We tend to think of having a formal identity as an enabler for social and economic inclusion, but in fact identity can have entirely the opposite effect. Once socioeconomic interactions are based on a standardized notion of identity, it is likely that social status based on past achievements, family histories, personal connections, political backing, wealth and education levels will influence socioeconomic outcomes — thereby potentially reinforcing the established class hierarchy. Systems that are based on anonymity might in fact be the most equitable and inclusive, in the sense of ensuring equal participation by all, by systematically stripping out social status.

But anonymous systems carry a high cost in terms of efficiency. Reputations would be impossible to establish, contracts would be hard to enforce, and there would be more insecurity as it would be much harder to track and clamp down on illicit activities. It is therefore not at all certain that the poorer segments of the population would be better off in absolute terms if the economy worked on the basis of anonymity.

The need for digital identities for inclusive access

In fact, giving lower-income people digital identities would make it possible for them to participate in the modern digital economy in many ways: to open accounts and receive moneys from anyone, assert their rights over digital services they have contracted and digital assets they have purchased, settle disputes, etc. But establishing a formally recognized identity can be a major hurdle in itself, especially in countries that do not have digitized national ID schemes.

It is ironic that the difficulty of establishing formal identity in the first place often prevents so many lower-income, and especially rural, people from accessing digital services. Identity systems with selective coverage of the population create a double whammy of inequality: on the one hand, these partial systems help the haves to carry their social and economic status symbols and reputations into every market interaction they are engaged in, and on the other they negate digital visibility and access to digital services for the have not´s.

We argue in a new research paper that it should be the government´s responsibility to ensure that every citizen in fact has a digital identity, not merely to create a platform that enables people to have digital identities. The Indian government´s Aadhar push to provide everyone in India with a unique number ID linked to biometrics is a good example of such a policy.

The demands of identity verification systems

The problem is that different policy agendas converge on the issue of identity and have different requirements for a digital identity platform. What works as an identify standard for financial systems may not be good enough for law enforcement agencies. The risk is that governments adopt the highest standard, with the result that the inclusion agenda and the needs of the poor are ignored.

If there is no centralized government system for identity, then what we need is a system that:

1. Lets the issue of identity be resolved in the first instance within the communities where poor people live, shop and work (e.g. through attestation by known local figures)
2. Draws people into seeking and improving their digital identities over time, much in the way that they develop their social network over time.

This is the notion of social identity. Let people with meager resources help each other overcome their limitations: each may have very little voice, but collectively they represent a potentially vast information system for official identification purposes. That is hard to reconcile with the way governments and formal institutions tend to handle identity verification: in silos, contained within databases and cards. We need more flexible notions of identity, which build layers of identity information and verification through social networks – as well as bureaucratized ID-seeking processes.

Good afternoon Chair Ayotte, Ranking Member Cantwell, and Members of the Subcommittee. Thank you very much for the opportunity to testify today on the important topic of domestic unmanned aircraft systems (UAS).

I am a nonresident senior fellow in Governance Studies and the Center for Technology Innovation at the Brookings Institution. I am also a National Fellow at the Hoover Institution at Stanford, and a professor at UCLA, where I hold appointments in the Electrical Engineering Department and the Department of Public Policy. The views I am expressing here are my own, and do not necessarily represent those of the Brookings Institution, Stanford University or the University of California.

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On Friday, June 3, S&P Global Ratings announced that it would not downgrade South Africa’s credit rating to junk, letting South Africa breathe a sigh of relief. The outlook, however, remained negative. While some experts were confident that the rating would not be cut, most continued to warn that future economic or political turmoil could spark a downgrade later this year. The South African Treasury agreed, but remained positive releasing a statement saying:

Government is aware that the next six months are critical and there is a need to step up the implementation [of measures to boost the economy] … The benefit of this decision is that South Africa is given more time to demonstrate further concrete implementation of reforms that are underway.

South Africa, whose current rating stands at BBB- (one level above junk), has been facing weak economic growth—at 1 percent—over past months. The International Monetary Fund has given a 2016 growth forecast of 0.6 percent. Many feared that a downgrade could have pushed the country into a recession. Borrowing by the government would have also become more expensive, especially as it tackles a 3.2 percent of GDP budget deficit for the 2016-2017 fiscal year.

Other credit ratings agencies also are concerned with South Africa’s economic performance. Last month, Moody’s Investors Service ranked the country two levels above junk but on review for a potential downgrade, while Fitch Ratings is reviewing its current stable outlook and BBB- rating.

For South African Finance Minister Pravin Gordhan’s thoughts on the South African economy, see the April 14 Africa Growth Initiative event, “Building social cohesion and an inclusive economy: A conversation with South African Finance Minister Pravin Gordhan.”

This week, the Extraordinary African Chambers—located in Dakar and established in collaboration with the African Union—sentenced former Chadian President Hissène Habré to life in prison. Habré seized power in 1982, overthrowing then President Goukouni Oueddei. He fled to Senegal in 1990 after being ousted by current Chadian President Idriss Deby. After he fled to Senegal, the African Union called on Senegal to prosecute Habré. In 2013, the Extraordinary African Chamber was created with the sole aim to prosecute Habré. The Habré trial is the first trial of a former African head of state in another African country.

Habré faced a long list of charges including crimes against humanity, rape, sexual slavery, and ordering killings while in power. According to Chad’s Truth Commission,  Habré’s government murdered 40,000 people during his eight-year reign. At the trial, 102 witnesses, victims, and experts testified to the horrifying nature of Habré’s rule. His reign of terror was largely enabled by Western countries, notably France and the United States. In fact, on Sunday, U.S. Secretary of State John Kerry admitted to his country’s involvement in enabling of Habré’s crimes. He was provided with weapons and money in order to assist in the fight against former Libyan leader Moammar Gadhafi. Said resources were then used against Chadian citizens.

Also this week, Simone Gbagbo, former Ivorian first lady, is being tried in Côte d’Ivoire’s highest court— la Cour d’Assises—for crimes against humanity. She also faces similar charges at the International Criminal Court though the Ivoirian authorities have not reacted to the arrest warrant issued in 2012. In March 2015, Simone Gbabgo was sentenced to 20 years in jail for undermining state security as she was found guilty of distributing arms to pro-Laurent Gbagbo militia during the 2010 post-electoral violence that left 3000 dead. Her husband is currently on trial in The Hague for the atrocities committed in the 2010 post-election period.

