Authors: Karen Davis, Ph.D., Cathy Schoen, M.S., and Stuart Guterman, M.S. Journal: Health Affairs, May 2013 32(5):900–9 Contact: Karen Davis, Ph.D., Eugene and Mildred Lipitz Professor, Department of Health Policy and Management, Johns Hopkins Bloomberg School of Public Health, email@example.com Summary Writers: Deborah Lorber
“A comprehensive MedicareEssential benefit has strong advantages for beneficiaries. [They] would have benefits they want at lower cost and with less confusion and complexity.”
Researchers propose a new coverage option for Medicare beneficiaries that would provide comprehensive benefits, protection from catastrophic costs, and incentives for choosing high-quality, high-value care. Combining hospital, physician, and prescription drug coverage, the “Medicare Essential” option could save $180 billion in national health spending in the next decade while also improving care.
Research has shown that Medicare beneficiaries are more satisfied with their coverage than are working-age people with employer coverage. Medicare, however, fails to protect beneficiaries against high out-of-pocket costs, unless they purchase two private supplemental policies—a Medigap plan to cover items like copayments and deductibles, and a Medicare Part D plan for prescription drug costs. Karen Davis, of Johns Hopkins Bloomberg School of Public Health, and Commonwealth Fund researchers Cathy Schoen and Stuart Guterman propose a new “Medicare Essential” option that eliminates this complexity by rolling hospital, physician, prescription drug, and supplemental coverage into one health plan. The plan would offer better financial protection than traditional Medicare does, including a limit on out-of-pocket spending. Beneficiaries could see additional cost savings by selecting medical providers that deliver high-value care.
Medicare Essential’s comprehensive benefits would substantially reduce deductibles and out-of-pocket costs. A single $250 deductible would replace deductibles of $1,156 for each hospital episode and $140 annually for Part B services that were in effect in 2012. Prescription medications would be covered with no deductible, as would preventive care. The plan would set an out-of-pocket maximum of $3,400 a year to protect against catastrophic costs.
Physicians and hospitals that agree to be reimbursed through innovative payment methods designed to incentivize the delivery of high-quality, efficient care would be designated as “high-value providers.” Beneficiaries who select such providers would save money through reduced cost-sharing.
Under Medicare Essential, a beneficiary would spend an average of $354 monthly on premiums and out-of-pocket costs, including prescription drugs. This represents a savings of 17 percent compared with a person who currently has traditional Medicare plus Part D and Medigap Part F supplemental plans. Medicare Essential enrollees who use high-value providers would save even more: they would spend an estimated $254 a month, for a savings of 40 percent.
Overall, the Medicare Essential option would reduce total health spending by $180 billion between 2014 and 2023, by simplifying administrative costs, encouraging value-based health care decisions, and shifting beneficiaries into patient-centered medical homes and accountable care organizations that meet high standards for care coordination and management of high-risk, high-cost conditions.
Under the plan, households would save $63 billion, private employers would save $90 billion in retiree plans, and state and local governments would save an estimated $27 billion over 10 years.
Addressing the Problem
Medicare Essential would not add to the federal budget deficit, because its enhanced benefits are financed by premiums, which would be substantially lower than current payments for Medigap and Part D drug plans. The savings come partly from lower administrative costs compared with supplemental coverage purchased in the private insurance market, where administrative costs range from 10 percent to 20 percent, versus 2 percent for traditional Medicare.
About the Study
To draft the proposed benefit design, the authors used modeling by Actuarial Research Corporation (ARC) to estimate the potential 10-year impact on premiums and out-of-pocket costs. ARC compared projected costs to estimated costs for people enrolled in both traditional Medicare and supplemental private coverage, assuming the new Medicare Essential option would be available starting in 2014.
The Bottom Line
Combining Medicare hospital, physician, prescription drug, and supplemental coverage into a single health plan could save $180 billion in overall health spending over the next decade while reducing out-of-pocket costs for beneficiaries and improving care.
K. Davis, C. Schoen, and S. Guterman, “Medicare Essential: An Option to Promote Better Care and Curb Spending Growth,” Health Affairs, May 2013 32(5):900–9.
President Obama got roughed up by the pundit class last week. The question is what lessons he draws from the going-over. Here’s one he should take: The nation’s political conversation has grown stale, and many Americans have lost the sense of what he is doing to improve their lives.
You can argue that this perception isn’t fair. The Affordable Care Act, if it’s implemented well, will improve a lot of lives. The economy is adding jobs, not shedding them. The deficit is coming down. Two front-burner initiatives, immigration reform and broader background checks for guns — yes, they’ll be voted on again — really do matter.
But the fact is that the talk in Washington has been dominated by the same stuff we obsessed over in 2010, 2011 and 2012: a monotonous, uninspiring, insider clash over budgets. Even in that context, we barely discuss what government can do that would be helpful (except to air travelers).
