Incremental Reform Research Articles

Evaluating Alternative Approaches to Incremental Health-Insurance Expansion.

After a small decline, the number of uninsured persons in the United States is on the rise again, at over 41 million (Center on Budget and Policy Priorities, 2002). This increase is likely to spur efforts to cover the uninsured through legislative action. Given the failure of the most recent attempt at massive insurance expansions (David Cutler and Gruber, 2002), the likely approach is through incremental reforms. At the same time, there remains a fundamental conflict between the and the left over the appropriate form that such incremental reforms should take. The left advocates additional expansions of the public-insurance safety net, for example, to parents of children already publicly insured. The advocates subsidizing the purchase of private insurance through the tax code. In recent years, a number of analyses, both inside and outside of government, have studied the impact of these types of reforms (e.g., John Holahan et al., 1999; Gruber and Larry Levitt, 2000; Mark McClellan, 2000). These analyses have largely talked past each other, however, as there is little agreement on the right criteria on which to evaluate incremental reforms. Should we be concerned solely with the number of persons newly insured? What about the extent of displacement of other forms of insurance coverage, or crowdout? And what about the types of uninsured covered; should we count equally a low-cost child who is newly insured and a high-cost older person? In this paper, I lay out the issues surrounding the criteria along which alternative approaches to reform can be evaluated. I then present microsimulation estimates of the impacts of three types of reforms: tax credits for individual purchase of nongroup insurance, expansions of public insurance to children and parents, and expansion of public insurance to all adults. I use the results from these simulations to contrast these reforms using the various criteria developed here.

Transition to Knowledge-intensive Growth in Russia

The paper proposes a strategy to trigger knowledge-intensive growth based on a combination of bottom up and top down reforms. When both market and government failures are pervasive, institutional innovation (new ways of doing things and reach credible commitments) becomes paramount for growth and reform. The paper discusses entry points to trigger institutional innovation at a local level and proposes a mechanism of incremental self-reinforcing reform (bootstrapping). A three-stage approach to reform is proposed: top down reforms to enhance even playing field; a contest between regions to unleash institutional innovation; active federal industrial policy.

Gradual Economic Reform in Latin America: The Costa Rican Experience. By Mary A. Clark. Albany: State University of New York Press, 2001. 198p. $59.50 cloth, $19.95 paper

The central proposition advanced in this book is that incremental reform along neoliberal lines works. In Costa Rica, a slow-paced program of macroeconomic stabilization, fiscal cutbacks, economic deregulation, tax incentives for exporters, cessation of agricultural subsidies, and selected privatizations yielded “generally positive results” (p. 105). The economy recovered rapidly from the 1980s crisis and poverty rates fell back to precrisis levels, while the country's democratic stability was never in danger.

The Politics Of Health Reform: Why Do Bad Things Happen To Good Plans?

This paper examines political feasibility and its implications for health reform. I discuss the political obstacles to health reform in the United States, disentangling perennial barriers from contemporary constraints. I then explore major reform options and their political prospects. I argue that while incremental reform now appears to be the most feasible option, the political climate may change in a way that permits a bolder vision. Moreover, incremental reform may not be sustainable in the long run, for the same reason that makes it politically popular now: It does not change the status quo in the health system.

National health insurance or incremental reform: aim high, or at our feet?

Single-payer national health insurance could cover the uninsured and upgrade coverage for most Americans without increasing costs; savings on insurance overhead and other bureaucracy would fully offset the costs of improved care. In contrast, proposed incremental reforms are projected to cover a fraction of the uninsured, at great cost. Moreover, even these projections are suspect; reforms of the past quarter century have not stemmed the erosion of coverage. Despite incrementalists' claims of pragmatism, they have proven unable to shepherd meaningful reform through the political system. While national health insurance is often dismissed as ultra left by the policy community, it is dead center in public opinion. Polls have consistently shown that at least 40%, and perhaps 60%, of Americans favor such reform.

Creating the Legal Framework for Information and Communications Technology Development: The Example of E-Signature Legislation in Emerging Market Economies

This article examines the role of e-signature laws in creating the legal frame-work for e-commerce in developing and transitional countries. It argues that an early focus on electronic signature laws can be a distraction from more important reforms necessary to support e-commerce and information and communications technology development (notably telecommunications liberal-ization, support for entrepreneurship, transparency, banking reform). The article outlines an incremental legal reform strategy for emerging economies to address the issues surrounding electronic documents and e-signatures, and it recommends as an initial step legal reform that recognizes contracts entered into by businesses that have agreed by traditional means to technical standards for electronic contracts. For e-government applications, this article suggests steps governments may take to experiment with authentication systems (including possibly digital signatures). It recommends that govern-ments hesitate before setting up regulatory systems to license technologies or service providers for e-commerce. Furthermore, it identifies broader lessons for those interested in legal reforms to support growth of the Internet as a component of development, stressing the importance of basing legal reform efforts on a sensitive analysis of local needs and actual business practices.