On Monday, May 30, South African chemical and energy company Sasol Ltd announced that Mozambique’s ongoing debt crisis and continuing low global gas prices would not slow down its Mozambican gas project. The company expressed confidence in a $1.4 billion processing facility upgrade stating that the costs will be made up through future gas revenues. In explaining Sasol’s decision to increase the capacity of its facility by 8 percent, John Sichinga, senior vice president of Sasol’s exploration and production unit, stated, “There is no shortage of demand … There’s a power pool and all the countries of the region are short of power.” In addition, last week, Sasol began drilling the first of 12 new planned wells in the country.

On the other hand, on Monday The Wall Street Journal published an article examining how these low gas prices are stagnating much-hoped-for growth in East African countries like Tanzania and Mozambique as low prices prevent oil companies from truly getting started. Now, firms that flocked to promising areas of growth around these industries are downsizing or moving out, rents are dropping, and layoffs are frequent. Sasol’s Sichinga remains positive, though, emphasizing, "We are in Mozambique for the long haul. We will ride the waves, the downturns, and the upturns."

This election cycle, what will separate Democrats from Republicans on energy policy and their approach to climate change? Republicans tend to be fairly strong supporters of the fossil fuel industry, and to various degrees deny that climate change is occurring. Democratic candidates emphasize the importance of further expanding the share of renewable energy at the expense of fossil fuels, and agree that climate change is a real problem—with some saying the challenge trumps most, if not all, other U.S. security concerns.

Now that there are presumptive nominees for both major political parties, it’s an important moment to outline, in broad strokes, the positions of Secretary Hillary Clinton and businessman Donald Trump. We realize that Democratic Presidential candidate Bernie Sanders has not dropped out of the race, but note that it is fairly unlikely at this point that he would clinch the nomination.

Clinton: Building on the Obama legacy 

Secretary Clinton has laid out the most comprehensive and detailed energy and climate policy proposals of the candidates to date. They are in essence a continuation, and in some cases a further expansion, of existing White House policies under President Obama. The Secretary has stated that she wants the United States to be the “clean energy superpower of the 21st century.”

This starts with the notion that climate change is an existential threat, which the global community has to address as soon as possible. In order to do that, in her view, the United States needs to continue to show leadership on the international stage, as the Obama administration sought to do surrounding the Paris agreement in December 2015. This will require substantial reforms to expand low-carbon options, including nuclear energy to some degree, while tightly regulating fossil fuels (and gradually phasing them out). 

[S]he wants the United States to be the “clean energy superpower of the 21st century.”

The first casualty of this transformation is the coal industry, which Clinton has explicitly acknowledged. She presented a $30 billion plan to revitalize communities where coal production is currently an important industry and job creator, for example, and has campaigned with this message in various state primaries. Implicitly, Secretary Clinton does not seem to believe in the economic viability of carbon capture and sequestration in the United States—this is despite the fact that most analyses, including those of the Intergovernmental Panel on Climate Change (IPCC), suggest that this technology could be a cost-efficient tool in a wider carbon emission mitigation portfolio. 

Clinton sees natural gas as a bridge fuel, though at this point it’s not clear how long that bridge is. Questions remain about the role that natural gas can play in scenarios of deep decarbonization in 2030 and beyond. At the moment, the gas industry is rather nervous of the Secretary’s statement that she’d increase regulations on, in particular, the fracking industry—if her conditions came to fruition, there would very few places where fracking would continue. 

Secretary Clinton believes that oil consumption has to be cut substantially in the coming years, and she has suggested that new drilling in places like the Arctic, off the Atlantic Coast, and on federal lands would be discouraged or banned. She has previously opposed crude oil exports, though we would not anticipate a roll-back of existing policies (in December 2015, the Obama administration lifted the decades-old ban). 

Clinton foresees a new energy economy built on rapidly increasing shares of renewable energy, which should comprise 25 percent of the U.S. fuel mix by 2025 according to her plan (solar energy would be a key focus, with half a billion panels to be installed by the end of her first term). To facilitate this transition, she presented an elaborate energy infrastructure plan to modernize the U.S. grid and improve efficiency in reviewing and approving projects. 

Tax credits to support renewables would be continued under a Clinton White House, whereas fossil fuel subsidies would be phased out. Increased energy efficiency, including harmonization of vehicle efficiency and fuel standards, are high on her agenda as well. The Secretary also supports the Clean Power Plan that the Environmental Protection Agency under the Obama administration has launched, and which is currently on hold in the Supreme Court. 

On the international stage, Clinton supports the Paris agreement on climate change. Should she win the presidency in November, she would make an effort to take this Treaty to the next step, thus continuing U.S. leadership. That would mean reinforcing U.S. leadership along the lines described above, while helping address current uncertainties about finance, transparency, and accountability, to name only a few challenges that remain.

Trump: Drill, baby, drill

Although Donald Trump’s candidacy remains highly controversial, he is now the presumptive Republican nominee for president. To the extent that we know any detailed plans, quod non, it is safe to say that his views on energy and climate change are diametrically opposed to most of Clinton’s. Broadly speaking, Mr. Trump has come out as a fervent supporter of the fossil fuel industry, and has expressed skepticism about the economic viability of renewable energy.

Mr. Trump’s views start with the belief that climate change is not man-made. In the past, the controversial businessman has suggested that climate change might be a hoax invention from China, in order to undermine U.S. industrial interests and job creation. This starting point allows Mr. Trump to be extremely supportive of existing industrial interests (if carbon and other greenhouse gas emissions are not a problem, the thinking goes, then business as usual is the way to go). 

In a speech in North Dakota in late May, Mr. Trump laid out some broad initial ideas for his energy policy. He declared that under his presidency the United States would “accomplish complete American energy independence,” leaving unaddressed arguments about what that would mean for existing international energy trade. 

It is probably safe to say that Mr. Trump would like to further expand oil, gas, and coal production in the country. The latter, in particular, is remarkable: even coal executives have declared that market forces (particularly very competitive natural gas) have been the primary threat to the coal industry. Since Mr. Trump is also a strong supporter of the natural gas industry—and considering the challenges of building new bulk terminals for exports—it is unclear how a revitalization of the coal industry would occur. 