Obama’s defenders say that D.C. dysfunction should be laid at the feet of Republicans in Congress who are so invested in his failure that they even vote against things they are for. That’s what Sen. Pat Toomey (R-Pa.) says happened on background checks.
Rather than criticize the president, says former chief White House speechwriter Jon Favreau, those who want him to succeed need to hold Republicans in the House and Senate accountable. The president can’t do it by himself, Favreau said in the Daily Beast. He needs help from his supporters.
Well, sure. To pretend that the president can magically get an increasingly right-wing Republican House and Senate contingent to do his bidding is either naive or willfully misleading. The GOP really does hope that blocking whatever Obama wants will steadily weaken him.
But the president also needs to ask himself why even his supporters are growing impatient. His whole budget strategy, after all, is directed almost entirely toward gently coaxing Republicans his way, without any concern as to whether what he is doing is demobilizing the very people he needs on his side now.
When, in pursuit of tax reform, he explicitly offered a compromise to change the index that determines Social Security benefits as part of his budget, he did so against the advice of many of his most loyal backers in Congress. That includes Democrats who would be willing to vote for that cut to Social Security benefits as part of a serious budget deal. But they insist that such a major step toward the Republicans should be taken only in return for concrete concessions from them on the need for more revenue.
If Obama wants to underscore that his problem is Republican obstruction, he should tell those GOP senators he likes to dine with that they need to come up with revenue very soon or else he’ll withdraw that “chained CPI” offer he claims not to like much anyway. Put up or shut up is a cliche, but a useful one.
Similarly, it’s worth asking why so many of Obama’s initiatives have dropped out of public view. Obama has called for raising the minimum wage to $9 an hour. Many Democrats in Congress think, correctly, that it should be set at $10. Would it be so hard for Obama to come out fighting for the minimum-wage increase — and for other steps to bolster the incomes of those stuck at the bottom of the economy? Why not expose that none of this is happening because of GOP opposition?
Obama wants to provide universal pre-K education. That ought to be a bipartisan idea. Many Republican governors have embraced the concept in their states. Shouldn’t the president be pushing harder to get it on the media’s radar by way of forcing a debate in Congress?
The president believes we need to spend more on our infrastructure to boost job creation now and to make us competitive for the long run. He’s right. But he needs to make clear it is something that’s genuinely important to him.
It’s true that Obama spoke about both his investment agenda and preschool plans at last week’s much-maligned news conference. And the White House announced on Sunday that he would embark on a series of “middle class jobs and opportunity tours.” These should be shaped by a consistent, driving theme: that the stakes in this debate are larger than the day-to-day drone of partisan invective suggests.
Remember the Mark Twain line that Wagner’s music was better than it sounded? Obama’s program has more to do with growth and opportunity than he usually lets on. If he wants to rally us, he might want to change that.
Timothy Eganon American politics and life, as seen from the West.
Not long ago, the congressman from northeast Texas, Louie Gohmert, was talking about how the trans-Alaska oil pipeline improved the sex lives of certain wild animals — in his mind, the big tube was an industrial-strength aphrodisiac. “When the caribou want to go on a date,” he told a House hearing, “they invite each other to head over to the pipeline.”
Gohmert, consistently on the short list for the most off-plumb member of Congress, has said so many crazy things that this assertion passed with little comment. Last year, he blamed a breakdown of Judeo-Christian values for the gun slaughter at a cinema in Colorado. Last week, he claimed the Muslim Brotherhood had deep influence in the Obama administration, and that theattorney general — the nation’s highest law enforcer — sympathized with terrorists.
You may wonder how he gets away with this. You may also wonder how Gohmert can run virtually unopposed in recent elections. The answer explains why we have an insular, aggressively ignorant House of Representatives that is not at all representative of the public will, let alone the makeup of the country.
Much has been said about how the great gerrymander of the people’s House — part of a brilliant, $30 million Republican action plan at the state level — has now produced a clot of retrograde politicians who are comically out of step with a majority of Americans. It’s not just that they oppose things like immigration reform and simple gunbackground checks for violent felons, while huge majorities support them.
Alex Wong/Getty ImagesLouie Gohmert at a Tea Party rally in front of the U.S. Supreme Court in 2012.
Or that, in the aggregate, Democrats got 1.4 million more votes for all House positions in 2012 but Republicans still won control with a cushion of 33 seats.
Or that they won despite having the lowest approval rating in modern polling, around 10 percent in some surveys. Richard Nixon during Watergate and B.P.’s initial handling of a catastrophic oil spill had higher approval ratings.
But just look at how different this Republican House is from the country they are supposed to represent. It’s almost like a parallel government, sitting in for some fantasy nation created in talk-radio land.
