Maybe a quarter a click?

I'm a baseball fan, but I stopped paying for online broadcasts when they raised the fee from $9.95 to $14.95 per year. I read articles about the Cubs on the Chicago Tribune website until they tell me I've reached my monthly limit, when I switch over to always-free cubs.com. Thomas Hobbes told us that when we look at ourselves we should see the whole of human nature, and I conclude that a paid subscription approach to information on the web would change the universe in which I've become accustomed to working and thinking.

Maybe I overrate how boring I am to data miners, but sometimes I'm willing to let whoever have whatever, just so I can use websites for free. Let Cambridge Analytica or Vladimir Putin try to troll me. I know how to ignore them.

The budget deal and the future of Congress

"Political Drama" by Robert Delaunay (1885-1941)
at the National Gallery of Art, Washington

There's a positive tone in town right now, thanks to the budget deal worked out by the Senate Republican and Democratic leaders that not only prevents another shutdown, but funds the government through March 23, which makes it that much longer before we have to endure more brinksmanship. National defense, the Children's Health Insurance Program, disaster relief and the opioid epidemic get two years of funding.

It's not a great deal, being pretty much a logroll that provides additional spending for both parties' priorities. This will, of course, further aggravate the budget outlook already set askew by an irresponsible tax bill in December. The budget deal adds to the Keynesian stimulus begun by the tax cut, at a time when stimulus is clearly not indicated, and stock markets took another dive Thursday. Representative Dave Brat (R-VA), a member of the Freedom Caucus, is perfectly correct to call it a "Christmas tree on steroids" (Sullivan and Lee 2018). On the other hand, given the Freedom Caucus's enthusiasm for that tax cut, it could be taken as sour grapes that they weren't going to get their way on everything.

It's no news to you that Congress hasn't been impressing anyone for quite awhile. After a brief blip up into the 20s last winter, public approval ratings have settled back to the 15-20 percent range where they've been for nearly a decade. Congress as a group has rarely been wildly popular, but it's important to remember that the current numbers are low by historical standards, at least for the 75 years of national public opinion surveys.

My read on the quagmire at our nation's Capitol, previously explored in a number of posts listed below, is rooted in incentive structures. Ideological polarization and geographic sorting mean that neither Democratic nor Republican legislators have much incentive to seek constructive solutions to public problems. Core partisans are suspicious of bipartisan solutions, and there aren't enough swing voters in enough states and districts to counteract that. Accurate representation of their constituents gets them re-elected, but it also tends to stalemate or at best zero-sum solutions.

Ian Shapiro (from yale.edu)

So I was intrigued earlier this week to hear Ira Shapiro, a scholar and author as well as president of Ira Shapiro Global Straegies, LLC, highlight the importance of leadership at a forum celebrating the release of his new book, Broken: Can the Senate Save Itself and the Country (Brookings, 2018). He argues the decline of the Senate as a deliberative body is decades old, but suddenly accelerated in the middle of the last decade. "It's no accident," he said, "that the accelerating downward spiral of the Senate coincided with Mitch McConnell's time as leader." Senator Harry Reid (D-NV), Democratic leader from 2005-2017, was no prize, either: "Their joint legacy would be a broken Senate."

Source: flickr.com

McConnell, a Kentucky Republican, became the party's Senate leader in 2007, and Senate majority leader after Republican successes in the 2014 elections finally recaptured control of the chamber late in the Obama administration. Shapiro gave three examples of McConnell's norm-busting, counter-productive leadership style:

• After helping pass economic stimulus in fall 2008 when George W. Bush was still President, he "suddenly became against everything" once Barack Obama was inaugurated. Was he more concerned about how Obama's approval rating might affect Republican electoral fortunes than he was about the economy?
• His 2016 refusal to consider anyone Obama nominated to the Supreme Court after Justice Scalia died
• The unproductive handling of health care repeal in 2017

Shapiro clearly sees leadership style as a key causal variable in the current state of Congress. He concluded by pronouncing himself optimistic, anticipating the day when the 75 or 80 Senators "who know what the Senate is supposed to be and hate what it is now" step forward and "actually put country first."

Shapiro was joined on the panel by Molly Reynolds, a fellow in Governance Studies at Brookings, and author of Exceptions to the Rule: The Politics of Filibuster Management in the U.S. Senate (Brookings, 2017). She presented the evidence for the causal role of institutional incentives, in which senators' and voters' "ideological positions make it much more difficult to work collaboratively." Morover, partisan competition for control has increased since the era (1960s & 70s) that Shapiro used as his baseline for Senate performance. As a result, we see both parties staking out ideological positions, and using Senate procedures to thwart the other side, eschewing compromise in favor of "getting [or trying to get] policy done that is close to their own ideological positions." Individual senators, too, use procedures--like holds, which used to be rare but now are as common as dirt--to enhance their own reputations. There've always been such individuals--Wayne Morse and Jesse Helms leap to mind--but there are many more of them. Kentucky Senator Rand Paul's mini-filibuster Friday morning is only the most recent example. Reynolds shares Shapiro's discontent with the current state of the Senate, but concluded with a question rather than a hopeful statement: "How do we work within the existing set of incentives to change behavior?"

A third view, identified with political scientists like Morris Fiorina, is that partisan polarization among the electorate was created and manipulated by elites (see also Zingher 2018 and his co-authored article with Michael Flynn in the British Journal of Political Science). If polarized politics resulted from choices, can elites choose to move past it? Or, as I gloomily suspect, is this monster going to be harder to destroy than it was to create?

The panel was organized and hosted by William Galston, Ezra K. Zilkha chair and senior fellow in Governance Studies at Brookings. I once appeared on a panel with Galston, in 2009, which makes me feel one degree of separation from something.

VIDEO of the event is here: https://youtu.be/zB8XZrGxqoU 

SEE ALSO:
"Shutdowns and Sillypants (and the Statler Brothers)," 8 October 2013
"Deliberation and the Shutdown," 3 October 2013
"What's the Matter with Congress," 30 May 2013