Do imputed benefits include administrative overhead costs? about c-tam

[MaxGhenis]

@Amy-Xu could you please clarify this?

[Amy-Xu]

@MaxGhenis We planed to include administrative cost last year but got sidetracked. The targets we used for extrapolation I believe are benefit projections.

If this is something useful, I'll try to add it in the coming month.

[MaxGhenis]

Thanks, good to know. I think it would be useful, but it's also not too hard to add the % myself, so not a super big deal on my end.

[Amy-Xu]

@MaxGhenis If you add it for your project, do you mind contribute that part to C-TAM? Would really appreciate it!

[MaxGhenis]

@martinholmer said in #70 (comment):

First, when benefit programs are repealed in Tax-Calculator, the budgetary savings is going to be understated because the administrative cost savings will not be accounted for. Is that OK for add-UBI-and-repeal-benefits-programs analysis?

Second, your statement (that administrative costs are not included in any benefits) is just not true, and therefore, the different types of benefits are inconsistent with respect to whether or not they include the administrative costs of providing the benefits. The clearest example of where benefits include administrative costs is TANF. Just a couple of weeks ago, you merged pull request #67 which increased aggregate TANF benefits from about $9.6 billion to about $29.3 billion. The old target of 9.6 was what HHS calls TOTAL EXPENDITURES ON ASSISTANCE and the new target add to the 9.6 the TOTAL EXPENDITURES ON NON-ASSISTANCE. But the NON-ASSISTANCE includes about $2.3 billion in "Administration" and "Systems", which seem clearly to be administrative costs. The 2.3 is roughly 8 percent of the total. Here is the screen shot of the page that the TANF/README.md files points to as the source of TANF data.

screen shot 2018-05-09 at 10 46 54 am

And, I imagine if I looked at veterans benefits, I'd find that the administrative cost of running the VA hospital system is included. Or did you factor out those administrative costs?

[Amy-Xu]

Let me summarize the current status of administrative cost. It seems both TANF and Housing's targets have included in the targets. The administrative cost of TANF can be easily separated but that's not the case with Housing. I have only found an 'estimated' administrative cost for the HCV program but not any other programs.

@MaxGhenis Max mentioned it would be useful to provide the data with and without administrative costs. That makes sense to me. My only concern is about housing, for which at least I haven't found specific admin records on administrative costs. Perhaps some sort of imputation is needed.

A side question is about the scope of the administrative costs. As Martin mentioned in the post above, the medical care expenditure in Veteran's Benefits certainly includes the cost of running the hospital. This case seems to be different from either Medicare or Medicaid, where administrative cost is obvious. Which part of the hospital running cost should be counted as administrative cost?

Anyways, here're the number I have found for 2014.

Program	Amount ($, in billions)	Source
SSI	3.0	Annual Statistical Report
SNAP	4.2
Medicaid	24.4	2015 Actuarial Report
Medicare	8.8	2015 Annual Report
OASDI	6.1	2015 Trustee's Report
UI	4.4	UI Outlook President's Budget 2018
VB	7.6 *	2014 Expenditure table
WIC	1.9	Nutrition service and administrative cost
TANF	2.3
Housing Choice Voucher	1.4	HCV Administrative Fee Study

Note: Veteran's Benefit in this table only includes General Operating Expenses, not relevant to the medical care expenditure.

Would really appreciate any thoughts & feedback.
@MaxGhenis @martinholmer

[feenberg]

On Wed, 30 May 2018, Amy Xu wrote: Let me summarize the current status of administrative cost. It seems both TANF and Housing's targets have included in the targets. The administrative cost of TANF can be easily separated but that's not the case with Housing. I have only found an 'estimated' administrative cost for the HCV program but not any other programs. @MaxGhenis Max mentioned it would be useful to provide the data with and without administrative costs. That makes sense to me. My only concern is about housing, for which at least I haven't found specific admin records on administrative costs. Perhaps some sort of imputation is needed. A side question is about the scope of the administrative costs. As Martin mentioned in the post above, the medical care expenditure in Veteran's Benefits certainly includes the cost of running the hospital. This case seems to be different from either Medicare or Medicaid, where administrative cost is obvious. Which part of the hospital running cost should be counted as administrative cost?