As a whole, Congress has never been more diverse, except the House majority. There are 41 black members of the House, but all of them are Democrats. There are 10 Asian-Americans, but all of them are Democrats. There are 34 Latinos, a record — and all but 7 are Democrats. There are 7 openly gay, lesbian or bisexual members, all of them Democrats.
Only 63 percent of the United States population is white. But in the House Republican majority, it’s 96 percent white. Women are 51 percent of the nation, but among the ruling members of the House, they make up just 8 percent. (It’s 30 percent on the Democratic side.)
It’s a stretch, by any means, to call the current House an example of representative democracy. Now let’s look at how the members govern:
To date, seven bills have been enacted. Let’s see, there was the Responsible Helium Administration and Stewardship act — “ensuring the stability of the helium market.” The Violence Against Women Act was renewed, but only after a majority of Republicans voted against it, a rare instance of letting the full House decide on something that the public favors. Just recently, they rushed through a change to help frequent air travelers — i.e., themselves — by fixing a small part of the blunt budget cuts that are the result of their inability to compromise. Meal assistance to the elderly, Head Start for kids and other programs will continue to fall under the knife of sequestration.
On the economy, the Republican majority has been consciously trying to derail a fragile recovery. Their first big salvo was the debt ceiling debacle, which resulted in the lowering of the credit rating for the United States. With sequestration — which President Obama foolishly agreed to, thinking Congress would never go this far — the government has put a wheel-lock on a car that keeps trying to get some traction.
Meanwhile, not a day passes without some member of this ruling majority saying something outrageous. Representative Jim Jordan of Ohio, for example, has endorsed the far-side-of-the-moon conspiracy theory that the government is buying up all the bullets to keep gun owners from stocking their home arms depots. As for Gohmert, earlier this year he nominated Allen West, a man who isn’t even a member of Congress (he lost in November) to be Speaker of the House. Harvey, the invisible rabbit, was not available.
Gohmert, like others in the House crazy caucus, has benefited from a gerrymandered district. He can do anything short of denouncing Jesus and get re-elected.
The Beltway chorus of the moment blames President Obama for his inability to move his proposals through a dunderheaded Congress. They wonder how Republicans would be treating a silken-tongued charmer like Bill Clinton if he were still in the White House. We already know: not a single Republican voted for Clinton’s tax-raising budget, the one that led to our last federal surplus. Plus, they impeached him; his presidency was saved only in the Senate.
Obama may be doomed to be a reactive president in his second term, with even the most common-sense proposals swatted down because, well — if he’s for it, Republicans will have to be against it. What could be a signature achievement, immigration reform, faces quicksand in the House. But a gerrymander is good for only a decade or so. Eventually, demography and destiny will catch up with a Congress that refuses to do the people’s bidding.
We can’t solve our country’s budget problems with a meat-ax.
Sequestration isn’t just dumb, it’s dangerous and irresponsible. Blunt, across the board cuts are hurting our children, our seniors, our veterans – the people who need our help the most.
Last week, Congress stepped in to restore full funding for air traffic controllers to keep out country moving. But our children, seniors, and veterans shouldn’t have to get stuck on a tarmac before Congress pays any attention.
People with cancer or families dealing with autism or Alzheimer’s shouldn’t be ignored. Flight delays are bad for all of us, but it’s also bad for all of us when we cut funding for Meals on Wheels and Head Start. And it’s bad for all of us when medical research gets sidelined and when young scientists’ work can’t get funded.
The truth is that we could end those cuts and put a stop to sequestration right now if we just made big corporations, millionaires, and billionaires pay their fair share.
That’s why I’m joining Sen. Sheldon Whitehouse to sponsor legislation that repeals sequestration by ending the tax giveaways and special breaks for our most profitable companies and millionaires.
Washington is rigged for the big guys — the ones who can afford to hire an army of lobbyists, lawyers, and accountants to create and find the loopholes and special breaks that let big corporations off the hook for paying taxes.
It’s rigged for the five biggest oil companies, which made $118 billion in profits last year — and yet still collected billions of dollars worth of government subsidies.
It’s rigged for multinational corporations, which get tax breaks to ship U.S. jobs overseas and stash their investments abroad.
And it’s rigged for hedge fund managers and billionaires, who pay lower tax rates than their secretaries.
The Job Preservation and Sequester Replacement Act closes corporate tax loopholes so everyone pays a fair share. And it implements the Buffett Rule so that people who make more than $1 million a year pay it forward so the next kid has a chance to make it big.
This is a sensible way to deal with our financial problems. But I need your help to build national support that puts pressure on Congress to pass the plan.
By JOHN HARWOOD, New York Times
Published: April 29, 2013
WASHINGTON — This month, a political organization aligned with House Republicans sent an e-mail to reporters attacking President Obama’s health care law.
