Tracking metropolitan America into the 21st century - Population ...

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over time as users gradually adapt tothis new system.Moving to the new classificationscheme is, at its root, a statistical policychange—not a programmatic one.In fact, in its guidance announcing therevised definitions, OMB cautionsgovernment agencies against employingthe definitions to develop andimplement “nonstatistical programsand policies without full considerationof the effects of using these definitionsfor such purposes.” Yet as the new systemgains acceptance and wider use,policymakers, researchers, and eventhe man on the street may confront anew way of looking at the world—or atleast their particular corners of it.Below we discuss the effects thatthese new metropolitan standards willhave on federal policy, research, andthe public at large.Federal PolicyThe federal government’s use of themetropolitan area concept for purposesother than mere statisticalreporting is widespread. This shouldnot be surprising, since the distincteconomic character metro areas aredesigned to exhibit makes them goodapproximations for labor markets,commuter sheds, and air-qualityregions. The U.S. Code alone—thefederal government’s body of law—contains over 60 unique mentions ofthe phrase “metropolitan statisticalarea.”Policymakers really put the conceptto work, though, in the implementationof federal laws through regulation.Nearly every major federalagency—from those involved in agricultureto homeland security to education—overseesone or more programsthat make use of OMB-defined metropolitanareas. Federal agencies typicallyuse the metropolitan areaconcept as a basis for reporting information,to establish program eligibility,and/or to set program features; anexample of each is offered here. 271. As a basis for reporting information—HomeMortgageDisclosureUnder the regulations that implementthe Home Mortgage DisclosureAct (HMDA), federally-insureddepository institutions must collectinformation on applications forhome mortgage loans. In addition tocharacteristics of the applicant, theinstitution must collect informationabout the property to which theapplication relates, including itslocation by metropolitan area, state,county, and census tract. Institutionsmust compile and report thisinformation to the appropriatebanking regulators (e.g., the FederalReserve, the Comptroller of theCurrency, etc.) annually. Metropolitanareas typically represent themarketplaces within which banksand thrifts operate, and thus serveas important geographic frames forevaluating lending performanceunder other laws related to HMDA,such as fair lending laws and theCommunity Reinvestment Act. Asmetropolitan areas change and growin size, banks and thrifts musttherefore change their informationand reporting procedures to bringtheir data—and lending practices—into line with the new metropolitandefinitions.2. To establish program eligibilityor applicability—Locality PayProgramU.S. law requires federal pay ratesto be comparable with non-federalpay rates for the same level of workwithin the same local area, and forany existing pay disparities betweenfederal and non-federal employeesto be eliminated. “Locality payareas” are places where the FederalSalary Council (FSC) has determinedthat wage rates should beadjusted. There are a total of 32locality pay areas, 31 of which coincidegenerally with metropolitanarea definitions, and one thatencompasses the remainder of theUnited States. A review of therevised metropolitan standards bythe FSC in December 2003 recommendedthat locality pay areas usethe new metropolitan standards,and where available, the combinedstatistical area. Micropolitan areaswill not be used unless they are partof a combined metropolitan statisticalarea. As a result of boundarychanges to several metropolitanareas under the new standards, thenumber of federal employees subjectto locality pay adjustments maychange. Final regulations on implementingthe new locality pay areaswill be issued by OPM in January2005.3. To set program features—MedicarePerhaps no federal program attractsmore attention to OMB’s metropolitandefinitions than Medicare. Thisis largely because many of the paymentsmade to providers underMedicare rely on cost data specificto the geography in which aprovider is located. A hospital’s locationinside or outside a metropolitanarea is used as an eligibility criterionfor various special Medicaredesignations that can raise reimbursementrates. 28 The most notableexample of metro area usage withinMedicare policy derives from programreimbursement for hospitals’operating costs based on prospectivelyset rates specific to eachpatient diagnosis. In making paymentsto a particular hospital, theCenter for Medicare and MedicaidServices (CMS) adjusts each diagnosticrate by a wage index applicableto the area in which the hospitalis located, in order to account forgeographic differences in the laborcosts hospitals bear. CMS definesthese areas using OMB metropolitanareas (MSAs, PMSAs, andNECMAs), and uses survey data toupdate the index annually for all18November 2004 • The Brookings InstitutionThe Living Cities Census Series