I think there is a reason that administrative costs should sometimes be included and sometimes not. The administrative costs of running a hospital are part of running it, and would be necessary no matter how financed and is part of the cost of producing the service. In the case of Medicaid, the administrative costs of providing care are included in the payments to vendors but the administrative costs of the government are separate and not required to produce the service. They are not part of the benefit. dan

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Anyways, here're the number I have found for 2014. Program Amount ($, in billions) Source SSI 3.0 Annual Statistical Report SNAP 4.2 Medicaid 24.4 2015 Actuarial Report Medicare 8.8 2015 Annual Report OASDI 6.1 2015 Trustee's Report UI 4.4 UI Outlook President's Budget 2018 VB 7.6 * 2014 Expenditure table WIC 1.9 Nutrition service and administrative cost TANF 2.3 Housing Choice Voucher 1.4 HCV Administrative Fee Study Note: Veteran's Benefit in this table only includes General Operating Expenses, not relevant to the medical care expenditure. Would really appreciate any thoughts & feedback. @MaxGhenis @martinholmer — You are receiving this because you are subscribed to this thread. Reply to this email directly, view it on GitHub, or mute the thread.[AHvQVd2iPIafDEnZZry0qJ6twnmpwMysks5t3wofgaJpZM4SJV7B.gif]

[Amy-Xu]

@feenberg said:

I think there is a reason that administrative costs should sometimes be
included and sometimes not. The administrative costs of running a hospital
are part of running it, and would be necessary no matter how financed and
is part of the cost of producing the service. In the case of Medicaid, the
administrative costs of providing care are included in the payments to
vendors but the administrative costs of the government are separate and
not required to produce the service. They are not part of the benefit.

Thanks Dan. For Medicaid, can I interpret your explanation as we should just include the administrative cost of the government as our counting of administrative costs in this repo? Given that analyzing the UBI is the main utility of including the administrative costs.

VA hospitals are tricky exactly in the sense that they're run by the government and the administrative costs therefore are intrinsically a part of the benefits. In other words, the administrative costs and the benefits are not quite distinguishable. Maybe we could skip distinguishing the two for now?

Do you think there's a way to somehow identify the amount of the administrative cost for the housing programs?

[feenberg]

On Fri, 1 Jun 2018, Amy Xu wrote: @feenberg said: I think there is a reason that administrative costs should sometimes be included and sometimes not. The administrative costs of running a hospital are part of running it, and would be necessary no matter how financed and is part of the cost of producing the service. In the case of Medicaid, the administrative costs of providing care are included in the payments to vendors but the administrative costs of the government are separate and not required to produce the service. They are not part of the benefit. Thanks Dan. For Medicaid, can I interpret your explanation as we should just include the administrative cost of the government as our counting of administrative costs in this repo? Given that analyzing the UBI is the main utility of including the administrative costs. VA hospitals are tricky exactly in the sense that they're run by the government and the administrative costs therefore are intrinsically a part of the benefits. In other words, the administrative costs and the benefits are not quite distinguishable. Maybe we could skip distinguishing the two for now?

I believe that is not only expedient, but theoretically correct.

Do you think there's a way to somehow identify the amount of the administrative cost for the housing programs?

For government owned public housing I think this case is analogous to VA hospitals. After all, maintaining any apartment building requires administration. For vouchers, the administrative cost is not part of maintaining the real estate. However, I am not sure what you are doing with the resulting calculation. Are you calling some administrative costs part of recipient income and some not? dan

…

— You are receiving this because you were mentioned. Reply to this email directly, view it on GitHub, or mute the thread.[AHvQVXAS2mw1oRpid1i_ZKskqhKJgpHmks5t4WzTgaJpZM4SJV7B.gif]

[MaxGhenis]

I agree with @feenberg that hospital administration is part of the benefit, but I'm not so sure about public housing, which IIUC includes a lot of administration around selecting applicants and periodically reviewing income and other eligibility requirements. That is, its administration is part voucher-esque part normal building management. Ideally we'd have the market value of the housing unit itself--which would include management costs--and overhead would be beyond that.