If climate change is a hoax, it will come as no surprise that Mr. Trump will not support efforts to mitigate carbon and other greenhouse gas emissions.

Contrary to his opponent, Mr. Trump would also like to revoke restrictions on drilling for oil and gas, and would permit production on federal lands. He also supports further expansion of energy infrastructure, and would, if elected, ask Trans Canada to resubmit a permit application for the Keystone pipeline, which he’d approve. He has caveated his support for projects like these by demanding that a portion of the revenues from oil and gas flows be redistributed to local communities, to compensate them for intrusion on their private property. Mr. Trump has also indicated that he wants to use revenues from oil and gas production to rebuild U.S. infrastructure more broadly.

If climate change is a hoax, it will come as no surprise that Mr. Trump will not support efforts to mitigate carbon and other greenhouse gas emissions. The candidate has called the Obama administration’s Clean Power Plan “stupid,” and when asked what he would do about the Paris agreement on climate change, he said he’d cancel it. 

Though Trump says the United States must pursue all forms of energy—including renewables—he has expressed skepticism about their economic viability, calling solar energy “very expensive.” Wind energy received similar pejorative feedback, since Trump says it kills eagles and is noisy. During one of the few debates about renewable energy during the Iowa primary, he voiced his support for blending biofuels in vehicles. 

To the polls

The 2016 U.S. presidential election will have a profound impact on global affairs. Not only will it affect a range of security and economic issues in important ways, it also means a lot for global energy and climate policy. Will the United States continue on the trajectory that President Obama has started and continue a major energy transition strategy? Or will it shift course, potentially undermining existing domestic policies and investments, as well as international obligations? In November 2016, the American people will decide.

In his book, Our Divided Political Heart, Senior Fellow E.J. Dionne, Jr. writes that the current deep political divide plaguing American politics has its roots in a fundamental misunderstanding of our founding principles and the strong role our forebears saw for government in protecting individual liberty.

Video

• E.J. Dionne, Jr.: Founding Fathers Believed Common Good Protected Individual Liberty

The increasing diversification of news media—from online versions of major newspapers to political bloggers, to 24-hour cable news to social media—plus the profession’s changing economics have caused the balance of power between political reporters and presidential candidates to change. Stephen Hess, senior fellow emeritus, says our very good, well-trained reporters are “almost dangerous” to presidential candidates who are trying to stay on message. Thus, says Hess, the way the press covers campaigns has changed as well, and not for the better.

Video

• Stephen Hess: The Changing Balance of Power in Presidential Campaign Reporting

The only interlocutor for the United States in Turkey will be President Recep Tayyip Erdoğan from now on, Professor Kemal Kirişci has said, adding that Washington has come to recognize the reality that whoever becomes the prime minister “knows he is not going to do anything that is unauthorized.”

The U.S. has lost its hopes regarding Turkish democracy, according to Kirişci, who is at the Washington-based Brookings Institute.

Prior to President Erdoğan’s visit, there were a record number of articles saying he would not receive a warm welcome in Washington, let alone a meeting with U.S. President Barack Obama. Yet Erdoğan ended up in the White House for a long meeting.

I was able to observe both of his visits in May 2013, and the one that took place last March. The difference is day and night. In 2013 the U.S. administration was bending over backwards to welcome Erdoğan, and he was hosted very lavishly.

The last visit was also preceded by the article of Jeff Goldberg, where there was a reference to how disappointed Obama was with his relationship with Erdoğan. I think that the appointment was given because Turkey and the president of Turkey is very central and critical to the fight against the Islamic State of Iraq and the Levant (ISIL). This is the only reason why this appointment was given; this is my reading.

The meeting took place despite Obama’s disillusionment with Erdoğan. Does that mean that Turkey is indispensable, regardless of rules Turkey? Or is Erdoğan not expendable?

Both. The term that is being used in Washington for the U.S. relationship with Turkey is “transactional,” meaning wherever we have common interests and common concerns, we are going to try to cooperate. The idea of a model partnership based on shared liberal values is no longer an issue; the cooperation is out of necessity.

Was there ever a Davutoğlu effect in bilateral relations, since he was one of the figures shaping foreign policy?

Starting in September 2015, Davutoğlu projected the image of a pragmatic person wanting to address a problem. The way in which he handled the European migration crisis was assessed as something positive compared to the rhetoric the president uses where he is constantly criticizing and using contemptuous – almost denigrating – language toward Europe but also the U.S. I suspect that Davutoğlu was offered an audience with Obama [shortly after his meeting with Erdoğan] because of this.

How do you think Washington will see his departure?

At the micro level, they thought that there was room for a pragmatic, solution-oriented relationship with Davutoğlu. But in the course of the last year or two, they had also come to realize that Davutoğlu’s foreign policy based around his book “Strategic Depth” was producing conflict between Turkey and the U.S. – the conflict areas being Syria, ISIL, Egypt, Israel and Iraq. 

Do you think there will be any changes in relations with Davutoğlu’s departure?

I think there is a recognition in Turkey, Europe, the U.S. and the rest of the world that from today onward, Turkey’s foreign policy will be run by the president. The notion that Turkey is a parliamentary system and the president is supposed to be equidistant from political parties does not reflect reality. The U.S., with this experience behind them, has come to recognize this reality. Whoever becomes the PM, they know he is not going to do anything that is unauthorized. The consequence is that Turkey-U.S. relations will not be where they were when Erdoğan first came to power; that’s how I can answer the question because it is comparative. At that time, in addition to Syria, trade, the economy and Turkey’s relations with the EU were also on the agenda.

These issues will no longer be on the agenda; there will be only one issue: the Syrian issue. [But another will be how will] NATO manage the challenges that Russia is bringing to European security? I think there is some room for interaction there.

Has the U.S. given up on Turkey as a reliable ally sharing the same values? 

It is sad but that is the reality. Turkey’s agenda today in the neighborhood is not an agenda that overlaps with the Western transatlantic community’s agenda. There is a lot of aggravation that emerges from that reality. For the U.S., the issue of ISIL is regarded as the major challenge emanating from the Middle East to U.S. and European security. I think they have reached a conclusion that cooperating with Turkey is an uphill battle. They also recognized Turkey and the U.S. have conflicting interests with respect to the PYD [Democratic Union Party]. Turkey considers it a threat to national security whereas the U.S. sees the PYD as an actor with which they are able to cooperate against ISIL in a decisive, reliable and credible manner. In the case of Turkey, there is cooperation but there are question marks over the reliability and credibility and commitment of Turkey.

