s examples of various roles.
No one knows (or is willing to hazard a guess) how many people participate in this market. Similarly, few want to estimate how large the market is, although the general feeling is that it is large, and one expert noted th


digital underground, “once you are able to establish your- self, it can be lucrative.” Additionally, it can be a badge of honor to survive a purge.
Participants in black markets come from all over the world. Originally, key participants in such marke


d anonymizing networks such as Tor, Invisible Internet Project (I2P), and Freenet.
Participants frequently alter their communication tactics hoping to stymie law enforce- ment. More sophisticated participants tend to use cutting-edge tools and techno


considered lower-tier forums) are a little harder to find and often require vetting before entry.10 Some exclusive forums start as smaller groups where people can cut their teeth and work their way up into the bigger ones. Often, this lower tier exis


es function properly and are free from obstacles. These include infrastruc- ture and cryptanalytic services, among others. Digital assets are the output from the suc- cessful hacking or hacking services (e.g., financial information, data records, acc


eatures to conduct attacks on a customer’s behalf; can provide the full attack lifecycle
ensure that initial access tools and hacking services (enabling or full-service) will work as needed, are set up correctly, and can overcome “speed bumps” or obs


ribution is accomplished electronically, the require- ments are negligible. This is because a majority of players, goods, and services are online-based and can be accessed, harnessed, or controlled remotely, instantaneously. “Shipping” digital goods


ies are increasing in popularity, as are attacks on them. Experts predict that we will soon see more cryptocurrency targeting, DDoS services against cryptocurrencies, and more malware with the sole purpose of targeting wallets and bitcoins.
It is dif


ke, Spack, Sploit, Unique, ZoPack, Styx, Neutrino, Magnitude, Sakura, LightsOut, RedKit, Kore, GongDa, et al. More information on several of these exploit kits is available in Parkour (2014).
16 For example, a credit card with a lower limit, or a low


 paget, 2010b, 2012; parkour, 2014; as well as interviews with paget and parkour.
cards are freshly acquired, or $10–$12 if there is an influx. Credit cards acquired in the Target breach initially fetched anywhere from $20–$135, depending on the type


he market. It also leads to much more intense personal vetting.
The validation of person, product, and payment can all be tricky in underground mar- kets. Buyers and sellers validate each other through reputation, personal relationships, middle- men,


oor for exploit kit creators to access later). These types of features tend to show up in the lower-tier markets. Thus, performing due diligence on a product, vendor, or service is important; this may require buyers to find a due diligence service or


 Egypt were less active during unrest). This can raise the price of products as the supply decreases.
Although newer operating systems and browsers tend to be more secure against attacks, their introduction does not affect black markets immediately b


al (about half). Now, almost everything involves a digital aspect. Because so much more crime has a digital element, law enforcement has more opportu- nities to encounter crime in cyberspace and learn from such encounters.
But law enforcement may bec


entities and
eCommerce accounts (e.g., PayPal, Amazon, etc.), other (lower) members of the group stepped up to continue operations (Krebs, 2013g).
One reason takedowns only temporarily affect the black markets is that even if a tool, forum, group, or


 Botnet Timeline
    Botnets gain ground and are commanded via IRC channels
Number of botnet variants double (from use in early 2000s) due to source code and graphical user interfaces available
     Botnets primarily used for spamming
 Spam is most c


8; Namestnikov, 2009). In the last few years, criminals have started using botnet hosts as proxies when they purchase items with fraudulent credit cards; by purchasing with an IP address from the same area as the stolen credit card, buyers evade tran


ploitation. This, combined with zero-days being difficult to find and difficult to develop an exploit for, makes them pricy. Zero-days are most often thought to be used for corporate espionage, or highly targeted attacks where the only entry is throu


to pay serious money for them. As with the crimeware hacker market, there are third parties that broker the sale of zero-days between researchers and companies (or governments). Some third parties are themselves companies (Greenberg, 2012a, 2012b; L


d up to $150,000 for Chrome exploits (Fisher, 2013b).
 Table 4.1
Zero-Day Prices Over Time
Service
“Some exploits” “weaponized exploit”
a “real good” exploit Microsoft excel
Mozilla
Vista exploit
wMF exploit
ZDI, iDefense purchases adobe reader
andro


 in openness was due to several recent reports and leaks, and a broker’s clients asked him to stop talking about his work.
As awareness of zero-days has increased, access to them has not. One still needs to be sophisticated and certainly needs to kno


d customized products
takedowns, the market bounces back (may take a Despite increase in little time)
nOTe: Green represents a positive trend, yellow a mixed trend, and red a negative trend.
   Constant innovation to match the latest technology
 ripp


and PIN systems), but mom-and- pop stores will be hurt because they may not be able to keep up with these new security requirements imposed on them.
• Black markets will require better encryption, vetting, and operational security due to the dynamic


ble on the market, increasing the ease-of-entry for non-technical players
 State-sponsored groups develop; start to see state-sponsored hacking by Russia, China, Romania, Ukraine, Middle East, cartel- controlled Central America, etc.
Structure Partic


come out (only 12 percent of Android devices have been updated to the versions that prevent pre- mium SMS charges being run up on the phones of unsuspecting users).
Agreed-Upon Projections and Predictions for Shifts in Attack Characteristics
• Attack


downs mean more media coverage, making hackers more aware of the opportunities provided by black markets. Those already in the market grow smarter as they learn from law enforce- ment’s investigative techniques, complicating law enforcement’s job. Ad


re likely to dry up within two years as enterprises move to more secure platforms (e.g., Windows 7 and beyond). Others say vulnerable systems will always exist, and lower-tier hackers will continue to focus on XP and age-old attacks, even though they


individuals are techno- logically savvy; suspects are going after bigger targets, and thus are attracting more attention; and more crimes involve a digital component, giving law enforcement more opportunities to encounter crime in cyberspace. Yet, de


tors (hardest to do), or the lower- or open-tier participants?
• How likely is it for governments and law enforcement worldwide to work with each other to agree to persecute and extradite when appropriate, and to coordinate for physical arrests and i


an action, and do something. These had been around since the mid- to late-1990s with BackOrifice (1998), but they become more popular in 2003–2004 when crime starts to be mixed in (unlike a worm/virus that just spreads on its own).
2003–2004: The bla


lethal” pieces of malware. A few variants pop up from time to time; by 2010, there were more than 40,000 variants of ZeuS. Law Enforcement and Security Researchers could release to the industry what was happening with initial variants, but soon were


are now outmoded; sophisticated spear-phishing and highly legit- imate presentation formats (e.g. fake websites) increase.
2011: ZeuS source code is leaked on underground forums, causing a new boom of cus- tomized versions (Fisher, 2011).
2012: The n


s an intermediary between two or more parties in negotiating agreements, bargains, or the like (Wikipedia, 2014a).
Reward given for finding and reporting a bug or vulnerability in a particular computer software product (Techopedia, undated-a).
Servic


ce on a particular target. An abbreviation for “document tracing”.
Data stolen from the magnetic stripe on the backs of credit and debit cards (Krebs, 2013e).
Type of industry where the buying and selling of goods or services is conducted over electr


4i).
An example of a darknet. Used as an anonymizing layer to connect to other I2P websites, anonymous email, and the public Internet (Irongeek. com, undated).
Glossary 49
50 Markets for Cybercrime Tools and Stolen Information: Hackers’ Bazaar
Malwar


ervices (Wikipedia, 2014n).
Protected health information (PHI)
Ransomware
Rippers
Search engine optimization
SMS Trojans Social engineering
Spam
Spear-phishing
Spyware
The Onion Router (Tor)
Tier (of black market)
Virtual machine
Virtual private netw


s
ZeuS
An attack that compromises a popular or well-trafficked website by leaving a piece of malware that will infect all legitimate users visiting the site.
Exploitable vulnerabilities that a software vendor is not aware of and for which no patch ha


- part-i.aspx
Caballero, Juan, Chris Grier, Christian Kreibich, and Vern Paxson, Measuring Pay-per-Install: The Commoditization of Malware Distribution, undated. As of February 20, 2014: https://www.usenix.org/legacy/events/sec11/tech/full_papers/Cab


-please.html
Dark Side of the Web, The Dark Web, web page, undated. As of February 20, 2014: http://davidenewmedia.wordpress.com/workingterms/darkweb/
de Carbonnel, Alissa, “Hackers for Hire: Ex-Soviet Tech Geeks Play Outsized Role in Global Cyber Cr