‘The Possible as the Art of Politics’: Understanding Consensus Politics

Drawing on the Kuhnian model of scientific paradigms, this article suggests consensus politics should be conceptualised not as an agreement or a settlement but as a political framework that derives from an ideationally informed policy paradigm. Such a consensus constrains the autonomy of governing elites, encouraging them to conform to an established policy agenda that defines the ‘mainstream’ wherein ‘the possible is the art of politics’. In Britain, as demonstrated by the replacement of a post-war social democratic paradigm by a contemporary neo-liberal successor, periods of policy continuity and incremental reform have been matched by occasions of dramatic political change. Any appreciation of consensus politics has therefore to explain change as well as account for stability, something considerably under emphasised in the existing literature. Consensus politics are therefore best defined as a constrained space within which politics is conducted and political actors differ, a paradigmatic framework from which political outcomes emerge, and never as an agreement freely entered into. Looking at consensus politics beyond the much commented upon post-war example, this article uses British politics since 1945 as an exemplar of consensus politics and an illustration of how a consensus can be forged, how it can endure and how it may change.

Social Security and Medicare: Do we Need Incremental or Radical Reforms?

Social Security and Medicare: Do we Need Incremental or Radical Reforms?

Japan’s never–ending social security reforms

This paper examines implications of the 2002 population projections for future trends in pension and healthcare costs in Japan. Current redistributive pension and healthcare programmes have resulted in considerably higher per capita income for the aged than the non–aged population. Substantive reforms are needed to lessen the extent of such redistribution, but political considerations have meant that only incremental reforms have been feasible. A start, however, has been made on introducing private initiatives in pensions; and shifting from the command and control model operated by the central government to a contracting model for healthcare.

A Workable Solution for the Pre-Medicare Population

Incremental reforms to expand health coverage among older Americans are justified by medical spending that increases with age and enrollment in employer insurance that decreases with age. Older Americans are also at risk of unexpected changes in health, access to health insurance, and earnings that could leave them poorly positioned financially for their retirement years. We propose offering universal access to Medicare at a community-rated premium, with premium vouchers for those with a history of low lifetime earnings and tax-preferred savings accounts to help everyone with the increased cost of insurance at older ages. These subsidies are available for coverage obtained from sources other than Medicare. We would set the eligibility age for the buy-in at 62. However, because enrollment in employer insurance does not drop precipitously at age 62, we regard the eligibility age as an adjustable design element that could resize the program to fit political and budgetary constraints.

Slouching toward managed care liability: reflections on doctrinal boundaries, paradigm shifts, and incremental reform.

Following the seemingly endless debate over managed care liability, I cannot suppress thoughts of Yeats’s poem, “The Second Coming.” It is not the wellknown phrase, “Things fall apart; the centre cannot hold,” that comes to mind; although that could describe the feeling of a health-care system unraveling. The poem’s depiction of lost innocence — “The best lack all conviction, while the worst/Are full of passionate intensity” — does not allude to the legislature, the industry, the public, or the medical or legal profession. What resonates is the poem’s evocation of humanity’s cyclical history of expectation and disappointment, with ideas as grand as justice and occupations as pedestrian as managed care. Writing in 1919, Yeats described the end of an era with images of war’s destructive forces. The poem expresses a universal desire for some miraculous rebirth or resolution of all problems: “Surely some revelation is at hand.” But instead, the brutish Sphinx-like creature emerges, possibly the Antichrist. New gods displace old gods in the cycle of civilization, and man must muddle on.

Increments Toward What?

Incremental proposals to expand health insurance coverage, such as expansions of the State Children's Health Insurance Program (SCHIP) or creation of new tax credits, should be examined for the values that underlie them and for how they structure future options for additional incremental coverage expansions. This paper examines five design issues in incremental reform: who determines coverage options for the newly insured; what risk pool do they enter; what is the government's contribution toward their coverage; what barriers are created by efforts to encourage efficiency; and how are issues of federalism handled? Tax credits are a departure from past approaches, while an SCHIP expansion is a continuation of current policy directions.