Why are you using the word sad?

It is sad from a personal point of view because when you look at the world right now, it looks like there are two governance system competing with each other. One governance system is the system to which I thought Turkey was always committed. We became a member of NATO, Council of Europe and the OECD. We aspire to become part of the EU because I suppose we believed the values of members of this community provides more prosperity, stability and security to its citizens. Then there is an alternative form of governance represented by Russia, Iran and China [based on] the idea that the state should have a greater say on the economy, the state interest should prevail over the interests and the rights of individuals and that freedom of expression and media can be curtailed to serve state interests. Turkey is increasingly moving in the direction of this second form of governance.

Why, then, did Brookings invite Erdoğan, producing embarrassing moments when the president’s security detailed interfered with demonstrators?

Brookings has a long-established program called the Global Leaders Forum and invites presidents and prime ministers to give speeches. It is an independent think tank and does not confer legitimacy or illegitimacy on a speaker. The Washington audience got an opportunity to see how Turkey is being governed.

It looks like the U.S. remains indifferent to democratic backpedalling in Turkey.

There was a time at meetings on Turkey in which questions were raised along the lines of, “Why isn’t the U.S. doing more against this backsliding?” Interestingly, in the course of about six months or so, this question is being raised less and less. The U.S. has lost hopes about Turkish democracy. The primary reason for this is that they have this impression that Turkish society, especially after what happened after the June [2015] elections, gives priority to this kind of governance. Also, the Obama administration, especially compared to the Bush and Clinton administrations, is less comfortable with the idea of promoting democracy and supporting democratization.

The interview was originally published in Hürriyet Daily News.

Payment reform in health care is confusing, but the goal is simple: How can health care providers change their economic incentives to encourage value over volume? If you've wondered about how these new payment models work, we’re here to help. And if you want to see Dr. Patrick Conway, the head of the Center for Medicare and Medicaid Innovation, talk about it more in depth at our most recent MEDTalk event about oncology care reform, click here.

Where are we now?

Fee-for-Service. Traditionally, health care providers are paid in a "Fee-for-Service" (FFS) model. This is exactly what it sounds like: every time you have a blood test, a doctor's visit, a CT scan, or any other service, you (and your insurance company) pay separately for what you have received. Over the course of a long treatment or a chronic condition, that can add up to a huge expense.

The Fee-For-Service System

It is well known that FFS is draining the entire health care system. When paying for volume, a sick patient is worth more than a healthy patient , and this status quo results in uncoordinated care, duplication of services, and fragmentation. After all, the more doctors and providers do, the more they get paid.

Reformers hope to replace the traditional FFS model with something better, and they’ve come up with many different models of payment that could allow this to happen. (Note to reader:  these are simplified explanations; policy enthusiasts can learn much more about them through the Engelberg Center’s Merkin Initiative).

Here are four widely proposed and increasingly popular alternative payment models:

Accountable Care Organizations (ACOs) are groups of providers across different settings– primary care, specialty physicians, hospitals, clinics, and others – who chose to come together to jointly share responsibility for overall quality, cost, and care for a large patient population. These providers recognize that poorly coordinated care from these entities can lead to increased costs from things like redundant tests and overlapping care.

Accountable Care Organization Model

Here’s how it works in basic terms: the ACO physicians bill the way they always do, but the total costs get compared to an overall target. Plus, they have to measure some of their patient outcomes, to prove that they hit certain quality benchmarks. If costs are higher than the target, the ACO may get penalized. In the end, if they are under the cost target and satisfy their quality measures, they get a share of the savings.

By bringing all of these providers under the umbrella of an ACO, caregivers can all be on the same page, and the patients ideally receive coordinated care with a focus on prevention – since providers are encouraged to keep their patients healthy and not just earn more by doing more tests and procedures.

Bundles: A health care bundle estimates the total cost of all of the services a patient would receive per episode over a set time period for a certain problem, like a knee replacement or heart surgery. For example, a payer such as Medicare or an insurance company could calculate that a hypothetical 30-day bundle for a knee replacement surgery costs $10,000.

Without Bundled Payment...

The payer reduces the total cost of the episode by 2-3%, and hands the bundle over to the provider – in the knee surgery example, that becomes $10,000 minus 2%, so $9,800. The provider is then responsible for all costs of treatment – whether or not it exceeds the amount of money they were originally given. This encourages the provider (collaborating with the entire care team) to help the patient avoid preventable complications like a hospital readmission by better managing a patient’s care.

With a Bundled Payment...

If the provider keeps costs low, they can keep the margin on the bundle, while the insurance company already saved by reducing the cost of the episode by a small percentage when they created the bundle. So, in our example, if the provider was able to meet quality benchmarks and the total cost of the 30-day episode was $9,000, they get to keep the extra $800.

Patient-Centered Medical Homes set themselves apart by providing set monthly payments on top of existing funding models, in order to fund a highly coordinated team of primary care professionals, which may include, depending on the patient’s needs, physicians, nurse practitioners, medical assistants, nutritionists, psychologists, and possibly even specialists. The team works closely to build a strong relationship with each other,with their patients and their caregivers.

Patient-Centered Medical Home Model...

This extra money can be used to hire nurses or agencies to give special care and attention (by phone or home visits, for example) to high-risk patients, with the goals of reducing emergency room visits and other preventable problems in the long run. Other enhancements might include email communication with patients, more time to call and coordinate care between primary care doctors and specialists, and so on. In the end, the savings from better coordinated care make the extra monthly payments worthwhile.

Pathways, an idea which has gained traction in oncology care, provides a system of choices and decision making tools for providers and patients in order to prescribe the most effective and least costly treatment. For example, let’s say there are two cancer drugs proven to have the same effectiveness, with no differentiation in side effects, but one of them costs less than the other.

Same Effectiveness, Different Cost...

Like the medical home, the pathways model uses a “per-patient” add on fee (often much larger than for medical homes focused on primary care, since cancer patients need intensive treatment) that might encourage the provider to prescribe the less expensive of two equally effective treatments.

How Pathways Creat Savings...

When this is implemented on a broad scale, the savings could add up for payers, and defray the cost of the add-on fees.