“Young adults on parents’ plan pay more,” said the organization, the YG Network, citing a new employee benefits study. The e-mail’s subject line read “So Much for Popularity.”
Actually, the study did not show those young adults were paying more. It showed insurance companies were, because they had begun providing health coverage to those young adults, as called for under the law.
The missive, inaccurate though it was, illustrates the immense challenge facing the Obama administration as it puts in place the most significant parts of the 2010 law. Few government initiatives reach so many corners of the American economy and society — and have as much potential to generate trouble for the party in the White House.
Among the complex imperatives: pushing reluctant states to set up insurance marketplaces and expand Medicaid programs, keeping an eye on insurance companies as they issue new rate schedules, measuring the law’s effects on small-business hiring, and coaxing healthy young people to buy coverage so the system works economically for everyone else.
Gail Wilensky, who ran Medicare and Medicaid under President George Bush and supports the new law, said that 2014, when the law will make it mandatory to have insurance, “is going to be quite a bumpy year.”
Austan Goolsbee, a former chief economist to Mr. Obama, predicted “a big messaging headache the whole year.”
A new example popped up last week, to the delight of Republican opponents of the law. An article by Politico reported “high-level confidential talks about exempting lawmakers and Capitol Hill aides” from the health law.
In fact, lawmakers said, the talks the article referred to concerned preserving the same kind of employer-subsidized health coverage for Congressional employees that workers at private companies can receive under the law. Yet the article sent White House aides and other Democrats scrambling to avoid the appearance of special treatment.
The law poses some modest potential headaches for the overall economy.
It requires, for example, that businesses with 50 or more full-time workers either offer insurance coverage or pay a penalty. Mr. Goolsbee said he would be watching whether companies around that threshold either defer hiring or shift some full-time workers to part-time jobs.
But the number of such companies is small. A vast majority of American workers are employed by larger companies that already offer coverage.
Some younger health care customers will face a significant increase in their insurance premiums, said Karen Ignagni, who leads a major health insurance trade group. That is because the law requires more comprehensive coverage than many of them now have and curbs insurers’ ability to charge more for older customers, who tend to consume more services.
Yet those increases may be offset by subsidies available to lower-income customers and, for women, by rules barring insurers from charging women more.
Most significant is that those increases apply only to the small fraction of Americans who buy health insurance individually.
N. Gregory Mankiw, a Harvard economist who advised Mitt Romney’s 2012 presidential campaign, fears that some lower-income job holders will work less under the law, since their government-financed insurance subsidies will phase out at higher earning levels. But he acknowledged that it was an “open question” how large those effects would be.
Not large, White House economists say. And to the extent that they do happen, they would be offset by reduced marginal tax rates for others who, under current law, lose their Medicaid health coverage as they earn higher incomes.
The law’s supporters also predict that workers with better health care will be more productive. Expanded coverage may ease the “job lock” that now prevents some workers from seeking better employment for fear of losing coverage.
Uncertainty over the law’s future hung over employers and investors throughout 2012. “It impeded the recovery,” said the economist Mark Zandi.
But last June, the Supreme Court upheld the core of the law, and in November Mr. Obama won re-election. Going forward, Mr. Zandi said, “it’s prudent at this point to think it’s all going to be a wash.”
That will not, however, ease pressure on administration officials over a gantlet of hurdles to put the provisions in place.
Fewer than half of the states have indicated that they plan to establish their own health care marketplaces, known as exchanges under the law. Washington is committed to stepping in and establishing them for states that decline to.
Only about half of the states have indicated that they will expand Medicaid under the law, a central ingredient for the goal of providing coverage to those now uninsured. Some people who acquire insurance under the law may have trouble obtaining treatment, because of a shortage of doctors and state-level “scope of practice” laws restricting the ability of others like nurse practitioners to step in.
Most challenging of all is persuading young, healthy Americans — the most profitable customers for insurance companies — to buy their “mandated” coverage next year, even though the penalty for not doing so is a modest $95. White House officials say this group’s participation in health insurance marketplaces is vital to their success because it will offset the cost of less-healthy customers.
The political stakes in meeting these challenges are circumscribed by the long, acrimonious debate that has occurred in the nation’s polarized political culture. White House strategists estimate that 9 in 10 Americans have fixed views one way or the other. They say that only personal experience with the law can move them.
Yet efforts to reach the small group of undecideds will only increase as the 2014 midterm elections draw closer. Ian Prior, a spokesman for the House Republicans’ campaign committee, vowed that his party’s candidates would keep hammering away at Democratic incumbents who supported the law.
“I don’t think the American people want to go back,” said Representative Steve Israel of New York, who is the chairman of the House Democrats’ committee. But Democrats say they cannot afford to be passive.