metropolitan areas and statewidenon-metropolitan areas. Generally,the wage index is higher in urbanareas and lower in rural ones, sowhether a hospital is located in ametropolitan area receives a greatdeal of scrutiny. 29Recognizing the significantimpact that the new metropolitanstandards will have on the calculationof the wage index, CMS hasalready analyzed the changes toeach hospital’s wage index thatwould result from: (a) constructingseparate indexes for hospitalslocated in each MetroSA, metrodivision, MicroSA, and statewidenon-CBSA; and (b) leaving hospitalsin MicroSAs as part of a generalizedstatewide rural index. 30 The proposedrule opts for consideringMicroSAs and statewide non-CBSAs together, in large partbecause moving to MicroSA-specificindexes could result in large onetimechanges to many hospitals’payments, and because manyMicroSAs are home to only onehospital, thus limiting the averagingeffect of the index across providers.Whichever path CMS eventuallyadopts, OMB’s metropolitan standardswill continue to play a highprofilerole in shaping the details ofMedicare program operations.Among these three types of usages,federal policymakers employ metroareas most often in the same manneras the “locality pay program” example—toestablish whether, by virtue ofits location, an individual or communityis eligible for a particular program,or certain regulations apply toindividuals, businesses, or governments.Programs that use metro-areacharacteristics in formulas, as withMedicare, are rarer. 31 However, someagencies use the standards in morethan one of these ways. In fact, thelocality pay program uses metro areadefinitions to designate whether ametropolitan area is part of the programand then indexes pay levelsaccording to local wages.Nonetheless, the decision to changemetropolitan definitions can have farreachingconsequences for these typesof programs, and, as a result, someagencies are cautious about adoptingthe new standards. The Department ofHousing and Urban Development(HUD), for example, is responsible forannually publishing “Fair MarketRents” (FMRs) or payment standardsfor their major housing assistance program(commonly known as Section 8).When HUD announced the proposedFY2005 FMRs, which used the newmetropolitan standards, they receivedpublic comments from key interestgroups expressing concern that thenew definitions produced drasticchanges in FMRs in some communities.As a result, HUD decided not toswitch immediately to the new OMBmetropolitan definitions.The impacts that the new definitionswill have on federal programs arestill unclear overall, and will dependnot only on the particular characteristicsof the metropolitan areas undergoingchanges, but also on howlawmakers and rulemakers integratethe new concepts into existing systems.In this regard, OMB recentlyoffered more explicit guidance to federalagencies that use metropolitanareas for nonstatistical purposes. 32OMB urges agencies that had usedPMSAs to now consider using MetroDivisions, which it describes as the“comparable geographic units of classification.”In addition, it suggests thatin cases where old metro areas dividedinto more than one new metro area,the CSA may form a “more appropriategeographic unit for analytic andprogram purposes.” Whether agencieswill take these suggestions to heart, orwill opt for more straightforward usageof MetroSAs alone, may in the enddictate the pace at which the new definitionsare adopted, and the extent towhich programmatic changes result.November 2004 • The Brookings Institution The Living Cities Census Series 19
Page 1 and 2: Metropolitan Policy ProgramTracking
Page 5 and 6: the MSA/CMSA combined list (276area
Page 7 and 8: Table 1. Geographic and Demographic
Page 9: Table 3. County TransitionsPercent
Page 14 and 15: most cases, the result is a longern
Page 16 and 17: analysis in one large region, New Y
Page 20 and 21: ResearchAs OMB’s suggestions indi
Page 22 and 23: Appendix A. Definitions of Metropol
Page 24 and 25: Appendix B. Comparing Old and New S
Page 26 and 27: Appendix C. Metropolitan Statistica
Page 28 and 29: Endnotes1. In 1947, the Bureau of t
Page 30 and 31: ReferencesBrown, David L. and Louis
Page 32: About the Living Cities Census Seri

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