Please feel free to use any of these images in your own work, presentations, or educational efforts, and to view and download the interactive versions here.  The images should be attributed to The Merkin Initiative on Clinical Leadership and Payment Reform at Brookings.

Event Information

Over the past few years, more than 600 Accountable Care Organizations (ACOs) have formed across the country, charged with the dual goals of improving health while also reducing health care costs. Increasingly, evidence on how public and private ACOs are progressing toward these goals is beginning to emerge. Based on these results, major regulatory changes are anticipated in the months ahead that will impact accountable care programs in Medicare, as well as future uptake within the private sector.

On October 20, the Engelberg Center for Health Care Reform hosted a half day forum to assess the latest evidence on accountable care, discuss strategies to overcome unique ACO challenges, and provide an overview of accountable care reforms. Sean Cavanaugh of the Centers for Medicare and Medicaid Services (CMS) provided keynote remarks on the latest Medicare ACO results and potential changes to the Medicare Shared Savings Program (MSSP). Panel sessions featured leading experts in ACO research, implementation and health care policy.

 Join the conversation on Twitter using #ACOFuture or follow @BrookingsMed

Video

• The Medicare Shared Savings Program (MSSP): Looking Ahead
• Big Issues for ACOs Going Forward
• ACO Policy Issues and Solutions on the Horizon

Audio

• The State of Accountable Care: Evidence to Date and Next Steps

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• ACO Public Event full deck FINAL
• 102014_Accountable Care_Transcript

How to react to presidential candidates who are running, in part or wholly, on their experience in private business?

It’s impossible for anyone to come into the White House with all the skills required to be a good president. We can know that key traits include intelligence, both cognitive and emotional; self-confidence; and decisiveness. Also needed are the ability to communicate; to listen and learn; to delegate; to recognize problems–and a sense of humor and humility.

Candidates’ stands on the issues are critical in primaries and in the general election, but I suspect that the views of many independent voters–whose ranks are growing–may not be as intensely held as those of partisan voters.

Given Americans’ widespread frustration with traditional politicians, it is understandable why a few candidates with at least some business experience have entered the fray. Having run a business exposes one to how government affects the private sector, which is the engine of economic growth and drives improvements in living standards.

But running a private-sector business is very different from heading a federal government that employs millions, and that takes in and spends trillions, while also dealing with a wide range of domestic and foreign policy issues, many of which demand immediate attention. These things require dexterity–and the combined challenges are ones that no business ever comes close to dealing with. (Probably the closest experience to the presidency is running a large state. But even then, no governor has had to confront the range of foreign policy challenges facing the president.)

A critical difference between running a business and government is that CEOs can usually make sure that their orders are carried out; and if they’re not, those who didn’t do their jobs can be fired. Imagine a president tried working with Congress that way. “My way or the highway” won’t cut it.

One might think that military leaders would face the same problem, but successful generals, especially in recent times, have had to develop and hone political skills as well as knowing how to fight. Gen. Dwight Eisenhower is now regarded as a good president not only because of his military experience but because he also was a politician-administrator while commanding allied forces during World War II. George Washington had both a military and business background, but he was a politician too–and the government he oversaw wasn’t much larger than his (substantial) private business.

Some 2016 voters will cast ballots based on particular issues. But for others, particularly those who believe this country is on the wrong track, a candidate running on his or her business background in an effort to stand out from the pack is not likely to have the qualifications most important to being a successful president.

The new 2013 budget unveiled by President Obama on Monday again contains the Automatic IRA, which was developed by Brookings' Retirement Security Project in conjunction with The Heritage Foundation. This year's version again includes an important change that will also encourage more employers to offer a 401(k) account to their workers. However, important changes to the Saver's Credit, which had been in previous budgets failed to make it this year.

Nearly half of American workers - an estimated 78 million- currently have no employer-sponsored retirement savings plan. The Automatic IRA is a simple, easy to administer and understand system that is designed to meet the needs of small businesses and their employees. Employers facilitate employee savings without having to sponsor a 401(k)-type plan, make matching contributions or meet complex eligibility rules. Employees are enrolled automatically into an IRA with a simplified system of investment choices and a set automatic savings level. However, they retain complete control over all aspects of the account including how much to save, which investment choice to use, or even to opt out completely. Automatic IRAs also offer savings options for the self-employed, for independent contractors, as well as providing those who are changing jobs the ability to continue their retirement savings.

The new 2013 budget would also double the size of the tax credit that employers receive in return for starting a new 401(k) plan from $500 annually for three years to $1,000 annually for the same period. This increase will ensure that the credit covers more of an employer's costs, and should encourage more employers to offer such a plan. This is a very good move, but the credit could be still further expanded to $1,500 for three years as will be proposed by a new House bill coming from Rep. Richard Neal. As Congress examines the proposal, it will have the opportunity to also expand the smaller credit that would be offered to employers that start an Automatic IRA to ensure that they are fully reimbursed for all expenses connected with starting and operating such an account for their workers.

A disappointing development is the failure to again include proposals to expand and improve the Saver's Credit by making it fully refundable. The Saver's Credit is an incentive for middle-and lower-income taxpayers to save in 401(k)-type accounts or IRAs. Retirement Security Project research found that more than 69 million taxpayers had income that was low enough for them to be eligible for the Saver's Credit in 2007. However, nearly 45 million of these filers actually failed to qualify for the credit because they had no federal tax liability. If the Saver's Credit was made refundable as RSP has proposed and deposited directly into the account as a match for savings, those 45 million taxpayers could have taken advantage of the program and had significantly higher retirement savings.

Since it was created in 1935, Social Security has grown from covering about half of the work force to covering nearly all workers.  The largest remaining exempted group is a subset of state and local government workers (SLGWs).  As of 2008, Social Security did not cover about 27 percent of the 23.8 million SLGWs (Congressional Research Service 2011).  Non-coverage of SLGWs is concentrated in certain states scattered around the country and includes workers in a diverse set of jobs, ranging from administrators to custodial staff.  Some police and fire department employees are not covered.  About 40 percent of public school teachers are not covered by Social Security (Kan and Alderman 2014).    

Under current law, state and local governments that do not offer their own retirement plan must enroll their employees in Social Security.  But if it does offer a retirement plan, the state or local government can choose whether to enroll its workers in Social Security.  

