Category: Uncategorized

Tracking Healthcare Cost Growth Through a New Measure of Productivity

Posted on by The Progressive Policy Institute

This brief provides a new explanation for why healthcare cost growth is showing restraint. Specifically, we find evidence that the healthcare sector is finally managing to use its workers more productively.

In this policy brief we define a new measure of healthcare productivity, Gross Medical Productivity (GMP). We define GMP as the number of potential patients per healthcare worker, where the pool of potential patients is the entire population. GMP measures healthcare productivity by looking at how effectively the sector uses its workers. So, if the potential patient population grows faster than the number of healthcare workers, GMP rises.

We argue GMP is a reasonable proxy for healthcare productivity, and could be a leading indicator for trends in healthcare cost growth going forward. Research shows labor accounts for over half of total healthcare costs1, suggesting a strong relationship between labor productivity and cost growth. Indeed, historically GMP has been falling at a rapid rate, corresponding to rapid growth in healthcare costs. That suggests a rise in GMP, or a rise in the number of potential patients per worker, will place downward pressure on healthcare cost growth. And because we can see changes in GMP well before official healthcare cost data is available, we believe GMP can provide early insight on the direction of cost growth.

From this approach we find evidence to suggest healthcare cost growth continued to show restraint in 2012, especially for the elderly population. We found that GMP rose considerably in 2012 for the 65 and over population, one of the largest drivers of healthcare cost growth, as healthcare workers became more productive in treating older patients. However, we also note that GMP for the entire potential patient population continues to fall.

Download the policy brief.

The Secret Ingredient for Solving Economic Inequality: Savings

Posted on by The Progressive Policy Institute

In his second inaugural address, President Obama laid out a bold vision for solving economic inequality. “We are true to our creed,” he said, “when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else because she is an American.”

The president has hinted at a variety of approaches for solving inequality, ranging from education reform to job training. But he has yet to spotlight one critical ingredient: savings. Without an aggressive plan to help all Americans save and build wealth, genuine equality of opportunity is impossible.

Stagnant household incomes are unquestionably inequality’s principal source of nourishment. The Census reports 2011 real median income was down nearly 9 percent from its high in 1999. Continue reading “The Secret Ingredient for Solving Economic Inequality: Savings” →

Reframing the Marriage Debate

Posted on by The Progressive Policy Institute

Listening to the political debate in Washington, you’d think the only important question about marriage is whether there’s any valid reason to bar gays from it. Few pay attention to the basic health of the institution we’re all fighting over.

David Blakenhorn is an exception. He and his colleagues at the Institute for American Values are calling public attention to the decline of marriage in the United States, and the profound social and economic implications it entails. They’ve just issued a call for a “new conversation on marriage,” which I’ve been pleased to endorse.

Our statement underscores that the erosion of marriage among non-college educated Americans (not just the poor) is reinforcing other baleful trends – wage stagnation and the concentration of economic gains at the top of the economic pyramid – that are deepening class divides in our supposedly classless society. And yet:

This hollowing out of marriage in mainstream America is among the most consequential social facts of our era. It’s contributing to the growth of inequality, harming countless children, and weakening, perhaps fatally, our formerly strong middle class. And amazingly, if you listen to political leaders of both parties and opinion leaders from both the left and right, you’ll discover that very few of them appear even to have noticed what’s happening.

The appeal ends by challenging the fatalistic view that the decline of marriage is some kind of historical or evolutionary inevitability. Marriage is an organic social institution, and we can take intelligent steps to strengthen it. By reframing the marriage debate, this statement begins that vital process of renewal.

Stop the Debt!

Posted on by The Progressive Policy Institute

Writing for Politico, Will Marshall argues that President Obama should counter the Republican’s proposal of balancing the federal budget in 10 years with an achievable goal of stopping the debt growth this year:

Republicans have retreated twice this month on the fiscal front, but they aren’t giving up. After having been forced to swallow higher tax rates and a debt ceiling increase, they’ve regrouped behind a new demand: balance the federal budget in 10 years.

That’s not going to happen, but no matter: The GOP is making an ideological statement. President Barack Obama should counter with a realistic fiscal goal, one Congress could actually achieve this year: Stop the debt from growing.

It’s finally dawned on Republicans that control of the House doesn’t entitle them to dictate the nation’s agenda. Still, they want to keep debt reduction front and center in Washington, because it’s a proxy for what conservatives regard as the nation’s overriding priority: shrinking the federal government.

But Obama won the election, and he has other ideas. One of them is not letting the right hold America’s economy hostage to demands for brutally deep cuts in public spending. The public backs the president, as evidenced by polls showing Americans believe GOP rigidity is the chief obstacle to a fiscal compromise.

