Looking for our new site?

Fiscal Policy

How are Families Really Doing? Part 4: Income Inequality

December 9, 2011
Publication Image

This is the fourth and final installment in a series of interviews with policy experts who participated in an event we hosted on November 22nd, "Poverty, Inequality, Mobility, Oh My," where we explored different ways of assessing how families are doing post-Great Recession and how applying these different approaches to the design of public policies might improve the conditions and opportunities of low-income families.

Happy Budget Passback Day!

November 28, 2011

For those working deep within the beltway, today marks more than a return to the office after the welcomed Thanksgiving break. It also is “Passback Day” – a key date in the federal budget process.  This is when the White House and the Office of Management and Budget (where I began my DC career) tell the executive branch agencies exactly what is going to be in the budget. After listening to each cabinet secretary and their staff make a case for various policies, campaigns, and proposals, OMB lets them know which ones made the cut and how much budget authority (money in DC-speak) will be requested by the President on their behalf. This is the almost final word on funding levels and initiatives. There is still time for final negotiations and wordsmithing but most of the numbers are getting lock down.

The Post’s Ed O’Keefe offers a bit more description of the process—including how current budget director, Jack Lew, has humanely broken with precedent and moved Passback Day. When I was at OMB, there were often  a few chuckles as we passed back on the eve of Thanksgiving, knowing this meant some of our agency colleagues would spend their holidays working away on appeals while we relaxed.  

Of course, the public will wait weeks before finding out what’s in the President’s budget. Usually, the major themes and initiatives are highlighted in the State of the Union address and then the details and fine print are released soon after. Perhaps there will be less suspense this year as a divided Congress will make it difficult for the administration to pass its agenda. Still, the budget is an important marker of the President’s priorities, and will likely give shape to next year’s election issues. In that respect, the terms of the coming debate are quietly being set in motion today.

Going Big Means Don't Stop Until You Get Enough

November 16, 2011

The Committee for a Responsible Federal Budget – along with many other lawmakers, business leaders, former government officials, and policy experts – has called on the Joint Select Committee on Deficit Reduction (“Super Committee”) to go beyond its current mandate of finding $1.5 trillion in savings to recommend two to three times as much in order to stabilize the federal debt and reduce it as a share of the economy.

Supercommitteepalooza! or, Disagreements With People We Respect: CRFB/CBPP Edition

November 17, 2011
Publication Image

The folks downstairs at the Committee for a Responsible Federal Budget clued us in last week to an ongoing debate they've been having with the Center on Budget and Policy Priorities. The central piece of the debate is CRFB board member Erskine Bowles's recommendations to the Supercommittee, which included about $600 billion in reduced Medicare and Medicaid spending. The posts are interesting throughout, and as the deadline approaches, we felt it was important to check in on the federal budget side of health policy.

Here's the debate, with a our commentary:

The initial post: Bowles Plan Offers Path to Compromise

The most important aspect of Bowles' plan, from our perspective, is the method proposed by the Fiscal Commission for fixing the Sustainable Growth Rate (the ironically unsustainable Medicare reimbursement cuts that Congress pushes back each year). In order to pay for a long-term "doc fix" (which would bring down spending on physician fees by cutting rates of reimbursement), the commission recommended that Medicare "develop an improved physician payment formula that encourages care coordination across multiple providers and settings, and pays doctors based on quality instead of quantity of services."

This recommendation is critical. Moving away from the current fee-for-service system is among the most important ways to change how doctors make decisions; at a bare minimum, the Supercommittee should recommend changing reimbursements to reflect the value of primary care instead of encouraging the overcapacity of specialists we have right now.

CRFB didn't specifically mention it, but another critical Medicare fix that the Fiscal Commission recommended is removing the hospital exemption from IPAB recommendations. Given that hospitals make up a huge amount of our total medical spending and are the setting for a huge amount of unnecessary treatment, it's crucial that IPAB have the authority to recommend changes that improve hospitals' incentives to treat patients efficiently.

Related to the initial post: Actually, Raising the Medicare Age Is Also A Good Idea

CRFB's discussion of raising the Medicare age from 65 to 67 is the primary inspiration for this post's second title: we just can't find any good reason to support it.  (If you're really interested in why, we recommend The Incidental Economist's podcast on the subject.)