3/10/13/net-us-cybercrime-arrest-idUSBR E99714Y20131013
Fortinet, Cybercriminals Today Mirror Legitimate Business Processes: 2013 Cybercrime Report, Sunnyvale, Calif.: Fortinet Inc., December 2012. As of November 11, 2013: http://www.fortinet.com/sit


$2 Million in Prizes to Hackers Who Exploit Chrome,” arstechnica.com, August 15, 2012b. As of November 11, 2013: http://arstechnica.com/security/2012/08/google-pledges-million-in-hacking-prizes/
———, “Google Chrome Exploit Fetches ‘Pinkie Pie’ $60,00


lackHat, Washington, D.C., February 18–19, 2009a. As of February 3, 2014: http://research.microsoft.com/en-us/um/people/cormac/papers/2009/Blackhat09.pdf
———, “Nobody Sells Gold for the Price of Silver: Dishonesty, Uncertainty and the Underground Eco


y-wave-whitehole-exploit-kit-hello.html
———, “Magnitude EK: Pop Pop !,” Malware Don’t Beed Coffee blog, October 2013b. As of February 4, 2014:
http://malware.dontneedcoffee.com/2013/10/Magnitude.html
Kamluk, Vitaly, “The Botnet Business,” SecureList.


iberty-reserve/
———, “Styx Crypt Makers Push DDoS, Anti-Antivirus Services,” krebsonsecurity.com, July 19, 2013d. As of February 4, 2014:
http://krebsonsecurity.com/tag/carder-pro/
———, Cards stolen in Target Breach Flood Underground Markets, krebson


idl, Jarrod, “VUPEN vs Google and the Consequences for IT Security,” jarrodloidl.blogspot.com, May 22, 2011. As of February 4, 2014: http://jarrodloidl.blogspot.com/2011/05/vupen-vs-google-and-consequences-for-it.html
M86 Security Labs, Web Exploits:


nt for the New Crime Lords Who Are Bringing Down the Internet, PublicAffairs, 2010
Miller, Charlie, The Legitimate Vulnerability Market: Inside the Secretive World of 0-day Exploit Sales, Independent Security Evaluators, May 6, 2007. As of October 31


anda Security Report, 2011. As of November 11, 2013:
http://press.pandasecurity.com/wp-content/uploads/2011/01/The-Cyber-Crime-Black-Market.pdf
Parkour, Mila, “An Overview of Exploit Packs (Update 20) Jan 2014,” contagiodump.blogspot.com, January 8,


ty, 2008. As of February 20, 2014: http://www.econlib.org/library/Enc/FreeMarket.html
Rouse, Margaret, “Attack Vector,” SearchSecurity.com, May 2012. As of February 3, 2014: http://searchsecurity.techtarget.com/definition/attack-vector
Samani, Raj, a


“ZeuS on the Hunt,” SecureList.com, April 12, 2010. As of February 3, 2014: http://www.securelist.com/en/analysis/204792107/ZeuS_on_the_Hunt
Techopedia, Bug Bounty, web page, undated-a. As of February 20, 2014: http://www.techopedia.com/definition/28


b page, updated February 23, 2014a. As of February 20, 2014: http://en.wikipedia.org/wiki/Cryptocurrency
———, Cryptocurrency, web page, updated February 19, 2014b. As of February 20, 2014: http://en.wikipedia.org/wiki/Cryptocurrency
———, Data Breach,


rivate_network
———, Zeus (Trojan horse), web page, modified January 30, 2014u. As of February 20, 2014: http://en.wikipedia.org/wiki/Zeus_(Trojan_horse)
Zeltser, Lenny, “What Are Exploit Kits?” blog.zeltser.com, October 26, 2010. As of February 6, 20


13 (name withheld on request).
Vennon, Troy, Juniper Networks, telephone interview with the authors, October 2013.
Watson, Alex, Director of Security Research at Websense, email communication with the authors, October 2013.
As noted earlier, we also


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ich addresses all aspects of public safety and the criminal justice system, including violence, policing, corrections, courts and criminal law, substance abuse, occupational safety, and public integrity. Program research is supported by government ag


spatial software tools to determine the tools’ impact on law enforcement with respect to whether each tool delivers a new or enhanced capability to crime analy- sis, how the capability is unique or differs from similar capabilities, and identify stra


description of the geo- spatial software tool and the environment in which it operates. The technical description is the starting point of our evaluation. It feeds into the operational assessment and the overall evaluation. The opera- tional assessme


which NIJ can take actions to ensure maximal benefits from future geospatial tool developments. These include addressing several appar- ent policy gaps and inconsistencies, including ensuring that policies assign NIJ or Department of Justice officia


spatial weights matrices within Tool provides basic spatial regression functionality (spatial lag and spatial error model) and the ability to the widely-used ArcGIS
ArcGIS 10.2 PySAL Tool
In progress
Planned release of next version may address user-


development. No NIJ or other U.S. Department of Justice (DOJ) office appears to have taken on the role of tool dissemi- nation and assumed the responsibilities inherent in operations and maintenance of the NIJ-funded geospatial tools. Because many NI


 geospatial software tools can result in higher tool adoption and more routine users. Establishing a modest postdelivery modifica- tion fund is one possible method of addressing this issue.
Craft a Proactive Strategy to Address Interoperability as an


his research. In addition, we thank the geospatial tool developers who graciously supplied information on their developments. We also thank the tool users who generously volunteered their time to share informa- tion on their tool use experiences. All


le extension for a text file
Urban Crime Simulator
extension for a worksheet file
Abbreviations xxv
ChAPTER ONE
Introduction
 Background
By federal law, the mission of the National Institute of Justice (NIJ) is to “encourage research and development


focused on actions NIJ can take to ensure maximal benefit of future geospatial tool developments for the law enforcement community.
Organization
Chapter Two describes our methodology and data-collection proce- dures. Chapter Three presents our tool a


nd the environment in which it operates. The technical description is the starting point of the evaluation, feeding into both the operational assessment and the overall evaluation. The operational assessment, which characterizes the current and poten


cements
• Potential limitations
• Potential utility
• Potential as a commercial product
 Overall evaluation
• Benefit to the law enforcement community from the award
– Impact of the capabilities that the software tools bring to law enforcement – Impa


red the oper- ating system, processing speed, random access memory (RAM), hard drive capacity, video card, display, and support hardware. The ques- tions associated with these topic areas are shown in Table 2.3.
Software and Data Requirements
The sof


ks information about the tool docu- mentation available to users. Table 2.6 shows the questions associated with support.
Operational Assessment Framework
The operational assessment characterizes the use of the tool. The topic areas of the operational


nal or technical barrier for the NIJ- funded version to be transformed into a commercial product?
  Potential enhancements and limitations
Potential utility
Potential as a commercial product
  Data Collection
We collected information on the tools fro


ite, Literature,
Users Videos RAND Tool Test
  ArcGIS 10.2 xaxx PySAL Tool
CAST xbxx
CrimeStat x x Facility Cop
GeoDaNet x a
GeoDaSpace x a
Geographic x c Profiler
Mobile Semi- x c Automated 3-D
Near Repeat x x Calculator
OpenGeoDa x a
PySAL x a
Scho


ly loads Python. Next, the user loads NumPy and SciPy, available from SourceForge (SourceForge, undated). The third installation step is for the user to load the PySAL tool from the ASU website. Finally, the user downloads the ArcGIS PySAL tools from


n other fields who need basic spatial regression func- tionality, such as spatial lag and spatial error modeling and the ability to convert and transform spatial weight matrices. The user base for the tool may expand once a final version is released.