Read the piece at Politico.

Ending the Endless Election Season

Posted on by The Progressive Policy Institute

National elections in the United States now stretch out over nearly 24 months, with each new electoral cycle seeming to start up almost as soon as the last has ended. By contrast, British law allows elections in the United Kingdom to last no more than 17 working days. In 2005, for instance, the electoral season began on April 11 with the formal dissolution of Parliament and the vote was taken on May 5. The U.K. is not alone in the speed of its elections: the 2008 Canadian federal election began on September 14 and ended on October 7. That same year, elections in Italy lasted a slightly longer seven weeks, while in 2010 in the Netherlands the process took ten weeks.

There are reasons that the United States probably can’t have elections quite as compact as those in parliamentary democracies. But do they really need to last 40 times as long as in Britain, or even 10 times as long as in the Netherlands? And do our elections need to be so exorbitantly expensive? The $49 million cost of the 2010 U.K. parliamentary election was 120 times less than the almost $6 billion cost of the 2012 U.S. presidential election, or about 1/23rd as much per capita.

There is much that the U.S. system can learn from other democracies that would enable it to significantly streamline, simplify, and shorten our interminable electoral process for both the president and Congress, as well as state and local offices. Following are five ideas from around the world. Not all could be easily or directly imported into the U.S. system, but at a minimum they offer food for thought; in some cases they offer the start of blueprints for action.

Download the policy brief.

End the Endless Election Season

Posted on by The Progressive Policy Institute

Writing for the Daily Beast, PPI Senior Fellow Raymond A. Smith lays out policies to improve our presidential elections.

President Obama’s second inauguration last week capped a long electoral cycle that began almost two years ago, in early 2011. The stupendous length and cost of America’s presidential elections is a wonder to the world – and not in a good way.

In scarcely 24 months, the whole spectacle will start anew. Then it’s two years of straw polls, fundraising reports, and breathless horserace coverage of non-events. This will be followed by a gauntlet of caucuses and primaries whose arcane rules are understood only by a small priesthood of campaign consultants. And it in the end will yield a general election campaign smothered in attack ads paid for by shadowy “independent” groups accountable to no one.

Does democracy really have to be this way? No, and for proof we need only look to our closest democratic allies, whose national elections are notably brief, efficient and orderly. How do they manage this? Four sets of policies and practices stand out.

Read the complete piece at the Daily Beast.

San Bernardino County Strikes Measure to Use Eminent Domain

Posted on by The Progressive Policy Institute

Earlier today the Joint Power Authority, municipal body constructed by the county of San Bernardino, California voted not to consider using the power of eminent domain to seize residential mortgages held in private label securitizations (PLS).

The proposed move, authored by “Mortgage Resolution Partners”, a private firm out of San Francisco, had long been a controversial measure strongly opposed by private investors. The concept would have used the local “takings” power to write down principal on underwater mortgages and refinance the new loans onto the books at The Federal Housing Administration (FHA).

In a policy brief titled “Can Eminent Domain Help Underwater Homeowners” published on  July, 2012, when this plan first began to surface, I argued that eminent domain deserved credit for being creative, but was not in the best interest of homeowners. Please see the memo here.

Is the Labor Market for Colleges Grads Looking Up?

Posted on by The Progressive Policy Institute

Young educated Americans are finally rejoining the workforce. According to BLS statistics, the labor force participation of Americans age 18-34 with a Bachelor’s or Associate’s degree is rising again. By comparison, young people without higher education are still dropping out of the labor force.

The chart below shows the divergence in labor force participation between young people with and without a degree. Having a degree makes a big difference in who shares in the labor market recovery and who is increasingly left behind. Interestingly, young people with a vocational Associates degree are having the best recovery in labor force participation, even better than those with a Bachelor’s degree.

To be sure, the news is not all good. College students are well aware of the challenges awaiting them, like rising average student debt and falling real earnings. Most young grads say their biggest ambition has come to finding a job that pays enough to cover rent.

Continue reading “Is the Labor Market for Colleges Grads Looking Up?” →

New ‘Ability to Repay’ Rules Highlight Need for Affordable Housing

Posted on by The Progressive Policy Institute

This week, the Consumer Financial Protection Bureau (CFPB) released long-awaited new mortgage rules aimed at protecting consumers from abusive loans.

The new rules, when they take effect next January, will effectively shut down some of the worst practices leading up to the 2007-2008 housing crash: “interest-only” loans, predatory fees, and “teaser rates” that trapped people into mortgages they couldn’t afford once the low initial rates expired. Mortgages with these features are now excluded from what the CFPB defines as “qualified mortgages” shielded from consumer lawsuits.