“We already know that, left to its own devices, this doesn’t end up in a good place,” said Mark Mellman, a Democratic pollster. “Anyone who thinks this issue is done is fooling themselves.”
A version of this article appeared in print on April 30, 2013, on page A14 of the New York edition with the headline: The Next Big Challenge for Obama’s Health Care Law: Carrying It Out.
By E.J. Dionne Jr., Published: April 28, Washington Post
The policy mystery of our time is why politicians in the United States and across much of the democratic world are so obsessed with deficits, when their primary mission ought to be bringing down high and debilitating rates of unemployment.
And since last week saw a cross-party celebration of the opening of George W. Bush’s presidential library, I’d add a second mystery: Why is it that conservative Republicans who freely cut taxes while backing two wars in the Bush years began preaching fire on deficits only after a Democrat entered the White House?
Here is a clue that helps unravel this whodunit: Many of the same conservatives who now say we have to cut Social Security to deal with the deficit supported Bush’s plan to privatize Social Security — even though the transition would have added $1 trillion to the deficit. The one thing the two positions have in common is that Bush’s proposal also would have reduced guaranteed Social Security benefits.
In other words, deficits don’t really matter to many of the ideological conservatives shouting so loudly about them now. Their central goal is to hack away at government.
This goes to the larger argument about jobs and deficits. For a brief time after the Great Recession hit, governments around the world, including President Obama’s administration, agreed that the immediate priority was restoring growth. Through deficit spending and other measures, the 20 leading economies agreed to pump about $5 trillion into the global economy.
Obama and Democrats in Congress enacted a substantial stimulus. The package should have been bigger, but Obama — thinking he would have another shot later at boosting the economy — kept its size down to win enough votes to get it through Congress.
The second chance didn’t come because conservatives stoked anti-government deficit mania — and never mind that the deficit ballooned because of the downturn itself, and that the stimulus needed to reverse it and those fiscally improvident Bush-era decisions.
Then along came academic economists to bless the anti-deficit fever with the authority of spreadsheets. In a 2010 paper cited over and over by pro-austerity politicians, Carmen Reinhart and Kenneth Rogoff argued that when countries reached a debt level above 90?percent of their gross domestic product, they almost always fell into slow growth or contraction.
Financial Times columnist Philip Stephens compactly takes the story from there: “The implication was that deep retrenchment was the only route back to prosperity. Now, economists at the University of Massachusetts Amherst say the results reflected a data ‘coding error’ and some questionable aggregation. The assumption that high debt always equals low growth is not sustained by the evidence.”
While Reinhart and Rogoff acknowledged their error, they dismissed the controversy in a New York Times op-ed as an “academic kerfuffle” and insisted that their findings had often been “exaggerated or misrepresented” by, among others, politicians. (They also complained about the “hate-filled, even threatening, email messages” they received. I’d be happy to share my e-mail with them. Friends, if you have the good fortune to be engaged in public debates, you get a lot of angry missives these days.)
The two economists would have added to their credibility by showing a bit more humility about their data problem. But the damage was done. Europe and the United States moved prematurely to austerity. Tens of millions of people have suffered from joblessness or lower real incomes. Reinhart and Rogoff didn’t force these decisions, but they abetted them.
Now, through the “sequester” cuts, we are compounding the problem. It’s outrageous that Congress and the administration are moving quickly to reduce the inconvenience to travelers — people fortunate enough to be able to buy plane tickets — by easing cuts in air traffic control while leaving the rest of the sequester in place. What about the harm being done to the economy as a whole? What about the sequester’s injuries to those who face lower unemployment benefits, who need Meals on Wheels or who attend Head Start programs?
Instead, we should be using this period of low interest rates to invest in our infrastructure. This would help relieve unemployment while laying a foundation for long-term growth. But anti-government slogans trump smart-government policies. For reasons rooted in both ideology and the system’s bias against the less privileged, we hear nothing but “deficits, deficits, deficits” and “cuts, cuts, cuts.”
To paraphrase a French statesman from long ago, this is worse than a crime. This is a mistake. Its costs are being borne by good people who ask only for the chance to do productive work.
By Scott Lilly | April 26, 2013 reposted from Center For American Progress
The preposterous legislative sideshow taking place around sequestration gives a pretty clear picture of how little the people who were elected to run the government actually know about it.
Exactly four days after long-anticipated sequester furloughs began for air-traffic controllers, Congress decided the furloughs were not such a good idea after all. It also decided that perhaps it wasn’t a problem caused by an administrator trying to showboat the evils of across-the-board cuts but in fact a problem with the legislation that the members of Congress had crafted themselves—legislation directing that across-the-board cuts be taken from each program project and activity within the $7.5 billion appropriated for air-traffic operations.