1.5 GB, Win- dows 7 requires 15 GB, Mac OS X 10.4 requires 3 GB, and Mac OS X 10.5 requires 9 GB). A graphics board that supports DirectX 9 and OpenGL 1.0 is required. Because CAST will display multiple views of crime data (each view in a separate po


 and regression modeling. Crime travel-demand modeling functions, such as predictions of the number of crimes in each zone, trip distribution, travel modes, and likely trip routes, are also available in CrimeStat.
Software
CrimeStat provides suppleme


each run, the user must also specify measurement prefer- ences, such as the type of distance measurement (direct, indirect, or network), and parameters for the area of study and the length of the street network.
User Preparation
A basic GIS backgroun


ring the CrimeStat output to be inputted into a separate program is an addi- tional step that can be burdensome for frequent or routine users.
CrimeStat Libraries are component objects that allow tool devel- opers to directly program the functions in


ges in the new version. These events can potentially make CrimeStat more attractive and enlarge the CrimeStat user base without further development action by NIJ. CrimeStat should continue to be featured in NIJ sources that publicize its geospatial s


es download, documentation, and contact information.
Operational Assessment
Current Utility
Facility Cop provides the correctional community a simple-to-use tool to track incidents at one or more facilities. The tool requires no special training and


the database.
Recommendations
Any improvements to Facility Cop should be tied to improvements to School COP because the former is a derivative of the latter. Any improvements to one tool are transferable to the other tool. For this reason, no further


tational capabilities are selected. Once the inputs are specified, clicking the Compute button results in production of the output. Clicking the Visualization tab allows the user to select displays of the output.
Hardware
GeoDaNet runs on Windows and


eoDaNet provides experienced crime analysts with a new no-cost capability to identify clusters of crimes on networks and calculate dis- tances and other measures. The product, even in alpha release, has detailed documentation that makes it accessible


well. The recommended RAM to install and run is 512 MB (64 MB for Windows XP; 1 GB for Windows 7; 512 MB for Mac OS X 10.5), but the software will run on less RAM. The rec- ommended hard drive size to install and run is 10 GB (1.5 GB for Windows XP;


ining are available.
Potential as a Commercial Product
The developer has no plans to turn GeoDaSpace into a commercial product.
Impact
GeoDaSpace provides experienced crime analysts who are versed in spatial statistical application in crime analysis


un time is extremely long. Duplicating the example in the user’s manual (seven crimes in the series being consid- ered, 2,000 solved crimes, 500-foot map bandwidth, and using U.S. census data for Baltimore, Maryland) on a four-year-old laptop dedi- c


atics and statistics are required to understand the underlying theory. Therefore, the devel- oper recommends a college-level education to use the tool.
Support
A detailed user’s manual explains the history of the program, the algo- rithms used, and d


computing power improves in standard computers, the run times may decrease as computers are upgraded at law enforcement agencies. Hence, the run times of Geographic Profiler may decrease in the future without any modifications to the code, although


e information to direct responders.
Software
This review is based solely on information provided directly by the developer and by a representative designated by the developer because no users responded to RAND requests for input and the developer was


orative group are not specified. Documentation was not available for this review.
7 Documentation was not available for this study.
Tool Assessments 43
 44 Evaluation of National Institute of Justice–Funded Geospatial Software Tools
Operational Asses


Software
Near Repeat Calculator is a stand-alone program. It uses historical crime data provided by the user to calculate the probabilities that an incident will occur within specific distances and time frames of his- torical incidents. The user must


 format required. Near Repeat Calculator output reports are self-explanatory and are in table
format. An HTML browser is required to view the HTML web-page output.
Support
A short user’s manual provides installation instructions with expla- nations a


ish between true next-day (within 24 hours) crime and crime sprees in close proximity and short time spans (e.g., three break-ins on the same block within an hour). Developing an enhancement that can handle a time input could allow for finer fideliti


ulator can read, developing latitude/longitude compatibility, and allowing for more than one crime type to be considered will result in a larger user base. We make this recommendation because such a cost/ benefit analysis would indicate whether NIJ h


s on versions of Windows XP or more-recent versions of Windows, Mac OS X or more-recent versions of the Mac operat- ing system, and Linux. A minimum processor speed of 1.0 GHz is recommended (300 MHz for Windows XP; 1 GHZ for Windows 7; 867 MHz for M


ty
OpenGeoDa is an intuitive program for experienced criminologists with statistical expertise. It will be attractive to this target user group.
Potential as a Commercial Product
The developer has no plans to turn OpenGeoDa into a commercial product.


ftware packages are required to use PySAL directly. These are Python 2.5 or later, NumPy 1.3 or later, and SciPy 0.7 or later. Although PySAL’s primary users are tool developers, crime ana- lysts with Python programming expertise and an understanding


tive (undated).
Impact
ASU has used PySAL routines to develop geospatial software tools. At the time of writing, there had been at least 1,386 downloads of PySAL, so other developers may be using these routines as well.
8 C++ is an intermediate-level


udes instructions for installation and explana- tions with screen shots for each program feature. A sample facility map is provided.
School COP is available at School COP Software (undated [a]). The website includes download, documentation, a trainin


automatically downloaded to School COP, teachers or others entering incident data would not have to retrieve and enter the student’s identification number, address, contact information, and other repeated information. Developing an
Tool Assessments 5


 directories and developing some networking capability. A basic cost/ benefit analysis should be conducted to determine whether a small lim- ited investment to update School COP with such enhancements is fea- sible and cost-effective.
Any enhancement


ways straightforward. SPIDER offers diagnostics to help the user choose the category into which to place the suspect. This diag- nostic aid is the marauder/commuter prediction capability in SPIDER. The program advises the user to conduct next-event a


R support material includes a workbook, a three-day training course, and PowerPoint presentations for the three-day training course. Separate versions of the support material are available for Windows and Mac OS X. The workbook includes background ma


crime analysis.
Potential Utility
Primary users of SPIDER are crime analysts. Once training is com- plete, SPIDER offers a relatively quick, easy-to-use, and comprehen- sive tool to help users analyze crime series. Built-in or complemen- tary automat


backward compatible, so even if a current ArcGIS Engine license is secured for $1,500, UCS will still not run without installing ArcGIS Engine 9.2. These conditions make the tool less attractive to practitioners. No users of UCS could be found. Becau


s. A sum- mary view of the synthesis is presented first. Next, we discuss our over- all findings. Finally, we present the recommendations that stem from the findings.
Table 4.1 shows a summary view of the various tools reviewed for this study. The fi


, computation of street distances between points and crime locations, spatial regression modeling, spatial diagnostic tests for probit models.
PySAL
Additional investment to update
Plan in place
Spatial statistics program for the tactical crime analy


Geographic Profiler may just require a high level of computing power. In any case, its run times should decrease as computers become faster. School COP, the Near Repeat Calculator, and UCS may all benefit from a cost/ benefit analysis to determine wh


ch as geospatial software tools: initiation, system concept development, planning, requirement analysis, design, devel- opment, integration and test, implementation, operations and mainte- nance, and disposition. This means that DOJ policy assigns ro


ntation
   Release
     requirements requirements Software System
   Analysis
    Program design
      Coding
   Testing
   Operations
   Acquisition
    Supply
Development
         Operations
  Maintenance
  Destruction
                Initiation
Sy


community. For example, decisions on technical approach can result in unintentionally limiting the potential tool user base. A specific instance is the decision to tether UCS to ArcGIS Engine. This decision resulted in a tool that requires the user t


ments
as specified in
the functional
that the
developed
system
document.
reports.
coding, compiling,
conforms to
information system. Converts a design Includes acquiring into a complete
requirements detailed into a
requirement
ment; creating and test


tool implementation (see potential policy gaps illustrated in Figure 4.1).
Go-To Sources for Tool Notification
Our conversations with tool users and developers revealed that there is no established source (e.g., website, office, publication, app) for


ted in stand-alone tools that are installed on a single computer and do not have networking capabilities. Others are not interoperable with other
Overall Evaluations, Findings, and Recommendations 81
tools already in use by a potential user. These ch


to extend the use of geospatial tools to the law enforcement community. Our exchanges with developers and users indicate a few areas in which NIJ can take actions to ensure that future geospatial tool developments provide maximal benefits to the law


ll recognize that there are funda- mental processes underlying every software development. In an effort to facilitate communications among software users, suppliers, develop- ers, maintainers, operators, managers, technicians, and any other enti- tie


Models
Table A.1
Acquisition
Supply
Development
Maintenance
Operations
Destruction
         Bibliography
 Abrahamsson, Pekka, Outi Salo, Jussi Ronkainen, and Juhani Warsta, Agile Software Development Methods: Review and Analysis, Espoo: VTT Electroni