Most significantly, the new rules will also require lenders to ensure that borrowers can pay back their loans. Among the new requirements, a borrower’s monthly debt payments (including the mortgage) can’t exceed 43 percent of pre-tax income.

Without doubt, the mortgage lending landscape will now be much safer for homebuyers, who once faced a confusing and potentially toxic array of “exotic” products. These rules will also provide much needed certainty to the mortgage finance industry, which has had a rocky few years. Continue reading “New ‘Ability to Repay’ Rules Highlight Need for Affordable Housing” →

Make the Cabinet More Effective

Posted on by The Progressive Policy Institute

Writing for the New York Times, PPI Senior Fellow Raymond A. Smith argues for strengthening the role of the president’s cabinet.

EVERY four years the cabinet briefly becomes the focus of national attention in December and January — only to fade from view again after Inauguration Day. True, individual cabinet secretaries will be in the news from time to time, but the cabinet as an institution will be all but forgotten. Yet the United States could benefit greatly by strengthening its scope and role.

Although the cabinet is not established in the Constitution, presidents since George Washington have convened a collective body of the heads of the executive departments. Washington used these meetings to tap into the wisdom of Secretary of State Thomas Jefferson and Treasury Secretary Alexander Hamilton. Abraham Lincoln assembled a strong “team of rivals” in his cabinet to gird the nation at its time of greatest peril. Franklin D. Roosevelt convened his cabinet the day after the Pearl Harbor attacks, while John F. Kennedy relied on a subset of his cabinet during the Cuban missile crisis.

Over the past half-century, however, the expansion of the White House staff has centralized deliberation and decision making increasingly within the confines of 1600 Pennsylvania Avenue NW. This reliance on professional staffers, political advisers and media spinmeisters within a constrictive White House “security bubble” deprives presidents not only of the deep substantive policy expertise of top civil servants but also of the political judgment of cabinet members who are often successful politicians.

Read the complete piece at the New York Times.

What Americans Didn’t Get from the Fiscal Cliff Tax Deal

Posted on by The Progressive Policy Institute

By all accounts, the recently passed tax deal averting the “fiscal cliff” was a big win for the American people.

Among other things, the agreement preserves the full package of Bush-era tax cuts for the middle class and raises rates only on the wealthiest Americans. It also permanently patches the Alternative Minimum Tax so it wouldn’t affect middle-class households.

Moreover, it extends for five more years an expansion of three major tax benefits for lower-income households: the earned income tax credit for low-income wage-earners, the child tax credit and the “American Opportunity Tax Credit,” aimed at helping families defray college costs.

But Americans may end up losing more than they’ve gained if this agreement is all that passes as “tax reform” this Congress. If so, Americans will have been robbed of an opportunity to rebuild a tax code that’s truly in their favor.

This means a tax code that’s not just less complex but whose benefits, as well as its burdens, are distributed more fairly. In particular, middle-and lower-income Americans deserve far more help than they’re getting to save and invest in their economic security. Continue reading “What Americans Didn’t Get from the Fiscal Cliff Tax Deal” →

The Google Way: How Washington Can Regulate Without Killing Growth

Posted on by The Progressive Policy Institute

In the Atlantic, Michael Mandel explains how the Federal Trade Commission’s looming antitrust settlement with the search giant shows that regulators can do their job without stifling innovation:

The Federal Trade Commission seems ready to announce a settlement with Google today, bringing to a close a 20-month antitrust investigation. The settlement reportedly would avoid antitrust charges against the search giant, while requiring Google to agreeing to change some of the practices that other companies have complained about.

On its own, the settlement is good news for consumers, workers, and the whole U.S. economy. Objectionable conduct would be moderated without dampening the incentive for Google to innovate and provide new services. It’s also true that it never made much sense to attack one of America’s prime innovative companies at a time when competitiveness, growth, and job creation are at the top of the economic agenda.

More importantly, the FTC’s approach to the Google investigation shows that regulatory agencies can be thoughtful about adopting pro-innovation, pro-growth policies without abandoning their core missions. A critical question facing the U.S. economy–and indeed, the European economy as well–is whether the existing regulatory structure is flexible enough to deal with the fast changing world of technology. If regulators apply old rules too strictly, they run the risk of squashing the very innovation needed to drive growth, job creation, and competitiveness.

Read the complete piece at the Atlantic.