This paper reviews and extends discussion on whether state and local government workers should face mandatory coverage in Social Security.^[1]  Relative to earlier work, we focus on links between this issue and recent developments in state and local pensions.  Although some of the issues apply equally to both existing and newly hired SLGWs, it is most natural to focus on whether newly hired employees should be brought into Social Security.^[2]  

The first thing to note about this topic is that it is purely a transitional issue.  If all SLGWs were already currently enrolled in Social Security, there would not be a serious discussion about whether they should be removed.  For example, there is no discussion of whether the existing three quarters of all SLGWs that are enrolled in Social Security should be removed from coverage.

Bringing state and local government workers into the system would allow Social Security to reach the goal of providing retirement security for all workers.  The effects on Social Security finances are mixed.  Bringing SLGWs into the system would also help shore up Social Security finances over the next few decades and, under common scoring methods, push the date of trust fund insolvency back by one year, but after that, the cost of increased benefit payments would offset those improvements. 

Mandatory coverage would also be fairer.  Other workers pay, via payroll taxes, the “legacy” costs associated with the creation of Social Security as a pay-as-you-go system.   Early generations of Social Security beneficiaries received far more in payouts than they contributed to the system and those net costs are now being paid by current and future generations.  There appears to be no convincing reason why certain state and local workers should be exempt from this societal obligation.  As a result of this fact and the short-term benefit to the program’s finances, most major proposals and commissions to reform Social Security and all commissions to shore up the long-term federal budget have included the idea of mandatory coverage of newly hired SLGWs.

While these issues are long-standing, recent developments concerning state and local pensions have raised the issue of mandatory coverage in a new light. Linking the funding status of state and local pension plans and the potential risk faced by those employees with the mandatory coverage question is a principal goal of this paper.  One factor is that many state and local government pension plans are facing significant underfunding of promised pension benefits.  In a few municipal bankruptcy cases, the reduction of promised benefits for both current employees and those who have already retired has been discussed.  The potential vulnerability of these benefits emphasizes the importance of Social Security coverage, and naturally invites a rethinking of whether newly hired SLGWs should be required to join the program.  On the other hand, the same pension funding problems imply that any policy that adds newly-hired workers to Social Security, and thus requires the state to pay its share of those contributions, would create added overall costs for state and local governments at a time when pension promises are already hard to meet.  The change might also divert a portion of existing employee or employer contributions to Social Security and away from the state pension program. 

We provide two key results linking state government pension funding status and SLGW coverage. First, we show that states with governmental pension plans that have greater levels of underfunding tend also to have a smaller proportion of SLGW workers that are covered by Social Security.  This tends to raise the retirement security risks faced by those workers and provides further fuel for mandatory coverage.  While one can debate whether future public pension commitments or future Social Security promises are more risky, a solution resulting in less of both is the worst possible outcome for the workers in question.  Second, we show that state pension benefit levels for career workers are somewhat compensatory, in that states with lower rates of Social Security coverage for SLGWs tend to have somewhat higher pension benefit levels.  The extent to which promised but underfunded benefits actually compensate for the higher risk to individual workers of non-Social Security coverage is an open question, though.  

Mandatory coverage of newly hired SLGWs could improve the security of their retirement benefits (by diversifying the sources of their retirement income), raise average benefit levels in many cases (even assuming significant changes in state and local government pensions in response to mandatory coverage), and would improve the quality of benefits received, including provisions for full inflation indexation, and dependent, survivor and disability benefits in Social Security that are superior to those in most state pension plans.  The ability to accrue and receive Social Security benefits would be particularly valuable for the many SLGWs who leave public service either without ever having been vested in a government pension or having been vested but not reaching the steep part of the benefit accrual path.  

Just as there is strong support for mandatory coverage in the Social Security community and literature, there is strong opposition to such a change in elements of the state and local government pension world.  The two groups that are most consistently and strongly opposed to mandatory coverage of newly hired SLGWs are the two parties most directly affected – state and local governments that do not already provide such coverage and their uncovered employees.  Opponents cite the higher cost to both employees and the state and local government for providing that coverage and the potential for losing currently promised pension benefits. They note that public pensions – unlike Social Security – can invest in risky assets and thus can provide better benefits at lower cost.  This, of course, is a best-case alternative as losses among those risky assets could also increase pressure on pension finances.

There is nothing inconsistent about the two sides of these arguments; one set tends to focus on benefits, the other on costs.  They can be, and probably are, all true simultaneously.  There is also a constitutional issue that used to hang over the whole debate – whether the federal government has the right to tax the states and local government units in their roles as employers – but that seems resolved at this point.

Section II of this paper discusses the history and current status of Social Security coverage for SLGWs.   Section III discusses mandatory coverage in the context of Social Security funding and the federal budget.  Section IV discusses the issues in the context of state and local budgets, existing pension plans, and the risks and benefits to employees of those governments.  Section V concludes.

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Introduction

Many American workers do not have access to employer-sponsored payroll deduction plans for retirement saving. Groups with low rates of access include younger workers, members of minority groups, and those with low-to-moderate incomes. 1 Small business employees are especially at risk. Only about 14 percent of businesses with 100 or fewer employees offer their employees a retirement plan, leaving between 51 and 71 percent of the roughly 42 million people who work for a small business without access to an employer-administered plan (Government Accountability Office 2013).

Lack of access makes it difficult to build retirement wealth. A study by the Employee Benefit Research Institute (2014) shows that 62 percent of employees with access to an employer-sponsored plan held more than $25,000 in saving balances and 22 percent had $100,000 or more. In contrast, among those without access to a plan, 94 percent held less than $25,000 and only three percent hold $100,000 or more. Although workers without an employer-based plan can contribute to Individual Retirement Accounts (IRAs), very few do.2 But employees at all income levels tend to participate at high rates in plans that are structured to provide guidance about the decisions they should make (Wu and Rutledge 2014).

With these considerations in mind, many experts and policy makers have advocated for increased retirement plan coverage. While a national approach would be desirable, there has been little legislative progress to date. States, however, are acting. Three states have already created state-sponsored retirement saving plans for small business employees, and 25 are in some stage of considering such a move (Pension Rights Center 2015). John and Koenig (2014) estimate that 55 million U.S. wage and salary workers between the ages of 18 and 64 lack the ability to save for retirement through an employer-sponsored payroll deduction plan. Among such workers with wages between $30,000 and $50,000 only about one out of 20 contributes regularly to an IRA (Employee Benefit Research Institute 2006).