The legislation that the House passed overwhelmingly today would take funds from the Airport Improvement Fund—an account that Congress had previously exempted from any across-the-board cuts altogether—and redistribute it elsewhere within the Federal Aviation Administration, or FAA, thus ending the four-day-old crisis.
On one level, the traveling public should be pleased that this absurd, self-created crisis has been defused. But why did it happen in the first place, and why does Congress fail to address so many of the looming crises that will soon confront the citizens it represents?
The comments made by various participants in the FAA drama over the past few days are enlightening. A number of Republican lawmakers argued that there was no need to furlough any of the 15,000 FAA controllers because the agency has 47,000 total employees. The whole furlough problem could be solved by simply by increasing layoffs in the noncontroller workforce.
Ironically, the people offering this solution just months earlier were attempting to alleviate the defense sequestration cuts by larger cuts in nondefense programs. Now they seem to recognize for the first time that there are nondefense activities of the government that actually do matter to people. But what were these 32,000 noncontrollers at the FAA doing? What would happen if we increased their furlough days in order to eliminate furlough days for the controllers?
It turns out that about 15,000 of those employees install, maintain, and service the equipment used by air-traffic controllers and airline pilots. How much equipment are we talking about here? The FAA has radar, radio relays, transmitters, and other electronic equipment operating at more than 64,000 locations across the United States. Failure to maintain that equipment could be as catastrophic to the safe and orderly functioning of our air-transportation system as the understaffing of control towers.
How about the rest of the employees? Well, there are another 7,500 who work in what is called “Aviation Safety.” Some of these people inspect and certify aircrafts and aircraft equipment before it can be put into service by the airlines. Others monitor airplane maintenance by the airlines and certify the training programs and procedures of the airlines in ensuring proper maintenance of the planes that carry the traveling public hundreds of millions of air miles each day.
The fact that all of the uproar over the FAA furloughs was centered on the controllers and not those who ensure proper aircraft maintenance is a measure of how the current congressional decision-making process is nothing more than a series of knee-jerk reactions to whatever problems happen to make it onto the evening news. And those problems may very well be less of a real threat to our safety and well-being than others that we have not heard about.
The game that Congress is now playing is to impose serious cutbacks across thousands of programs, projects, and activities of the government and then figure out which to restore based on press reports and public outrage.
What will be the next item that Congress will have to fix to deflect the public’s wrath? Maybe it will be the growing lines that airline passengers will face to get through airport security due to the hiring freeze and inability of the Transportation Security Administration to pay for the overtime necessary to surge their workforce at peak travel times. Perhaps it will be a salmonella outbreak in certain fruits or vegetables because Congress responded to the meat industry’s demand to prevent furloughs at the Department of Agriculture but would not do the same for the Food and Drug Administration, which is responsible for all other food products. Maybe an early season hurricane will expose the degradation of the U.S. Weather Service’s data-collection capabilities.
Maybe the press will turn their attention to the fact that more than 70 percent of the staff at military hospitals are civilians and subject to furlough. It is obvious that all of those hospitals are at serious risk of not meeting minimal standards for cleanliness, safety, and quality of care. Perhaps an unexpected slowdown in construction starts will be linked to the growing backlog of unapproved multifamily mortgage applications at the Federal Housing Administration. Maybe we will have an early start to the wildfire season in the western United States, and the hazard posed by the lack of training and preparation already occurring in federal firefighting efforts will be linked to the possible unnecessary loss of millions of acres of forestland and dozens of communities caught in the path of wildfires. Perhaps the furlough of epidemiologists and other health professionals at the Centers for Disease Control will become a topic of public concern with the spread of a new generation of viruses or other infectious diseases.
The one thing you can be sure of, however, is that Congress is not examining these problems in advance and looking at issues across the government in a way that will allow them to be anticipated and resolved before they begin to create enough pain and inconvenience. But with a work schedule that requires them to be in Washington only a few full days a month, how could it?
Scott Lilly is a Senior Fellow at the Center for American Progress.
Our Feelings About Inequality: It’s Complicated
By ILYANA KUZIEMKO and STEFANIE STANTCHEVA (Published in the New York Times)
The Great Divide is a series about inequality.
How much do Americans care about rising income inequality? Surveys send mixed signals.
In a poll released last year by the Pew Research Center, two-thirds of Americans agreed that there were “strong conflicts between the rich and poor” — up substantially from when the question was asked in 2009 — but in a Gallup poll taken at the height of Occupy Wall Street, in the fall of 2011, reducing the income and wealth gap was low on respondents’ list of priorities for government action.
It seems like a paradox: Americans are increasingly worried about the gap between rich and poor, but are hesitant to have the government do anything about it.