The thing is, we agree with CRFB on the facts surrounding the issue. Raising the Medicare age would decrease federal health spending somewhat. (The CBO numbers they mention are higher than the ones cited by Carroll and Frakt in the podcast, but not unreasonably so.) On the other hand, they also acknowledge that the shift would increase costs in the private market beyond the savings to the government (because Medicare pays lower reimbursement rates than private insurance). We at New Health Dialogue are concerned with the high total level of spending on health care, rather than simply the level of federal spending on health care. Unnecessarily increasing total medical spending therefore seems like a high cost to pay for a slight reduction in the federal budget which would probably be shortlived, since many of those 65-67 year olds would need help getting insurance, probably through the exchanges specificed in the ACA.

CBPP's initial response: Bowles “Compromise” Proposal to the Right of Boehner Offer to Obama in July

We have to point out a framing problem in CBPP's analysis: not all Medicare and Medicaid cuts are created equal. Some cuts (like those generated by raising the Medicare age) are simply shifting costs from the federal budget to beneficiaries. Those can be fairly labeled as "cuts," and they do increase the burden of health care spending on the elderly. Some of the $600 billion in lower Medicare/Medicaid spending, though, is intended to come from eliminating overtreatment and waste in the medical system. We're well aware that "eliminating waste, fraud, and abuse" is usually what politicians say they'll do to pay for things that they have no intention of actually paying for. However, the Dartmouth Atlas and other analyses have demonstrated that health care really does have a huge amount of wasteful care. Deciding to give patients only the medical care they need, rather than whatever local practice patterns dictate, deserves to be called what it is: responsible management of taxpayer dollars (and of the health system more generally). Demagoguing against such cuts because they reduce health entitlement spending ignores the possibility of making the health system work better, and stands in the way of real progress.

Letter to Senator Baucus

October 29, 2011

October 29, 2011

Dear Senator Baucus,

On behalf of the Committee for a Responsible Federal Budget, I want to thank you for your work on the Joint Select Committee on Deficit Reduction, and the recent proposal you introduced into the discussions. Without having seen all the details, this appears to us to be a serious and credible proposal to reduce the deficit and help put the debt on a more sustainable path.

Erskine Bowles and Alan Simpson Testimony Before Joint Select Committee on Deficit Reduction

  • By Erskine Bowles and Sen. Alan Simpson
November 1, 2011

Chairman Hensarling, Chairwoman Murray, members of the Committee, thank you for inviting us here today to discuss the recommendations of the National Commission on Fiscal Responsibility and Reform, and thank you for your continued hard work to improve our nation’s fiscal situation. We know, a little too well, how difficult your job is.

The Cure

  • By
  • Phillip Longman,
  • New America Foundation
October 28, 2011 |

While the partisan gap in Washington is wider than it’s been at any time in living memory, the two parties do have one remarkable agenda in common. Both have proposed cuts in Medicare so drastic that they would have been politically suicidal a decade ago and may still be. Yet neither party is backing off.

Upcoming Event: The Darwin Economy

October 24, 2011
Charles Darwin

This Thursday October 27, 2011, the Asset Building Program and Economic Growth Program are co-hosting an event featuring the work of Robert Frank, professor of economics at Cornell University and a Distinguished Senior Fellow at Demos. Frank’s book The Darwin Economy seeks to complicate our views on a few of the basic tenets of economic thought: the role of competition in the free market and the theory of the invisible hand.

The Case for Going Big

October 21, 2011

Given recent reports of the challenges facing the Joint Select Committee on Deficit Reduction (Super Committee) in achieving their $1.2 -- $1.5 trillion savings mandate, the Committee for a Responsible Federal Budget released an analysis arguing that shooting for two to three times as much savings can actually increase the chances of the Committee's success.

In the analysis, CRFB argues that a Go Big approach can improve the chances of the Super Committee succeeding by:

Going Big Could Improve the Chances of Success

October 21, 2011

As the Joint Select Committee on Deficit Reduction (Super Committee) tries to identify $1.2 - $1.5 trillion in savings to meet its mandate, it should consider Going Big instead. While forging bipartisan consensus oneven $1.2 trillion in saving is no easy task, a Go Big approach of saving two to three times as much could actually increase the chances of success.

Syndicate content