The Razor's Edge: Distortions and Incremental Reform in the People's Republic of China

In a partially reformed economy, distortions beget distortions. Segments of the economy that are freed from centralized control respond to the rent-seeking opportunities implicit in the remaining distortions of the economy. The battle to capture, and then protect, these rents leads to the creation of new distortions, even as the reform process tries to move forward. In this paper I illustrate this idea with a study of the People's Republic of China. Under the plan, prices were skewed so as to concentrate profits, and hence revenue, in industry. As control over factor allocations was loosened, local governments throughout the economy sought to capture these rents by developing high margin industries. Continued reform, and growing interregional competition between duplicative industries, threatened the profitability of these industrial structures, leading local governments to impose a variety of interregional barriers to trade. Thus, the reform process led to the fragmentation of the domestic market and the distortion of regional production away from patterns of comparative advantage.

Sticks and Snakes: Derivatives and Curtailing Aggressive Tax Planning

Complex derivative financial instruments are often used in aggressive tax planning. In response, the government has implemented mark-to-market type reforms, but only partially. Considered in isolation, these incremental reforms are likely to seem well advised in measuring income more accurately. However, there is an important best cost, emphasized in this Article: the ability of well-advised taxpayers either to avoid the new rule or to turn it to their advantage (here called defensive and offensive planning options, respectively). This Article uses two case studies to identify how these effects arise and to suggest ways of combating them. The first case study, Section 475, requires securities dealers to use mark-to-market accounting. Although this rule curtails tax planning by securities dealers themselves, it enables dealers to serve as accommodation parties for their clients' tax planning: Once exempted from generally applicable rules, dealers can offer clients a tax benefit (e.g., accelerated losses) without experiencing a corresponding tax cost (e.g., accelerated income). The second case study, the contingent debt regulations, requires lenders and borrowers to report pre-realization gains and losses based on assumed annual returns. Although this reform seems to accelerate the lender's interest income, the rule's narrow scope allows tax-sensitive lenders to avoid this result. Accordingly, the new rule is likely to apply only when tax-exempt entities lend to tax-sensitive borrowers, who enjoy the regulations' accelerated interest deductions. This Article offers ways to remedy these reforms, as well as general guidance about how to implement incremental mark-to-market reforms without exacerbating the planning option.

Progressives and the 2000 elections.

During the 2000 Democratic presidential primary, battle erupted between Bill Bradley and Al Gore over universal health care coverage. Gore argued that universal coverage could be achieved only incrementally, on step-by-step basis (www.algore2000.com). Beginning with children, he gradually would expand coverage to the entire population. Bradley criticized this approach, arguing that it was too little too late He proposed a bold and comprehensive plan that will help everyone (www.billbradley.com). (I will put aside the question of whether his plan really would have accomplished his goal.) The debate between Gore and Bradley reflects deeper debate, over the relationship between incremental reform fundamental change, which progressives, including social workers, have long debated. Although this issue clearly cannot be resolved within the confines of this column, it is not something we can ignore. The elections are quickly approaching, and their outcome will affect our profession and our clients. As social workers, we recognize that phenomena such as equilibrium and disequilibrium and chaos and order are opposed in relative, rather than an absolute, sense (Sommer, 1995). The same, of course, holds true for biological, psychological, and sociological factors. Our social and psychological experiences so fundamentally affect our biological makeup that we must really talk about social--psychological biology (Hamer & Copeland, 1998; Schwartz, 1996; Wilkinson, 1996). Conversely, our (social--psychological) biological makeup drives and limits our social and psychological behavior and experiences. Clearly, the differences among these factors are of relative, not an absolute, nature. Unfortunately, we often fail to consider the relationship between incremental reform and fundamental change from this perspective. By this I mean, many social workers, and progressives generally, tend to engage in all-or-nothing thinking, which exaggerates the differences between these phenomena and overlooks their underlying identity. EXAMPLES: PAST AND PRESENT To illustrate my point, I briefly consider two examples of how, in my view, progressives have misunderstood the relationship between incremental reform and fundamental change. The first dates from the 1930s, the second from the 1990s. After the election of Franklin D. Roosevelt, and the appointment of Harry Hopkins, Frances Perkins, and others to key positions in his administration, many social workers believed that their profession had arrived and would provide in welfare matters (Reynolds, 1964, pp. 159-160). Others were more skeptical. Under the leadership of Mary van Kleek, Bertha C. Reynolds, and others, the Rank and File Movement emerged (Bombyk, 1995). Members of the Rank and File Movement believed that the New Deal had done little to address the real issues facing the country. They argued that capitalism was beyond repair and should be replaced with socialism (Bombyk, 1995). At the 1934 meeting of the of the National Conference of Social Work, Mary van Kleek urged social workers to aban don their 'Illusions Regarding Government' and recognize it as defender of property rights (Reynolds, 1963, p. 160). With the rise of government social welfare programs, social workers had become aligned with the status quo--against the their own interests and those of their clients. She believed that the real task was replacing our failed economic system (Reynolds, 1964). This argument is persuasive. The New Deal did not end the depression, and it failed to transform [ldots] capitalism in any genuinely profound way (Brinkley, 1998, P. 33). Roosevelt also did little to help African Americans, and recent evidence suggests that he shared the anti-Semitic prejudices of many members of his socioeconomic class (Freidel, 1990). Despite this, I believe the Rank and File Movement exaggerated Roosevelt's flaws and failed to grasp the real choice facing the country. …