/downloads
———, “GeoDaNet Alpha Download,” undated (d). As of February 16, 2014: https://geodacenter.asu.edu/downloads/software/gnet
———, “GeoDaSpace Alpha Downloads,” undated (e). As of February 16, 2014: https://geodacenter.asu.edu/software/downloa


ne and Associates, October 2009. As of January 23, 2014: http://www.icpsr.umich.edu/CrimeStat/files/CrimeStat-3.2a.zip
———, CrimeStat: A Spatial Statistics Program for the Analysis of Crime Incident Locations, version 3.3, Houston, Texas: Ned Levine


p://www.criminalbehavior.com/SPIDER
———, “Predicting Next Event Locations in a Crime Series Using Advanced Spatial Prediction Methods,” briefing, United Kingdom Crime Mapping Conference, 2005. As of January 23, 2014: http://www.ucl.ac.uk/jdi/events/m


orksheet,” Cambridge, Mass.: Abt Associates, undated (c). As of January 23, 2014: http://www.schoolcopsoftware.com/SchoolCOPSetupWorksheet.doc
———, “Instructions for Installing School COP 1.1 on a Network,” September 2002a. As of January 23, 2014: ht


development awards resulted in fully functional tools for the law enforcement community. Collectively, the tools provided the law enforcement community with access to new and enhanced geospatial capabilities to improve crime analysis. From a holisti


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use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents for commercial use. For information on reprint and linking permissions, please see the RAND perm


vironment, Energy, and Economic Development Program
The research reported here was conducted in the RAND Environment, Energy, and Economic Development Program, which addresses topics relating to environmental quality and regula- tion, water and energ


. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Structure of China’s Commercial Aviation Manufacturing Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Aviation Industry Corporation of China (AVIC). .


nologically sophisticated industries. The Chinese government has denoted several such industries as strategic, and has employed industrial policies, formal and informal, to foster the development of “national champions.” As part of this strategy, the


uments
To create an indigenous commercial aviation manufacturing industry, the Chinese govern- ment has employed the following policy instruments:
• setting up national champions
• providinglaunchaid
• compelling state-owned airlines to purchase Chin


uard their intellectual property and technologies. The most common approach is to manufacture key components outside of China; the joint venture then imports the component for final assembly. All materials and components used on aircraft must be cert


uction, the C919 will be technologically outdated compared to Airbus’s and Boe- ing’s new models, the A320neo and 737 Max, respectively. Most of our interlocutors felt that COMAC will not truly be able to break into the international commercial aircr


ed by Airbus and Boeing, and manufacturing know-how provide them with strong incumbent advantages.
Policy Options
The United States and the European Union
Both the United States and the European Union (EU) face a conundrum. China’s leadership appears


se joint-venture partners developed their own products outside the joint venture and captured the vast majority of sales in China with these products. In both these cases, state-owned companies have been the principal purchasers of the final product.


id that their intellectual property rights will not be safe, they will remain cautious about what technologies they bring to China. If China wishes to become fully integrated into the global commercial aviation manufacturing industry, China’s governm


 the State Council
World Trade Organization
Xi’an Aircraft International Corporation
xix
ChAPTEr OnE
Introduction
In the 30-odd years since the beginning of economic reforms in 1978, China’s economy has grown at a remarkable rate. In 1978, China’s gr


liament, 2011, p. 21.
  1
2 The Effectiveness of China’s Industrial Policies in Commercial Aviation Manufacturing
China with violations of WTO rules.2 Differential access to markets for goods, services, and capital have been of great concern to polic


hina market economy status, although China will automatically acquire this status in 2016 in accordance with the conditions under which it joined the WTO. Directorate-General for External Policies for the Union, 2011, p. 21; U.S. Trade Representative


of technologies from foreign manufacturers to the domestic Chinese industry. During the course of this research, we interviewed more than 50 company representatives and managers (Western and Chinese), journalists, lawyers, U.S. government officials,


on previous studies, the commercial press, discussions with industry managers, expert eval- uations, and a visit to the Zhuhai Air Show in November 2012 to chart changes in China’s technological capabilities in this industry. Drawing on this statisti


olicy statements, we first contrast Chi- nese industrial policies with rules issued by the WTO governing foreign trade, foreign invest- ment, and protection of intellectual property rights. We then discuss U.S. and EU approaches to addressing trade a


responsibility of the Ministry of Heavy Industry, with opera- tions managed by the Civil Aviation Administration of China under the supervision of the PLAAF. Subsequently, the Ministry of Aerospace Industry was set up, and enterprises engaged in the


while Airbus and AVIC each reported roughly $40 billion. The other six characters of the directive lay out the strategies by which growth is to be achieved. The “two integrations” refer to “integration within the global avia- tion production chain, a


tain that firms should concentrate on “core competencies.”7 However, AVIC appears to be in no hurry to divest itself of these subsidiaries. Over the last few decades, non-aviation products appear to have been more profitable than aviation products. A


es, frequently with a technological bent. Some have set up subsidiaries to which they have transferred inventions and other intellectual property so as to capitalize on these assets. Some of these subsidiaries have been listed on China’s stock market


Guizhou General Aircraft Company
 Cirrus Aircraft Industries
  AVIC Aero Equipment Company
 AVIC Aircraft Company
 AVIC General Aircraft (CAIGA)
 AVIC Commercial Aircraft Engines Company
 AVIC Engines Company
 AVIC Avionics Systems
  AVIC Electromech


egan as a manufacturer of bombers; it continues to produce the H-6 series of medium bombers developed from the Tupolev Tu-16 of 1950’s vintage and the JH-7 series of fighter-bombers. In recent years, it has set up a subsidiary to work as a subcontrac


t Company, Ltd. (中航工业通用飞机公司)
China Aviation Industry General Aircraft Company (CAIGA) is the AVIC division that spe- cializes in general aviation aircraft: smaller aircraft for personal or business use. Its major aviation-related assets in China incl


 require substantial development before they can enter commercial service.
Commercial Aircraft Company of China
At the same time that AVIC I and AVIC II were re-merged, COMAC was spun off from AVIC in an effort to create a commercial aviation manufac


up
 Chengdu Airlines
 Large Aircraft magazine
SOURCES: Compiled from the COMAC company website, COMAC annual reports, and media reports.
RAND RR245-2.2
for producing a military rather than commercial aircraft are very different and AVIC had not been


e government has sought to develop China’s capacity to produce capable military aircraft. Commercial aircraft manufac- turing and operations in China were given a lower priority. In fact, the commercial aviation sector got its start under the managem


s focused on smaller regional jets in the hope of gradu- ally working their way up to larger aircraft as the industry gained experience. In 2000, Xi’an Aircraft Company, Chengdu Aircraft Industry Group, Shenyang Aircraft Corporation, and the Shanghai


, 2011.
36 Kurt Hofmann, “Airbus Tianjin Factory to Deliver 100th A320 in September,” ATW Daily News, June 15, 2012.
China’s Commercial Aircraft Manufacturing Industry 17
 18 The Effectiveness of China’s Industrial Policies in Commercial Aviation Man


ospace America, February 2010, p. 27. 40 Tu Lei, “Aviation Industry Gets Landmark 8-Year Road Map: MIIT Plans for Competitive Future,” Global Times, May
24, 2013, p. 23.
41 Bradley Perrett, “Further Delays On COMAC C919 Program Push First Flight to 2


r personnel, and improve quality assurance. Computer-integrated manufacturing systems and automation tools such as computer-aided design software, computer-aided process planners, and digitally controlled machine tools have become widespread in leadi


. As noted, the COMAC ARJ-21 has run into repeated delays.50 A key problem has been a lack of systems integration skills. Boeing and Airbus have moved to using a “distributed airframe manufacturing process,” whereby subcontractors are responsible for


t manufacturing industry as a source of economic growth and technological spin-offs. To achieve the goal of creating a commercial aviation manufacturing industry, as already noted, the Chinese government has adopted a strategy of first engaging in do


tion Industry (2013–2020).”6 The plan lays out China’s goals for the industry in much more detail.
A number of other indicators point to the importance of the commercial aircraft manu- facturing industry to the Chinese government. In mid-2012, the St


uring industry that China hopes will eventually be competitive with Boeing and Airbus.10
Setting Up National Champions
The Chinese government merged AVIC I and AVIC II back into a single company in 2008, and it created COMAC, a state-owned company de


in the company, including 5 billion renminbi from the Shanghai Municipal Government’s Guosheng Investments Group, 1 billion renminbi from Aluminum Corporation of China (Chinalco), 1 billion renminbi from Baosteel Group, and 1 billion renminbi from S


to career advancement for local officials. Local
14 Anil Gupta and Haiyan Wang, “COMAC: China’s Challenge to Airbus and Boeing,” Bloomberg BusinessWeek, June 30, 2010.
15 GlobalSecurity.org, “Commercial Aircraft Corporation of China (COMAC),” web pag