An experiment we conducted, described in more detail below, may help explain the contradiction. Americans who were given more information about rising inequality expressed significant concern about the problem, but that concern did not always translate into greater support for redistributive policies. Our work identified a possible explanation for this seeming disconnect, and it is a sad one: the more people focused on inequality, the less they trusted the government.
How much Americans care about income inequality and the extent to which they want the government to address it are two distinct questions that are often conflated. Democrats and Republicans agree that America faces a long-run fiscal imbalance that in the coming decades will most likely require cutting social services, raising taxes or both — policies that directly influence income distribution. Who will bear the brunt of this rebalancing will depend on whether the government uses tax and other policies to counteract rising income inequality with greater redistribution.
Since the 1970s, income inequality in the United States has increased at a historic rate. In 1970, the richest 1 percent of Americans enjoyed 9 percent of total national pre-tax income. In 2011, by contrast, that share had risen to 19.8 percent. And this large increase in inequality has not been softened by more progressive tax policy. Tax rates on the top 1 percent of taxpayers have fallen over the same period.
Such a reshaping of the income distribution was unlikely to go unnoticed, and indeed, surveys show that Americans are generally knowledgeable about the rise in income inequality. Using survey data from 2002, the political scientist Larry M. Bartels showed that three-quarters of Americans believed inequality has increased over the previous two decades. The majority of those respondents said this trend was a “bad thing.”
And yet over the past 30 years, Americans have also become less supportive of government efforts to redistribute from high- to low-income households. Between 1991 and 2010, roughly 28 percent of Americans in the General Social Survey — a continuing survey of opinions and attitudes in the United States, conducted by the University of Chicago — agreed that the federal government should “improve the standard of living of all poor Americans.” (Forty-five percent were neutral, and 27 percent agreed that “it is not the government’s responsibility, and that each person should take care of himself.”)
This was a sharp decline — 5 percentage points on average — in support for redistribution relative to those surveyed between 1975 and 1990.
The survey has also revealed that the share of respondents who believe that the rich should pay proportionally more of their income in taxes than the poor is substantially lower now than in 1987. Gallup polls reveal a similar decrease.
What explains Americans’ unwillingness to translate their concerns over inequality into government action? Along with the economist Emmanuel Saez of the University of California, Berkeley, and the psychologist Michael I. Norton of Harvard Business School, we surveyed over 5,000 Americans online in 2011 and 2012. We randomly assigned half of our respondents to complete an online 10-minute tutorial about the increase in income inequality over the last decades. When respondents entered their current household income, the interface calculated a painful counterfactual: what their income would have been had economic growth since 1980 been equally shared among all American households.
In addition, the tutorial emphasized the role that public policy could play in reducing inequality, presenting charts showing that, historically, periods with higher top tax rates have not necessarily been periods of low economic growth. If lack of knowledge is responsible for lack of support for redistribution, our tutorial should have had a meaningful effect on respondents’ policy preferences.
Our respondents did, in fact, react to our tutorial by increasing their already significant concern about inequality: the tutorial raised the share of respondents who indicated that inequality was a “very serious problem” by over 40 percent.
However, our results also revealed — with one key exception — that support for redistribution increased to a much smaller degree. Our tutorial had only a small effect on support for increasing taxes on millionaires and raising the minimum wage, and no effect on support for other policies that help low-income families, like the earned-income tax credit and food stamps.
What was the exception? Our tutorial informed participants that only about 1 of every 1,000 households was wealthy enough to pay the estate tax. (The tax is currently levied on individual estates worth more than $5.25 million.) Seeing this information sharply increased support for the estate tax. Other surveys have shown that Americans wildly overestimate the share of households subject to the estate tax. The effect of information on increased support for the estate tax has been demonstrated by researchers, in other contexts. It appears that in situations where the public is highly misinformed, providing simple facts can have a big impact on policy views.
But why didn’t greater knowledge about inequality translate into support for policies to ameliorate it?
Our experiment suggested an answer: Those who saw our tutorial became 20 percent less likely to agree that government could be trusted at least “some of the time” — a surprisingly large effect. By emphasizing to respondents the level and growth of income inequality over the last several decades, our tutorial appears to have simultaneously undercut their trust in government’s ability to fix the problem. After all, if the government let things get this bad, respondents might logically conclude that it is also unable to do much to fix the situation.
Indeed, the General Social Survey has shown that confidence in government has dropped over the past 30 years. From 1976 to 1989, 23 percent of respondents, on average, reported having “hardly any” confidence in Congress. Since 1990, that number has risen by more than 11 percentage points. The survey has revealed an almost identical erosion of confidence in the executive branch of the federal government. Respondents reacted to our inequality tutorial by reporting lower trust in government, raising the possibility that Americans may have reacted to 30 years of rising income inequality by reducing their trust in government.
Whether or not the rise in inequality has itself lowered Americans’ faith in government, the low opinion in which Americans hold their government may well limit their willingness to connect concern with inequality to government action.