Include Me Out? The New Politics of Place and Poverty

The regeneration of London raises key questions about the goals of urban policy and about both the definition of, and the solutions to, social exclusion. The concepts of an ‘urban underclass’ as an analytic tool for understanding poverty and unemployment, and of ‘social cohesion’ as a solution to it, are shown to be inaccurate and unhelpful. Successful policy will need to attack continuing poverty and inequality, strengthen employability and the transition to work, and prioritize families and children. Politicians should eschew the search for a ‘big idea’ in favour of piecemeal, incremental reform.

The politics of reform.

�� The articles on individual health insurance market reform in this issue raise fundamental questions about the role of competitive markets in promoting access to health care. The decision to impose new restrictions on insurers, or conversely, not to regulate insurers’ rating and enrollment practices, rests on certain core assumptions about how the world works (Thompson 1981). In New Jersey, for example, policy makers viewed rating and enrollment reforms in the individual health insurance market as a means to reduce the number of uninsured persons (Garnick, Swartz, and Skwara 1998). This basic policy hypothesis undergirds individual insurance market reforms such as the removal of preexisting-condition clauses, limitations on underwriting practices, and the introduction of community rating. If this assumption is flawed, however, incremental reforms will be ill-equipped to address many of the most significant shortcomings of the marketplace. The articles in this issue return to the familiar “competition versus regulation” debate which dominated the health policy literature in the 1970s and 1980s. First, what lessons can be gleaned from the case studies? Should state government reject insurers’ claims of “actuarial fairness” in enrollment and rating in favor of reforms designed to protect certain groups from discrimination? What are the consequences of doing so? Second, can incremental reforms which regulate the rating and enrollment practices of insurers effectively limit discrimination against chronically ill persons or other high-risk subscribers? Or are regulatory cures worse than the disease? Finally, what are the political dynamics of reforming the individual health insurance market? Under what circumstances are reforms most likely to surface?

Cross-subsidization in the market for employment-related health insurance.

This paper uses data from the 1987 National Medical Expenditure Survey to examine the nature of equilibrium in the market for employment-related health insurance. We examine coverage generosity, premiums, and insurance benefits net of expenditures on premiums, showing that despite a degree of market segmentation, there was a substantial amount of pooling of heterogeneous risks in 1987 among households with employment-related coverage. Our results are largely invariant to (i) firm size and (ii) whether or not employers offer a choice among plans. Our results suggest the need for caution concerning incremental reforms that would weaken the link between employment and insurance without substituting alternative institutions for the pooling of risks.

Political incrementalism: Political lessons from China's 20 years of reform

The recent crackdown by the Chinese Communist Party government on the efforts of Chinese dissidents to organise the China New Democratic Party has raised a serious question among scholars: why has the Chinese leadership been so reluctant to initiate democratic reforms? But an equally important question is: how has the Chinese political system been able to accommodate drastic socioeconomic changes? Although Chinese leaders from Deng Xiaoping to Jiang Zemin have strongly opposed the Western style of democracy, they have continuously adjusted the country's political system to prevent socioeconomic chaos from occuring, chaos that has troubled many former communist states and Third World countries. This paper explores China's political incrementalism and explains how incremental political reforms have worked. It argues that, although Chinese leaders have so far been successful in accommodating social changes through incrementalism, they are still uncertain about how to cope with increasing social demands for political reform and democratisation.

Health care reform in Japan: the virtues of muddling through.

Japan's universal and egalitarian health care system helps to keep its population healthy at an exceptionally low cost. Its financing and delivery systems have been adapted over the years in a gradual way that preserves balance. In particular, its mandatory fee schedule has proved to be effective in controlling spending by manipulating prices. Today, with severe fiscal problems, pressures are mounting for more radical reforms. However, these proposals attack the wrong problems and are impractical. Real problems include inequitable health insurance financing and insufficient regard for quality of hospital care. We suggest incremental reforms that would improve these situations.