This paper highlights a variety of issues that policymakers will need to address in creating and implementing an effective state-sponsored retirement saving plan. Section II discusses policy design choices. Section III discusses management issues faced by states administering such a plan, employers and employees. Section IV is a short conclusion.

Note: this paper was presented at a October 7, 2015 Brookings Institution event focused on state retirement policies.

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Ron Haskins and Isabel Sawhill were just awarded the 2016 Daniel Patrick Moynihan Prize by the American Academy of Political and Social Science. The honor is presented to “a leading policymaker, social scientist, or public intellectual whose career demonstrates the value of using social science evidence to advance the public good.” In this case, however, for the first time the award was awarded jointly.

Here at Brookings, Belle and Ron have forged a powerful and unique intellectual partnership, founding and elevating the Center on Children and Families and producing world-class work on families, poverty, opportunity, evidence, parenting, work and education, and much more besides.

The Association highlighted Belle and Ron’s bipartisanship. This was appropriate, given that the two have different political backgrounds, and work with people across the political spectrum. The skills and attributes they display in order to work in this way are:

1. Deep respect for the views of others regardless of their politics.
2. Reverence for the evidence and for the facts.
3. A willingness to adapt their views to the facts, rather than (as so often in this town), the other way around. This has been true even when it has made their life more difficult with people on “their” side of the political spectrum.
4. A desire to work hard to bring ideas to bear on public policy. The point is to do good work, but also to have real impact.
5. An insatiable intellectual curiosity to find out more, push new boundaries, and to keep learning. (Both of them have new books out, of course.)

These attributes, when you think about it, are those every decent scholar should aspire to. Belle and Ron have shown us that the skills for bipartisanship turn out to be essentially the same skills as those required for good scholarship.

In his remarks at the Prize lecture, Ron focused on the rise, importance, and prospects for evidence-based policy. Ron has tackled this subject at book length in Show Me the Evidence. Here is part of what Ron had to say:

“Perhaps the most important social function of social science is to find and test programs that will reduce the nation’s social problems. The exploding movement of evidence-based policy and the many roots the movement is now planting, offer the best chance of fulfilling this vital mission of social science, of achieving, in other words, exactly the outcomes Moynihan had hoped for. Today, evidence-based policy rests on the mighty oak of program evaluation in general and the random assignment study in particular.”

Ron highlighted the growth of Pay for Success programs, the Obama administration’s emphasis on evidence-based initiatives, and the creation of the Ryan/Murray Commission on Evidence-Based Policy.

Ron argued that it was right to be skeptical about the likely impact of any particular intervention. But this is not to say that policy doesn’t work—just that some policies work, others don’t, and it good to know the difference. In his slides, Ron lists some programs that have been shown to have demonstrable, sustainable impact—what he described as “his entry in the evidence-based policy sweepstakes.”

But there are plenty of challenges ahead, including the need to improve our understanding of implementation; and the following critical question: “When a program fails, what’s next?” Ron argued that the answer should not be to simply pull the funding, but to work on improving performance.

Belle highlighted the work captured in her latest book, Generation Unbound, on how to reduce the damaging rise of unintended pregnancies and births in the U.S. Over 40 percent of children are born outside of marriage, and 60 percent of births to single women under age 30 are unplanned. In the spirit of being faithful to the facts, and focused on what works, Belle showed the costs of unintended pregnancies for poverty, family stability, and opportunity. Child poverty rates have increased, Belle estimates, by about 25 percent since 1970 because of changes in family structure.

So what are the solutions? In the spirit of following the evidence, Belle argued that the goal must be to help people plan for rather than drift into pregnancy, by broadening access to and use of long-acting reversible contraception. The best example is the intrauterine device, or IUD. The risks of pregnancy for women using this method of contraception are very much lower than for condoms or the pill: 

A fact-based analysis of a problem, followed by an evidence-based approach to solutions: Belle’s work on contraception (sometimes alongside Ron) is a perfect example of bipartisanship, impact-oriented scholarship and a commitment to evidence.

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Like many Brits, I’m reeling. Everyone knew that the "Brexit" referendum was going to be close. But deep down I think many of us assumed that the vote would be to remain in the European Union. David Cameron had no realistic choice but to announce that he will step down.

Mr. Cameron’s fall can be traced back to a promise he made in the 2010 election to cap the annual flow of migrants into the U.K. at less than 100,000, "no ifs, no buts."Membership in the EU means free movement of labor, so this was an impossible goal to reach through direct policy. I served in the coalition government that emerged from the 2010 election, and this uncomfortable fact was clear from the outset. I don’t share the contents of briefings and meetings from my time in government (I think it makes good government harder if everyone is taking notes for memoirs), but my counterpart in the government, Mr. Cameron’s head of strategy, Steve Hilton, went public in the Daily Mail just before this week’s vote.

Steve recalled senior civil servants telling us bluntly that the pledged target could not be reached. He rightly fulminated about the fact that this meant we were turning away much more skilled and desirable potential immigrants from non-EU countries in a bid to bring down the overall number. What he didn’t say is that the target, based on an arbitrary figure, was a foolish pledge in the first place.

Mr. Cameron was unable to deliver on his campaign pledge, and immigration to the U.K. has been running at about three times that level. This fueled anger at the establishment for again breaking a promise, as well as anger at the EU. In an attempt to contain his anti-European right wing, Mr. Cameron made another rash promise: to hold a referendum.

The rest, as they say, is history. And now, so is he.

Immigration played a role in the Brexit campaign, though it seems that voters may not have made a clear distinction between EU and non-EU inward movement. Still, Thursday’s vote was, at heart, a plebiscite on what it means to British. Our national identity has always been of a quieter kind than, say the American one. Attempts by politicians to institute the equivalent of a Flag Day or July Fourth, to teach citizenship in schools, or to animate a “British Dream” have generally been laughed out of court. Being British is an understated national identity. Indeed, understatement is a key part of that identity.

Many Scots, Welsh and Northern Irish feel a much stronger affinity to their home nation within the U.K. than they do to Great Britain. Many Londoners look at the rest of England and wonder how they are in the same political community. These splits were obvious Thursday.

