America’s Infrastructure Gap Will Hit $5.6 Trillion: Report

America’s Infrastructure Gap Will Hit $5.6 Trillion: Report

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Plus, your Tuesday news roundup
Tuesday, January 12, 2021

Trump Administration Makes Major Changes to Covid Vaccine Rollout

The Trump administration on Tuesday announced some major changes to its Covid-19 vaccine rollout strategy, saying it would release all available doses and calling on states to start vaccinating everyone age 65 and older and adults with certain health conditions that make them more vulnerable to serious infection.

The changes are meant to accelerate a vaccination drive that is far behind the administration’s original goals, a pace that has drawn sharp criticism from health experts and Democratic lawmakers. They represent a reversal for the administration, which had been holding back about half of its supply of Pfizer and Moderna vaccines to ensure that the required second doses would be available. Those second doses are now expected to become available through the next waves of production.

The transition team for President-elect Joe Biden had said last week that it planned to quickly release all available doses of the vaccines, setting off a debate among health experts — and drawing criticism from Health and Human Services Secretary Alex Azar and Operation Warp Speed officials.

Azar said Tuesday that the administration always planned on making the change once it was confident in vaccine production and distribution capabilities. "This next phase reflects the urgency of the situation we face," Azar said, according to The New York Times. "Every vaccine dose that is sitting in a warehouse rather than going into an arm could mean one more life lost or one more hospital bed occupied."

Why it matters:
"These changes reflect a changing consensus about how best to distribute the vaccines — shifting away from a strict risk-based prioritization system, toward prioritizing getting as many shots into as many arms as possible, as quickly as possible," Axios explains. But the Times notes that the new strategy "threatens to create more confusion in states that had already articulated different plans for who should receive the vaccine next."

Trump Administration Hands Republicans a Big Win on Medicaid Funding

The Trump administration delivered a long-sought victory to Republicans late last week by approving a request from Tennessee to receive Medicaid funding as a block grant.

As part of a 10-year "experiment," the state will receive a fixed amount each year from the federal government to spend on health care for low-income citizens, rather than a variable amount determined by the level of participation in TennCare, the state’s Medicaid program. In exchange, the state will gain more control over how it operates the program, which serves roughly 1.4 million people.

Tennessee is one of 12 states that have not expanded their Medicaid programs as allowed under the Affordable Care Act. Currently, federal funding covers two-thirds of the cost of TennCare, with the amount rising and falling according to participation levels. Under the terms of the agreement, Tennessee will receive a set spending cap determined by historical data, inflation estimates and projected growth rates. If the state spends less than it has been budgeted while maintaining benefit levels, it will share in the savings with the federal government.

Seema Verma, administrator of the Centers for Medicare & Medicaid Services, said Friday that "this carefully crafted demonstration could be a national model moving forward."

Why it matters: Republicans have pushed for years to convert Medicaid into a block grant program, seeing such a structure as a way to limit the growth of federal spending on health care while forcing states to be more efficient with their funding.

Democrats and many health care advocates oppose the effort, arguing that that blocks grants would violate the intent of the Medicaid program and allow states to spend less than is needed on the care of low-income Americans.

"No other state has sought a block grant, and for good reason," Michele Johnson of the Tennessee Justice Center told Kaiser Health News. "It gives state officials a blank check and creates financial incentives to cut health care to vulnerable families."

Speaking to The New York Times, Johnson said the decision comes at a particularly bad time as a pandemic rages across the country. "The only way this makes sense is in the context of the Trump administration burning everything down on their way out the door," she said.

What happens next: It will take months to get the experiment up and running, and the state still needs to receive final approval from its legislature and negotiate standards of care with the federal government. Meanwhile, President-elect Joe Biden, who has opposed the block grant approach, could seek to revoke the state’s waiver. Terminating the program could take months, though, since CMS’s Verma has taken steps to make it more difficult to end Medicaid experiments, according to the Times’s Margot Sanger-Katz.

Number of the Day: America’s $5.6 Trillion Infrastructure Gap

The gap between America’s projected infrastructure investment needs and its likely spending on those needs is projected to top $2.6 trillion by 2029 and more than $5.6 trillion by 2039, according to a new report from the American Society of Civil Engineers.

The report says that a cumulative $6.1 trillion in infrastructure funding will be needed through 2029, but only about $3.5 trillion is expected over that time. It says a total of $13 trillion will be needed by 2039, but only $7.3 trillion is expected.

The report warns that underinvestment in infrastructure could have severe economic consequences. "Overall, if the investment gap is not addressed throughout the nation’s infrastructure sectors, by 2039 the economy is expected to lose more than $10.3 trillion in GDP," it says. "As a result of this underperformance, job losses will mount annually, and in 2039, the U.S. economy is predicted to support 3 million fewer jobs than under baseline conditions."

The report projects that deficient infrastructure will cost U.S. households more than $3,300 a year on average through 2039 as the result of job cutbacks and decreased productivity.
President-elect Joe Biden is expected to announce a major multi-trillion-dollar infrastructure initiative on Thursday.

Column of the Day: Why It’s Time to Spend

Bloomberg columnist Conor Sen writes that markets see Democrats — and their spending plans — as the best bet to boost the economy right now:

"The explanation for this new economic narrative is straightforward. Republicans scored decades of policy achievements by lowering taxes and restraining inflation. What's needed to drive higher levels of economic growth now is more government spending, which can kickstart a cycle of hiring, investment and consumer spending.

"How much spending will it take? Nobody knows for sure, but the best way to figure out when we've done enough — or that spending has become a problem — is to monitor inflation and longer-term interest rates, not the size of the national debt or federal budget deficits. Investors believe Democrats are more committed to doing that than Republicans."

In a related editorial, the Bloomberg Editorial Board says that righting the economy will require "ambitious investment" to create the jobs of the future and create growth that raises living standards broadly, including the millions of Americans who have been left behind by the economic trends of recent decades. "This will require more public spending," they write, "but with interest rates on government borrowing at multi-decade lows, the financial conditions are as conducive as they’ll ever be."

Read the full column and the editorial at Bloomberg.

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