However, I am not sure what you are doing with the resulting calculation. Are you calling some administrative costs part of recipient income and some not?

Not to speak for Amy and team, but I'm interested in whether a reform which replaces some benefit with cash makes people better or worse off. For example, what is the equivalent cash value of $10,000 in housing benefits? This is separate from the literature around utility, though my understanding is that those studies estimate the equivalent cash utility from pre-overhead costs; e.g. SNAP costs 8-10% overhead, but a dollar of SNAP is valued at between 0.8 and 1 cash dollars, per the OSPC UBI report.

[feenberg]

On Wed, 6 Jun 2018, Max Ghenis wrote: I agree with @feenberg that hospital administration is part of the benefit, but I'm not so sure about public housing, which IIUC includes a lot of administration around selecting applicants and periodically reviewing income and other eligibility requirements. That is, its administration is part voucher-esque part normal building management. Ideally we'd have the market value of the housing unit itself--which would include management costs--and overhead would be beyond that.

I recall that years ago much public housing in St Louis was priced similarly to private housing, but in New York was typically a fraction of the market price. So this is not an easy problem. dan

[Amy-Xu]

@feenberg asked:

However, I am not sure what you are doing with the resulting calculation.
Are you calling some administrative costs part of recipient income and
some not?

As in the UBI study, we want to convert this administrative cost to a part of UBI. In other words, the administrative costs are not a part of recipient income under current system but will be under UBI. One argument of UBI is that it doesn't involve as much administrative cost.

@MaxGhenis said:

I agree with @feenberg that hospital administration is part of the benefit, but I'm not so sure about public housing, which IIUC includes a lot of administration around selecting applicants and periodically reviewing income and other eligibility requirements. That is, its administration is part voucher-esque part normal building management. Ideally we'd have the market value of the housing unit itself--which would include management costs--and overhead would be beyond that.

Interesting point. Let me think about it and see whether I can find a way to make it happen.

[feenberg]

On Thu, 7 Jun 2018, Amy Xu wrote: @feenberg asked: However, I am not sure what you are doing with the resulting calculation. Are you calling some administrative costs part of recipient income and some not? As in the UBI study, we want to convert this administrative cost to a part of UBI. In other words, the administrative costs are not a part of recipient income under current system but will be under UBI. One argument of UBI is that it doesn't involve as much administrative cost.

Are you going to count the administrative costs of the IRS as part of UBI? It should only be part of UBI if it is a cost that the buyer would have to bear in the free market. If it is a cost of government supervision of expenditure, then that wouldn't be necessary in the free market and shouldn't be counted as UBI. dan

[MaxGhenis]

Are you going to count the administrative costs of the IRS as part of UBI?

If done through the tax code, we can assume it to be significantly lower than EITC's <1% overhead, given fewer requirements and much larger base. A monthly UBI to every person, including non-filers, might be larger on an absolute basis but still extremely small as a %.

[martinholmer]

@Amy-Xu, What's the status of C-TAM issue #60, which was opened by @MaxGhenis over six months ago on 2018-Feb-17? Is there any benefit to leaving it open? If so, what is being done to resolve the issue?

@MattHJensen @andersonfrailey @feenberg

[Amy-Xu]

@martinholmer Thanks for checking on this issue. The administrative cost, as listed in my comment above, is ready to go for all programs but housing. The way I expect to add administrative cost is through the final prep.py script in Taxdata, assigning each participant an uniform amount which is calculated as total administrative cost divided by the total number of participants.

In terms of housing, maybe the easiest way for now is to apply the administrative fee ratio of HCV to other programs.

@feenberg @MaxGhenis @andersonfrailey

[andersonfrailey]

@Amy-Xu I'll get to work on adding administrative costs as you recommended.