Identity politics has tended in recent years to be of the progressive kind, advancing the cause of ethnic minorities, lesbians and gays, and so on. In both the U.K. and the U.S. a strongly reactionary form of identity politics is gaining strength, in part as a reaction to the cosmopolitan, liberal, and multicultural forms that have been dominant. This is identity politics of a negative kind, defined not by what you are for but what you are against. A narrow majority of my fellow Brits just decided that at the very least, being British means not being European. It was a defensive, narrow, backward-looking attempt to reclaim something that many felt had been lost. But the real losses are yet to come.

Editor's Note: This piece originally appeared in the Wall Street Journal's Washington Wire.

Editor’s Note: This blog post is one in a series of posts in which guest bloggers respond to the Brookings paper, “The potential and limitations of impact bonds: Lessons from the first five years of experience worldwide."

In 2014, clause 5 (1) of the County Early Childhood Education Bill 2014 declared free and compulsory early childhood education a right for all children in Kenya. Early childhood education (ECE) in Kenya has historically been located outside of the realm of government and placed under the purview of the community, religious institutions, and the private sector. The disparate and unstructured nature of ECE in the country has led to a proliferation of unregistered informal schools particularly in underprivileged communities. Most of these schools still charge relatively high fees and ancillary costs yet largely offer poor quality of education. Children from these preschools have poor cognitive development and inadequate school readiness upon entry into primary school.

The Kenyan constitution places the responsibility and mandate of providing free, compulsory, and quality ECE on the county governments. It is an onerous challenge for these sub-national governments in taking on a large-scale critical function that has until now principally existed outside of government.

In Nairobi City County, out of over 250,000 ECE eligible children, only about 12,000 attend public preschools. Except for one or two notable public preschools, most have a poor reputation with parents. Due to limited access and demand for quality, the majority of Nairobi’s preschool eligible children are enrolled in private and informal schools. A recent study of the Mukuru slum of Nairobi shows that over 80 percent of 4- and 5-year-olds in this large slum area are enrolled in preschool, with 94 percent of them attending informal private schools.

In early 2015, the Governor of Nairobi City County, Dr. Evans Kidero, commissioned a taskforce to look into factors affecting access, equity, and quality of education in the county. The taskforce identified significant constraints including human capital and capacity gaps, material and infrastructure deficiencies, management and systemic inefficiencies that have led to a steady deterioration of education in the city to a point where the county consistently underperforms relative to other less resourced counties. 

Nairobi City County now faces the challenge of designing and implementing a scalable model that will ensure access to quality early childhood education for all eligible children in the city by 2030. The sub-national government’s resources and implementation capacity are woefully inadequate to attain universal access in the near term, nor by the Sustainable Development Goal (SDG) deadline of 2030. However, there are potential opportunities to leverage emerging mechanisms for development financing to provide requisite resource additionality, private sector rigor, and performance management that will enable Nairobi to significantly advance the objective of ensuring ECE is available to all children in the county.

Social impact bonds (SIBs) are one form of innovative financing mechanism that have been used in developed countries to tap external resources to facilitate early childhood initiatives. This mechanism seeks to harness private finance to enable and support the implementation of social services. Government repays the investor contingent on the attainment of targeted outcomes. Where a donor agency is the outcomes funder instead of government, the mechanism is referred to as a development impact bond (DIB).

The recent Brookings study highlights some of the potential and limitations of impact bonds by researching in-depth the 38 impact bonds that had been contracted globally as of March, 2015. On the upside, the study shows that impact bonds have been successful in achieving a shift of government and service providers to outcomes. In addition, impact bonds have been able to foster collaboration among stakeholders including across levels of government, government agencies, and between the public and private sector. Another strength of impact bonds is their ability to build systems of monitoring and evaluation and establish processes of adaptive learning, both critical to achieving desirable ECD outcomes. On the downside, the report highlights some particular challenges and limitations of the impact bonds to date. These include the cost and complexity of putting the deals together, the need for appropriate legal and political environments and impact bonds’ inability thus far to demonstrate a large dent in the ever present challenge of achieving scale.

In the Kenyan context, especially at the sub-national level, there are two key challenges in implementing impact bonds.

To begin with, in the Kenyan context, the use of a SIB would invoke public-private partnership legislation, which prescribes highly stringent measures and extensive pre-qualification processes that are administered by the National Treasury and not at the county level. The complexity arises from the fact that SIBs constitute an inherent contingent liability to government as they expose it to fiscal risk resulting from a potential future public payment obligation to the private party in the project.

Another key challenge in a SIB is the fact that Government must pay for outcomes achieved and for often significant transaction costs, yet the SIB does not explicitly encompass financial additionality. Since government pays for outcomes in the end, the transaction costs and obligation to pay for outcomes could reduce interest from key decision-makers in government.

The above challenges notwithstanding, a combined approach of results-based financing and impact investing has high potential to mobilize both requisite resources and efficient capacity to deliver quality ECE in Nairobi City County. To establish an enabling foundation for the future inclusion of impact investing whilst beginning to address the immediate ECE challenge, Nairobi City County has designed and is in the process of rolling out a modified DIB. In this model, a pool of donor funds for education will be leveraged through the new Nairobi City County Education Trust (NCCET).

The model seeks to apply the basic principles of results-based financing, but in a structure adjusted to address aforementioned constraints. Whereas in the classical SIB and DIB mechanisms investors provide upfront capital and government and donors respectively repay the investment with a return for attained outcomes, the modified structure will incorporate only grant funding with no possibility for return of principal. Private service providers will be engaged to operate ECE centers, financed by the donor-funded NCCET. The operators will receive pre-set funding from the NCCET, but the county government will progressively absorb their costs as they achieve targeted outcomes, including salaries for top-performing teachers. As a result, high-performing providers will be able to make a small profit. The system is designed to incentivize teachers and progressively provide greater income for effective school operators, while enabling an ordered handover of funding responsibilities to government, thus providing for program sustainability.

Nairobi City County plans to build 97 new ECE centers, all of which are to be located in the slum areas. NCCET will complement this undertaking by structuring and implementing the new funding model to operationalize the schools. The structure aims to coordinate the actors involved in the program—donors, service providers, evaluators—whilst sensitizing and preparing government to engage the private sector in the provision of social services and the payment of outcomes thereof.