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

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