Our results have differing implications for people on both ends of the political spectrum. On one hand, liberals can take heart in the news that Americans are deeply troubled about the current level of income inequality. On the other hand, conservatives may be glad to hear that despite this concern, Americans have a healthy skepticism that government can be trusted to do much about it.
Our research suggests that merely talking more about inequality is unlikely to change Americans’ policy preferences. Americans are already aware of inequality and are troubled by it. Proponents of greater redistribution can probably save their breath pointing out that inequality is a problem. Instead, they face what seems to be a much more difficult task: convincing them that their government is up to the task of addressing it.
Ilyana Kuziemko is an associate professor of finance and economics at Columbia Business School. Stefanie Stantcheva is a doctoral candidate in economics at the Massachusetts Institute of Technology.
ONE AFTERNOON in 2007, Ed Markey stood outside the doors of the US House chamber, balancing plaster models in his hands. He was waiting to enter the nearly empty chamber, to make a speech for C-SPAN junkies illustrating the lack of screening of cargo on US airliners — a loophole that Markey feared a terrorist might exploit. It was a point he had hammered home after 9/11, while airlines and cargo companies insisted that existing precautions were sufficient. But he wasn’t about to give up, and, with a big smile on his face, bounded onto the House floor.
Though Markey’s district included people who died on 9/11, there was no special reason why he, of all House members, should be leading this particular cause. He simply saw it as his job to do what he could to improve the country.
Now, after 37 years of legislative action — sometimes fruitful, sometimes fruitless, always engaged — Markey is seeking to move to the Senate. His primary-election rival, fellow US Representative Stephen Lynch, casts Markey as a creature of Washington, beholden to its ways. It’s an understandable argument for Lynch, since many voters are frustrated with the paralysis in the capital, and looking for ways to register their disapproval.
But it’s hard to see what Ed Markey has to do with the partisanship and discord that have turned people against Congress. He’s a happy warrior, eager to join with Republicans on matters of national importance. To reject Markey simply because he knows how to get things done wouldn’t be a blow against congressional dysfunction; it would further it.
Like Markey, Lynch is also a long-serving congressman, albeit for 12 years. But he is, for better or worse, an antiestablishment figure. He doesn’t seek to be part of the congressional leadership, and tends to go his own way on major votes. Like former Senator Scott Brown, Lynch sometimes seems to believe the job of legislator is to wait until others have shown their cards — until all the hard work of drafting bills is done — and then vote thumbs up or thumbs down. He famously turned thumbs down on Obamacare, despite passionate entreaties from most of his colleagues in the Massachusetts delegation, President Obama, and Vicki Kennedy.
Lynch’s complaints about some of the details of the act were reasonable, but his decision to oppose it wasn’t; opportunities to reform health care come along every two decades or so, and passing one up would have been disastrous. Of course, Lynch’s career shouldn’t be judged solely by the times he’s bucked the system: In some areas, such as providing congressional oversight of the Afghan war and reforming the postal service, Lynch has been a diligent House member. But he’s chosen, in this campaign, to present himself as a principled outsider taking on the ultimate company man. The alleged company man, however, has delivered more for the people of Massachusetts; the achievement gap between Markey and Lynch is vast.
Markey has been the House’s main architect of federal telecommunications policy, guiding the creation of millions of jobs — including many in Massachusetts. He’s also a leader in energy policy, and the prime mover of the far-reaching bill to address climate change that passed the House in 2009 but got bottled up in the Senate. He helped create the legislation that enabled President Obama to negotiate a 54.5 mpg fuel-economy standard for the 2025 model year — one of the greatest accomplishments of Obama’s first term. The list goes on and on.
Of course, some Lynch supporters hope that voters’ eyes will glaze over, and that Markey’s work will morph into images of tedious congressional hearings and floor fights. There have been plenty of those, but Markey hasn’t lost his connection to the values of Massachusetts Democrats. On some values issues, such as abortion rights and gun control, he’s been a more forceful advocate than his rival.
Still, Lynch deserves credit for making the race. He’s brought needed competition to the short special-election campaign. He’s forced Markey to be a better candidate. Most Democratic strategists and power brokers preferred to clear the field for Markey. Lynch stepped forward anyway — and rightly so. But Markey didn’t get where he’s gotten because of strategists and power brokers. It took hard work, through years of laying groundwork for measures that improved people’s lives.
On that afternoon in 2007, Markey could have been anywhere else in Washington — or Massachusetts, for that matter — than the floor of the House, intoning about cargo screening. But the opposition finally relented: Markey’s bill became law. On cargo screening and dozens of other issues, Markey’s legislative exertions have paid off for America and Massachusetts. He is the best choice for Bay State Democrats.