, along with how well their companies perform financially.25 Third, these three airlines have relied on financial support from the state to finance their operations and expand their fleets. For exam- ple, in 2009, China Southern received a $1.5 billi


soft. One interlocutor stated that no money has
26 Szamosszegi and Kyle, 2011, p. 46.
27 Information provided by Western expert on China aviation manufacturing industry.
28 Cliff et al., 2011, p. 17.
20 150
55
  China’s Industrial Policy and Its Comm


ke Boeing and Airbus, have been a factor in Chinese decisions on pur- chases of aircraft. Both Airbus and Boeing track purchases of components from Chinese com- panies; more than half of all Airbus planes contain components manufactured in China.35 T


designed to help Chinese firms acquire technologies, managerial know-how, and production experience. In a manufacturing joint venture, the foreign partner typically supplies the pro- duction design and management expertise, while the Chinese partner


by the FAA and EASA cannot, for all intents and purposes, fly inter- nationally. The primary means COMAC has employed to reach this goal is to incorporate only modules and components that have already been certified by the FAA and EASA into the C919


December 2009, Xi’an Aircraft Industry Company and a Hong Kong-based private equity firm Advanced Treasure Limited acquired 91.25 percent of Future Advanced Composite Components, an Austrian company specializing in manufacturing parts and modules fr


er Chinese Ownership,” AVweb, July 22, 2012.
53 McMillin,2012.
 China’s Industrial Policy and Its Commercial Aircraft Manufacturing Industry 33
short term. Rather, the basic objective is to elevate our comprehensive aviation industrial capabilities a


s, and staying competitive with domestic Chinese companies.
Foreign Companies
Because almost all aircraft manufactured in China have been for the PLAAF, both the Chi- nese government and foreign companies were initially wary about foreign investment


resence in China,” news release, undated.
sortium involving the Tianjin Free Trade Zone and AVIC, for final assembly of the A320.4 Like Boeing, Airbus has also invested in a joint venture, Hafei Airbus Composite Material Manufac- turing Center, locat


Ventures in China
  U.S. Partners
Eaton Corp. GE/Safran
Goodrich Corporation hamilton Sundstrand honeywell International
Kidde Aerospace (hamilton Sundstrand subsidiary) Parker Aerospace
rockwell Collins
Zodiac
Other International Partners
Fisher Adv


ide aircraft manufactur- ers with complete modules such as landing gear or engines, have followed suit to ensure that they can provide replacement parts and aftermarket service promptly. Rolls Royce and United Technology’s Pratt & Whitney unit, for e


a’s MRO Market Booming,” Air Transport World, January 1, 2012.
 The role of Foreign Companies in China’s Commercial Aircraft Manufacturing Industry 39
aircraft manufacturing industry have to be certified by the FAA or EASA before they can be used in


ith servicing the training provider’s aircraft.
Assembly operations set up by commercial aviation manufacturers are designed to lead to higher sales. As previously noted, it is doubtful that McDonnell Douglas would have success- fully sold aircraft t


hing to do with aircraft. For example, Airbus purchased a barge, the Ville de Bordeaux, a roll-on/roll-off vessel from the Jinling shipyard in Nanjing, to deliver parts for the A380 for $30 million.19 The aircraft manufacturer has to include the cost


ompanies to assemble the modules for the C919 in China. According to company representatives with whom we spoke, the joint ventures posted in Table 4.2 are primarily a consequence of this stipulation. For example, GE states that its joint venture in


e leadership. Even if the project fails, the company believes that it will have enhanced its corporate image in the eyes of China’s leaders.
Challenges of Investing in China
As shown by the quotes from the CEOs of AVIC and COMAC, these executives are


o into a manufacturing process. Rather, the ingredients are simply listed as “A” and “B”—employees are only informed of how much of each ingredient should be mixed together. Other companies break up manufacturing processes so that Chinese employees o


fficient protection for GE’s investment.32
30 Discussion with Western commercial aviation component manufacturer in China.
31 Kerry Lynch, “Donnelly Dismisses Concerns of Technology Transfer Risks for Cessna in China,” The Weekly of Business
Aviation


o civil aircraft manufacturing in other countries, the share of exports in total sales in the Chinese industry has been low, running between 13 and 21 percent of total output. In most countries with a substantial civil aviation manufacturing industry


. In other words, the U.S. industry generated nine times more output per worker. China’s statistics on employment in civil aviation manufacturing and U.S. statistics on employment in the aerospace industry are not completely analogous: the U.S. fig-


lays in the global commercial aviation export market, it is a very important market in terms of imports. China’s imports rose from about $3–4 billion annually in 2005 dollars in the 1990s to more than $14 billion in 2005 dollars in 2011. In 1992, Chi


nowledge gained by Chi- nese managers and employees formerly employed in Airbus’s joint venture in Tianjin. These individuals have been able to transfer lessons learned concerning final assembly from work- ing in the joint venture.7 Substantial inves


advanced proprietary production processes to China and share corporate technologies and know-how with Chinese staff are made at the corporate level. We were informed by many of the experts with whom we met in the course of this research that these de


hough in aggregate the EU is now larger, accounting for more than 44 percent of world exports compared to the United States’ 37 percent. In contrast to the absence of long-term growth in total output, exports have risen sharply over the last two deca


eing in 2012 employed 4,050 machinists in its Renton, Wash., plant; that number was 6,022 in July 2001.15 Steady improvements in productivity over this period have contrib- uted to these declines in overall employment. At Boeing, outsourcing also app


tion Manufacturing Industry as in Other Industries?
As shown by the statistics in Chapter Five, the Chinese commercial aviation manufacturing industry has yet to make serious inroads into the global aviation industry, although it has enjoyed solid gr


rent product has “nothing at all to do with Shinkansen”—even if the trains look identical to the Japanese design. Repre- sentatives from the Kawasaki consortium say 98 percent of the technology and designs used in the Chinese trains are Japanese. The


been an important source of technologies for their Chinese partners. American Superconductor Corporation (ASC) accuses Sinovel, its former joint venture partner and now one of China’s three largest wind turbine manufacturers, of stealing its technol


o have a Chinese joint venture partner that holds at least 50 percent of the equity in the assembly operation.12 Despite this stipulation, virtually every established automobile manufacturer from the United States, Europe, and Japan has set up a join


Itself into a Competitor,” International Herald Tribune, April 11, 2006, p. 1.
13 “Audi-Led Global Carmakers May Be Shut Out of China’s Fleet,” Bloomberg News, February 27, 2012.
14 KeithBradsher,“ChinaSeeksTrade-OffforEntryofGMHybridCar:AutomakerPre


ernment influences the choice of aircraft purchased by China’s state-owned airlines. The CEOs of these airlines are selected by the government. However, government pressure is only one influence on purchase decisions by these executives. Chinese airl


the Chinese partner with opportunities to learn how to efficiently manufacture product lines they had not previously had the capability to produce. Joint ventures have also helped provide the know-how acquired from repeatedly manufacturing the same c


ace raw material suppliers have not yet been able to produce materials of a quality that could be certified. Chinese aviation component manufacturers face a competi- tive disadvantage because they must import materials from the same suppliers as thei


to entry for competitors. COMAC, for example, is learning how to get through the certification process with both the FAA and the Civil Avia- tion Administration of China. Once Chinese companies master this process, they will be better placed to deve


costs. As aviation analyst Richard Aboulafia states, “China has tremendous resources and tremendous talent but the government-directed technology-copying system pro- duces disaster.”27
Foreign component manufacturers noted the rising cost of skilled


n China, although the
27 Negroni,2012.
28 Interviews in China with Western aviation component manufacturers.
29 Interviews in China with Western aviation component manufacturers.
 64 The Effectiveness of China’s Industrial Policies in Commercial Avia


ing industry.
31 Szamosszegi and Kyle, 2011.
32 Harrison, 2011, p. 4.
33 Interviews in China with experts on the Chinese aviation manufacturing industry.
 net Assessment of the Effectiveness of China’s Industrial Policies for Commercial Aviation Manu