Fiscal Cliff Deal Could Show the Way Toward a Grand Bargain

Posted on by The Progressive Policy Institute

Writing for the Daily Beast, Will Marshall argues that Obama is in a strong position to challenge the new Congress to pass a fiscal grand bargain early in 2013:

The fiscal cliff deal finally passed by the House Tuesday night isn’t likely to lift the public’s rock-bottom esteem for the nation’s elected leaders. It took too long and delivered too little, and the spectacle of a Congress that can’t conduct the nation’s business except under extreme duress from self-imposed deadlines and penalties is infuriating.

Still the outcome wasn’t terrible—and it shows that a grand fiscal bargain is still in reach, as our deeply polarized political class seems to be relearning the art of compromise.

The deal is best understood as ratifying the 2012 election result. President Obama campaigned and won on explicit promises to raise tax rates on the rich. That mandate, plus the automatic expiration of the Bush tax cuts, left Republicans with no choice but to negotiate with the White House over narrowing the scope of the coming tax hike.

Read the entire piece at the Daily Beast.

Why the Housing Market Can’t Move On Without More First-Time Homebuyers

Posted on by The Progressive Policy Institute

Writing for U.S. News & World Report, Jason Gold argues why the housing market needs more first-time homebuyers:

Home values are now increasing nationwide. While that’s certainly better than the alternative, a deeper dive into the data reveals a serious crack in the foundation: too few first-time homebuyers.

First-time homebuyers are the vital first rung on the home ownership ladder. They are usually buying from a seller who is “trading up” to a more expensive home or building a new one. When potential new buyers sit on the sidelines, existing homeowners are stuck, unable to move out and up.

In October, the first-time buyer’s share of the purchase market stood at about 35 percent according to the Campbell/Inside Mortgage Finance HousingPulse Survey. That’s down from 37 percent as recently as June and it’s the lowest percentage recorded in the survey’s history. Typically, a healthy housing market sees first-time homebuyers occupy around 40 percent of the purchase market.

The survey results also revealed that first-time homebuyers heavily relied on the Federal Housing Administration for financing, thanks to its low down-payment requirement of 3.5 percent. With the FHA’s recent announcement that it will tighten credit standards, first-time homebuyers will see the barrier to homeownership grow even more.

Read the entire piece at U.S. News & World Report.

How a Wireless Tax Bill Can Spread Holiday Cheer

Posted on by The Progressive Policy Institute

Most of us would be lost without our cell phones, tablets, and other wireless devices.  We rely on them so much it’s hard to imagine how we could function without 24 hour access to Twitter, Facebook, and email. That means we are willing to pay up each month – for the service connection charge, one-size-fits-all data access plan, and all the taxes and fees that go with it.

And all of the wireless taxes and fees that go with it certainly add up – to about 17.2 percent of our monthly bill according to a new report by Scott Mackey. That’s up from 16.3 percent in 2010, a 5.5 percent increase in just two years.  Not a very festive thought during the holiday season.

But there is one tax bill currently in Congress that may spread some holiday cheer just yet. The Wireless Tax Fairness Act, if passed, would provide a five-year reprieve on any tax increases for our wireless service.  That means no new state or local government wireless taxes through 2018.

A five-year reprieve on wireless taxes would of let us keep more of our money to spend on other things, like an increase in income and payroll taxes after the fiscal cliff. Or on the next iPhone, since it will be obsolete by the time our eligible discount-for-contract-renewal-once-every-two-years comes up (and who wants to wait that long?). Continue reading “How a Wireless Tax Bill Can Spread Holiday Cheer” →

Funding Cuts Hit College Students Harder Than Faculty

Posted on by The Progressive Policy Institute

Fiscal cliff or not, the coming years are certain to bring cuts in public spending on higher education. The looming sequestration threatens to cut $500 billion in federal discretionary spending starting next year, leaving a multi-billion dollar hole in R&D funding at public universities. State governments have already begun higher education funding cutbacks. So as policymakers pledge austerity and deficit reduction, colleges and universities will be left in a financial pinch.

Students and university faculty and staff are the obvious targets to fill these budget holes. But who actually pays the price for cuts in university funding?

New PPI research suggests college students will bear the brunt of additional austerity imposed on colleges and universities. Looking at previous cuts in public funding, we found college students were unquestionably worse off relative to faculty and staff when it came to making up the difference. And the impact of this uneven allocation could be serious. If college students continue to pay the biggest price for austerity, the next generation of young people may think twice about the value of going to college.

That’s because college students paid a high price for cuts in university funding over the last decade, while faculty and staff were relatively unaffected.  As shown in this first graph, total tuition at four-year universities rose a staggering 35% over the last decade (in constant dollars). These rising prices are certainly behind the rising real average debt per graduate, up almost 30% over the same time.

Continue reading “Funding Cuts Hit College Students Harder Than Faculty” →