ensive and challenging, but also necessary. Despite the size of the internal Chinese market, Chinese aircraft will need to be able to operate outside the country; COMAC also hopes to sell more planes abroad.36 To do so, COMAC will need to invest in d


upport the creation of these incipient national champions. It has provided substantial financial support for launching the C919. Through the purchasing authority of the China Aviation Supplies Import and Export Group Corporation (CASC), the Chinese s


veral ways buyers can avoid consummating the final sale, not least by canceling orders because of delivery delays. Moreover, by the time the C919 is in full pro- duction, it will be technologically outdated compared to Airbus’s and Boeing’s new compe


will have a difficult time competing against the incumbents, even in China.
COMAC officials have stated that they plan to source more components from China’s domestic aircraft manufacturing industry, once products by Chinese manufacturers have been c


s the extent to which these companies produce for the U.S. military or to which their technologies are considered dual use.
One area where China has been buying its way into the international market is general aviation. More companies participate in


any technology brought to China will be subject to theft. However, as already noted, they have taken a variety of steps to protect their intellectual prop- erty rights, most notably by keeping the manufacture of components involving key technolo-
48


es have taken market share from foreign competitors in China and in the rest of the world with detrimental effects on employment and profits for those competitors. But investing in these industries, especially the commercial aviation manufacturing in


ommercial aircraft was not covered under specific provisions of China’s accession agreement, the WTO is designed to constrain use of domestic subsidies, barriers to imports, and other trade-distorting measures so that foreign and domestic manu- factu


evision),” WT/TPR/S/230/
Rev.1, 5 July 2010, Section III, paragraphs 3–6.
3 Directorate-General for External Policies for the Union, Policy Department, 2011, p. 45.
4 Directorate-General for External Policies for the Union, Policy Department, 2011, p


mmission on Commerce and Trade (JCCT) was established in 1983 and is co-chaired by the U.S. Secretary of Commerce and China’s Minister of Commerce. It is a forum for “. . . high-level dialogue on bilateral trade issues and a vehicle for promoting com


 were inconsistent with this commitment in a timely manner. China has reportedly also agreed to participate in negotiations on new rules on official export financing with the United States and other major exporters.14
But, as the U.S. Trade Represent


mmission and China’s Premier, who is accompanied by members of the State Council.19 In contrast, the EU-China High Level Economic and Trade Dialogue, which began in 2007, focuses solely on trade and economic issues. It consists of upward of 25 separa


s are placed on bilateral agendas or brought to the WTO only if a domestic company complains. While U.S. and European firms still dominate a market, like commercial aviation manufactur- ing, trade negotiators tend to focus on other industries where c


r new air- craft a matter of policy for China’s state-owned airlines. Moreover, as purchases by state- owned airlines are not considered government procurement (China is not yet party to the
Government Procurement Agreement within the WTO), the U.S.


rage the U.S. Trade Representative and the Directorate-General of Trade to closely monitor sales efforts by COMAC and be prepared to launch formal pro- ceedings if the Chinese government appears to be violating WTO rules in this industry.
• Continue


ent, in particular, has provided support, but the British, Spanish, and German governments have done so as well.
China faces a number of hurdles in repeating the success of Airbus. The commercial air- craft market is highly competitive: Manufacturers


y. The facility was closed just before it went into production; the project was no longer commercially viable once oil prices dropped. Fortunately for the U.S. government, which would have been legally obligated to honor the loan guarantee, Exxon abs


n Commercial Aviation Manufacturing
support and their impact on the competitiveness of their respective industries. In the United States, philosophical predilections have contributed to a reluctance to provide subsidies to manufacturers, although agr


e, they will remain cautious about what technologies they bring to China. If China wishes to become fully integrated into the global commercial aviation manufacturing industry, China’s govern- ment would be well advised to change its current policies


nal Partners in the ARJ-21 Program
Partners
U.S. Partners Alcoa, Inc.
B/E Aerospace, Inc.
Eaton Corp.
GE
Goodrich hella Aerospace
hamilton Sundstrand (UTC subsidiary) honeywell International
Kidde Aerospace (hamilton Sundstrand subsidiary)
MPC Produc


first-order-first-flight-1970-1972/
Airbus (Tianjin) Final Assembly Company Limited, “Where We Operate,” EADS, undated. As of
August 8, 2013: http://www.eads.com/eads/int/en/our-company/where_we_operate/continent_asia/country_china/city_tianjin. html


utUs/tabid/62/language/en-US/Default.aspx
Bradsher, Keith, “China Automaker Sets Out on Its Own: GM and Volkswagen Find Their Partner Plans to Build Itself into a Competitor,” International Herald Tribune, April 11, 2006.
———, “China Seeks Trade-Off


eds., Washington, D.C.: Peterson Institute of International Economics, May 2010.
Dickie, Mure, “Japan Inc. Shoots Itself in Foot on Bullet Train,” Financial Times, July 9, 2010. Directorate-General for External Policies for the Union, Policy Departme


ated a. As of August 7, 2013:
http://www.globalsecurity.org/military/world/china/comac.htm
———, “Shanghai Aviation Industry (Group) Co., Ltd.; Shanghai Aircraft Manufacturing Factory (SAMF); COMAC Final Assembly Center,” web page, undated b. As of Fe


+locations
International Monetary Fund, “World Economic Outlook Database,” web page, undated. As of August 14, 2013:
http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx
International Trade Administration, Shipments of Complete U.S. Air


es C. Mulvenon, A New Direction for China’s Defense Industry, Santa Monica, Calif.: RAND Corporation, MG-334-AF, 2005. As of July 25, 2012: http://www.rand.org/pubs/monographs/MG334.html
Bibliography 89
90 The Effectiveness of China’s Industrial Poli


 21, May 25, 2013a.
———, “Further Delays On COMAC C919 Program Push First Flight to 2015,” Aviation Daily, May 24, 2013b. As of August 6, 2013: http://www.aviationweek.com/Article.aspx?id=/article-xml/avd_05_24_2013_p01-01-581804.xml&p=1
Porter, Mich


rtment of the Treasury, “U.S.-China Strategic and Economic Dialogue,” updated July 12, 2013. As of February 11, 2013:
http://www.treasury.gov/initiatives/Pages/china.aspx
U.S. Trade Representative, “Mission of the USTR,” web page, undated. As of Febr


划的提案),” 2011. As of December 12, 2012: http://news.xinmin.cn/rollnews/2011/03/11/9721567.html
Zhang, Sabrina, “Indonesia Halts US$1.2 Billion ARJ Order,” World Civil Aviation Resource Net, May 22, 2012a. As of February 14, 2013:
http://w w w.wcarn.co


  CHILDREN AND FAMILIES EDUCATION AND THE ARTS ENERGY AND ENVIRONMENT HEALTH AND HEALTH CARE INFRASTRUCTURE AND
TRANSPORTATION INTERNATIONAL AFFAIRS LAW AND BUSINESS NATIONAL SECURITY POPULATION AND AGING PUBLIC SAFETY SCIENCE AND TECHNOLOGY
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igorous standards of quality, objectivity, and independence.
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iii
iv


. . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. 8 .. 8
. 11 . 12 . 13 . 13 . 13 . 14 . 14 . 17 . 18 . 18 . 19
20 20 22
v
vi How Will the Patient Protection and Affordable Care Act Affect Liability Insurance Costs?
ProviderTreatmentEffect..


gs, by Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B.1. Estimated Relationship Between the Number of Paid Malpractice Claims and the Percentage of the Population w


 use prevailing Medicare rates as a basis for determining how much to reimburse providers
1 We focus on expected claim costs and not premiums paid or the net profits or losses to insurers or governments.
 xi
xii How Will the Patient Protection and Af


ollars)
Auto (first party)
–0.1 to –1.6
n/a
n/a –0.7 to –0.8 n/a
–1.4 –200
Auto (third party)
0 to –0.8
0 to –3.8 0 to 2.0 –0.7 n/a
–1.7 –540
WC
–0.1 to –1.2
n/a
n/a –0.8 to –1.7 n/a
–1.4 –930
Medical Malpractice
n/a
0 to –3.0 n/a n/a 0.4 to 7.8
2.4


can Community Survey
AHRQ Agency for Healthcare Research and Quality BI bodily injury
COMPARE Comprehensive Assessment of Reform Efforts CMS Centers for Medicare and Medicaid Services CPI Consumer Price Index
CSR collateral source rule
D&O director a


ss states in existing legal rules, popu- lation demographics, and other relevant factors might mediate the operation of each mecha- nism. Given that this report represents one of the first systematic empirical explorations of the ACA’s potential effe


ve assump- tions would affect conclusions about the impact (or lack thereof) of the ACA. Moreover, as implementation proceeds and more data and research become available regarding behavioral responses to the provisions of the new law, our framework c


ce may wish to skip to Chapter Three of the report.
The Patient Protection and Affordable Care Act
The ACA, as modified by the Health Care and Education Reconciliation Act (Pub. L. 111- 152), was signed into law on March 23, 2010. The act contained a


ot provide an aggregate estimate for this line.
Auto
Auto insurance reimburses auto crash victims for damage to their vehicle and injuries and related economic losses associated with a crash. As in Table 2.1, we separate auto liability payments for t


ally operate a motor vehicle. Because the BI claim process involves assigning fault in an accident, it is typical for medical care to be received and billed to the injured individual and his or her health insurer prior to the resolution of the BI cla


 is likely to be affected by the ACA similarly to how BI will be affected, so it is most useful to think of this cover- age as operating similarly to the auto third-party coverage.
 8 How Will the Patient Protection and Affordable Care Act Affect Lia


mages (pain and suffering). States also vary in their rules regarding the extent to which payments from collateral sources for injury-related costs can be factored into jury decisions regarding the amount of an award. For example, payments made by he


expect to see for general and other liability coverages. Moreover, insurers or stakeholders can apply the framework we have out- lined for third-party auto to consider about how costs for general liability might be affected by the ACA in a particula


project the size of the effect and, where possible, compile the needed information in order to present a rough quantitative estimate of the size of the effect across different lines and states. To obtain the necessary inputs into the quantitative an


sms in our quantitative work if effects do not rise above a de minimis standard, are unsupported by existing empirical evidence, or are too ambiguous of direction (sign).1 We also focus specifically on impacts that seem likely to affect insurer costs


ly affect funding for courts, insurance regulators, corporate tax rates, and similar services. However, we believe that such effects, if any, would be likely to be small relative to the more-direct effects we discuss in this report, so we do not addr


 had a preexisting lower back condition that had not been properly addressed because of a lack of health insurance.
Workers’ Compensation
A worker without health insurance sustains an injury over the weekend and does not come to work Monday, seeking


erience different changes in coverage under the ACA than the general population. In particular, workers are expected to be less affected by the Medicaid expansions because their incomes are often higher than 133 percent of the federal poverty level.


ts (e.g., relatively parsimonious WC reimbursement rates) that make it unclear how widely the results from Massachusetts might generalize and what mechanisms might have been at play. Never- theless, it provides some support for the hypothesis that in


r, nor did it indi- cate how measured changes in health might interact with future injury events. More directly relevant to our inquiry is that an analysis of auto accidents among drivers with and without health insurance in Wisconsin in 1992 did not


ed rates of new coverage.
Collateral Source Effect
Concept
Under standard liability law, the collateral source rule (CSR) holds that payments for injuries received by plaintiffs from collateral sources, such as health insurance, should not be taken i


ed party, including costs of medical care
RAND RR493-3.4
 9 From the perspective of the injury victim, whether or not the CSR applies may have little effect on recovery. This is because, even when the rule applies, private health insurers can still s


s and 15 in medical malpractice cases. Several states passed laws limiting the CSR in the 1980s and 1990s, although some laws have been subsequently repealed or invalidated by state supreme court decisions.
The Amount of Medical Payments Made for Bod


lways fully removed from liability awards. Thus, we must estimate the extent to which the medical payments for BI auto liability overrepresent individuals without health insurance, knowing that they only partially do so.
In our simplified model, usin


ge—the full amount of care paid for by the health insurer—and not merely a fraction like it is for the indi- vidual substitution effect.
Although we do not present quantitative estimates for this effect on general liability costs in Table 3.2, to the


ast and projected future medicals, it is unclear whether this effect would increase or decrease MPL insurers’ costs. Those who have health insurance are likely to get more treatment immediately following an injury than the uninsured, which would tend


states, except Oregon), payment is more uncertain because the person injured in the crash must first file a liability claim and demonstrate that the other driver was at fault before receiving compensation. From the provider’s perspective, payment is


ross all states (%)
States with smallest predicted change (%)
Median effect (among states with nonzero effect) (%) States with largest predicted change (%)
Aggregate cost impact (millions of 2016 dollars)
Auto (third party)
0.4
0.0 (20 states) 0.5 (S


in annual rate increases that were built into previous law—under the rationale that those previous adjustments did not account for hospitals’ ability to improve productivity and thus they were being overpaid. The CMS actuaries estimate $14 billion i


ecent years, and the IPAB will not be required to make a recommendation for 2015. However, given that the future is uncertain, we will apply the actuary’s estimate for 2016, the year in which our estimates are based.16
16 There is also a temporary sm


affect the total payout by the liability insurer. Although a minority of claims may be subject to such limits, the impact of such a cap will be larger than that percentage because claims at the limit are larger than those
Table 3.4
Change in Payment


es with smallest predicted change (%)
Median effect (among states with nonzero effect) (%)
States with largest predicted change (%)
Aggregate cost impact (millions of 2016 dollars)
Auto (first party)
–0.8
–0.7 (15 states) –0.8
–0.8 (32 states) –110
A


l increase in use of care under the ACA, let us define the amount of care used by a typical insured person as 1.0 units of care. Studies have generally found that the uninsured currently use about half of the care that the insured do (Hadley and Hola


e over time for defined demographic groups (by age and gender) as the rates of health insurance coverage for those groups changed over time. A detailed explanation of the approach and regression results is shown in Appendix B. Results and statistical


retirement, with no access to Medicare until age 65. Not only does Medicaid expand in participating states to all adults (who, unless they were parents of a child under 18, were generally not eligible prior to the ACA), but the exchange subsidies are


disability, improving the overall risk characteristics of the insurance population. However, the extent of the impact of early retirements on disability coverages may be moderated by the fact that many carriers limit payments for workers who are near


—in order for the ACA to increase induced demand from current levels, it would need to be the case that providers currently have some unexploited market power. Such a situation would not be consistent with profit maximization by medical providers.
Se


tial cost savings from the ACA that we outline are actually realized and are passed on to consumers through lower premiums, this might serve to offset any direct declines in demand.
CHAPTEr FOur
Aggregate Impacts Across States and Lines
Taken individ


ffect Liability Insurance Costs?
Table 4.1
Estimated Changes in Liability Claim Costs, by State and Market, Due to the Patient Protection and Affordable Care Act (%)
 State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Dist


substantial changes to the health care system that could, in turn, exert a more profound influence on liability mar- kets. In this chapter, we discuss a few examples of such changes. This discussion is, of necessity, speculative at this point given t


payer health insurance model in which near-universal coverage is provided by the state. It remains to be seen what role, if any, the WC system would play in the Vermont single-payer system (Lunge, 2013).
Similarly, auto no-fault was enacted in many s


id primarily based on the amount and types of care provided, ACO payment arrangements include financial incentives for providers who deliver higher- quality care or reduce costs. In theory, the ACO model is designed to facilitate better coordi- natio


ypes of providers and patients will ultimately choose to participate in these alternative payment arrangements, developments on the ACO front merit continued monitoring.
More generally, growth in ACOs and other global payment models may catalyze a sh


better care and therefore better health, empirical evidence for this proposition remains surprisingly limited. The most- prominent recent studies that convincingly demonstrate a relationship between health insur- ance and health generally consider i


he federal government to the states. One cost-containment option that could look attractive is more aggressive pursuit of subrogation. Changes in policies regarding subrogation could potentially affect all of the lines of insurance discussed in this


tential Longer-run Impacts 43
 44 How Will the Patient Protection and Affordable Care Act Affect Liability Insurance Costs?
encourage physicians to shift into particular specialties. Moreover, the prospect of rising future demand for health care serv


h can include liability payers in certain situations. Those costs would be reduced if more individuals had health insurance. Some of the cost-control mechanisms of the ACA, such as reductions in payment rates for providers, would have spillover benef


PL claim frequency rise more quickly than would be expected based on coverage expansion?
Are courts accepting of new causes of action based on ACA provisions?
Are states adopting legislated fee schedules? Is there movement away from no-fault coverage


g agents (firms, households, and the government) in the model. For example, a Medicaid expansion might cause some newly eligible workers to drop employer-sponsored health insurance in favor of public coverage. Employers in our model can respond to th


ay results from three multiple regression analyses testing the associa- tion between insurance coverage and medical malpractice claims (see Table B.1). The analysis is motivated by the question of whether the ACA might affect malpractice claims by in


r dummies to control for NPDB reporting anom- alies, features of tort law, and other changes occurring in states during those years, and age- sex-year controls to isolate the impact to changes in coverage within age-sex cells. The second and third sp


sity of Texas Law, Law and Economics Research Paper 184, September 2011.
Baicker, Katherine, and Amy Finkelstein, “The Effects of Medicaid Coverage: Learning from the Oregon Experiment,” New England Journal of Medicine, Vol. 365, No. 8, August 25, 20


/99xx/doc9924/12-18-keyissues.pdf
Coomer, Nicole M., and Te-Chun Liu, Benchmarks for Designing Workers’ Compensation Medical Fee Schedules: 2009, Cambridge, Mass.: Workers Compensation Research Institute, WC-10-32, June 2010. As of January 20, 2014:


ions and What to Do About It,” JAMA, Vol. 310, No. 2, July 10, 2013, pp. 141–142.
Heaton, Paul, The Impact of Health Care Reform on Workers’ Compensation Medical Care: Evidence from Massachusetts, Santa Monica, Calif.: RAND Corporation, TR-1216-ICJ,


&COL=YR&REP=MMPR&YR =2012&YR=2011&YR=2010&YR=2009&YR=2008&YR=2007&YR=2006&YR=2005&YR=2004&YR=2003 &YR=2002&YR=2001&AMT=RNGC01&AMT=RNGC02&AMT=RNGC03&AMT=RNGC04&AMT=R NGC05&AMT=RNGC06&AMT=RNGC07#results
references 53
54 How Will the Patient Protection


 Monday: Is Workers’ Compensation Covering Off-the-Job Injuries?” in Philip S. Borba and David Appel, eds., Benefits, Costs, and Cycles in Workers’ Compensation, Springer Netherlands, 1990, pp. 115–127.
Staiger, Douglas O., David I. Auerbach, and Pet


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e-TRIA levels, a greater fraction of loss in a terrorist attack would go uninsured than would be the case with TRIA in place. More loss going uninsured would increase demand for
 Key findings
• For terrorist attacks with losses less than about $50 bi


ainst it. The sudden emergence of a largely unfamiliar risk, warnings from the government about future attacks, sugges- tions that losses from a terrorist attack could be in the realm of hundreds of billions of dollars, and the unknown consequences o


m amount. In exchange for this federal backstop, insurers are required to offer terrorism insur- ance coverage for commercial property-casualty lines on terms that do not differ materially from other coverage.6
TRIA applies to specific lines of comme


th TRIA in place. More loss going uninsured would increase demand for other forms of compensation, which could, in turn, lead to an increase in other (non-TRIA) forms of federal disaster assistance.
In the remainder of this policy brief, we first sum


m was not defined as a separate coverage, and hence take-up was effectively 100 percent. Immediately following the 9/11 attacks, terrorism was excluded from general property-casualty insurance and separate terrorism coverage had to be purchased. Avai


ism coverage
is “functioning solely on the basis of TRIA being in place.”17
It is therefore not surprising that a predicted consequence of eliminating TRIA is a reversion to the limited availability/high price conditions that prevailed between Septem


ns in 2001 and now is that losses in the 9/11 attacks were largely covered by insurance, whereas insurance take-up is considerably lower now, and would be substantially lower still without TRIA. It seems reasonable to expect that less insurance cover


ell illustrated by the peaks in 2001, 2005, and 2013, representing extraordinarily large amounts of funding for the 9/11 attacks and for Hurricanes Katrina and Sandy, three of the costliest disasters in U.S. history. These peaks demonstrate that fede


3fc32ab01b91b1bbfea8852/FY13+September+Monthly+DRF_508.pdf.
RAND RR611-2
     Disaster Relief Fund Katrina Emergency supplemental appropriations
Total
     Sandy
   9/11
         Federal disaster assistance spending, $ billions ($ 2010)
    1991
1992


 loss deductions in 2005 was nearly $15 bil- lion, although it is unknown what fraction of this was claimed by businesses.34 As of 2007, over 90 percent of businesses file individual tax returns, accounting for about 40 percent of busi-
ness receipts


ach other in terms of commercial insurance take-up. Realistically, however, such data are not available, and insurance take-up probably does not vary enough to conduct such an analysis. Instead, we used aggregate estimates of uninsured disaster losse


ed U.S. natural disaster loss ($ billions, $ 2013)
SOURCES: Natural disaster loss: Munich Re, “2013 Natural Catastrophe Year in Review,” webinar presentation, January 7, 2014. As of April 2, 2014: http://webinar.munichreamerica.com/2014_01_ natcatrev


 and the extent to which federal disaster assistance is expected to increase with increasing uninsured loss, we now estimate the amount of federal disaster assistance spending with and with- out TRIA for different terrorist attack scenarios.
We consi


rage without TRIA
Insurance lines
Insurance coverage with TRIA
Insurance coverage without TRIA
SOURCES: Carroll et al., 2005; Dixon et al., 2007; this analysis.
RAND RR611-5
greater than the retention, the federal government is responsible for paying


ogram in place would exceed spending without it) is somewhere between $40 billion and $60 billion in total loss, where the range reflects the uncer- tainty in the relationship between uninsured loss and disaster assistance. For losses below this amou


the relative proportions of losses in property, workers’ compensation, and other insurance lines). This is approaching the insured loss from the 9/11 attacks ($42 billion in 2014 dollars). For attacks in this realm, the increase in disaster assistanc


 Hubbard and Deal, 2004.
4 Hillman, 2002; Baird Webel, Terrorism Risk Insurance: Issue Analysis and Overview of Current Program, Washington, D.C.: Congressional Research Service, R42716, 2013. As of April 2, 2014: https://www. fas.org/sgp/crs/terror/


isk Insurance Report, 2013. As of April 2, 2014: https://usa.marsh.com/NewsInsights/ MarshRiskManagementResearch/ID/30732/2013-Terrorism-Risk- Insurance-Report.aspx; Property Casualty Insurers Association
of America, “Re: Report by the President’s Wo


n/6081504.stm; William M. Paton, Philanthropic Grantmaking for Disasters: Lessons Learned at the Conrad N. Hilton Foundation, Augora Hills, Calif.: Conrad N. Hilton Foundation, 2011. As of April 2, 2014: http:// www.hiltonfoundation.org/images/storie


usinesses Through the Individual Income Tax, Congressional Budget Office Publication 43750, 2012. As of April 2, 2014: http://www.cbo.gov/sites/default/ files/cbofiles/attachments/43750-TaxingBusinesses2.pdf.
36 Dixon and Stern, 2004.
37 Dixon and St


 Quality.
 about this document
This document is part of a series of three policy briefs examining the potential ramifications of allowing TRIA to expire. The other two documents in the series examine
• the national security implications of terrorism


 and communities to recover quickly
• avoiding unnecessary legal, administrative, and other transaction costs.
The center is part of RAND Justice, Infrastructure, and Environment, a division of the RAND Corporation dedicated to improving policy and d


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 a tax-deductible charitable contribution at www.rand.org/giving/contribute.html
R® is a registered trademark.
© Copyright 2014 RAND Corporation
This document and trademark(s) contained herein are protected by law. This representation of RAND intelle


domains, including civil and criminal justice, infrastructure protection and homeland security, transportation and energy policy, and environmental and natural resource policy.
  is a component of the Office of Justice Programs of the U.S. Department


f program sustainability is becoming increasingly important as programs have been challenged to operate with increasingly scarce resources.
The present study aimed to better understand the characteristics and environments of programs that are likely


comments, and the RAND Survey Research Group, especially Megan Zander Cotugno, for their assistance in survey preparation, administration, and data collection. We thank Robert Davis and our peer reviewers, Mary Ann Scheirer of Scheirer Consulting and


ug court (DC), human trafficking (HT), and mental health (MH) areas. To ground this task in a theoretical context, we started with a literature review outlining definitions of sustainment and the factors associated with sustained programs. These them


course, recognition of the challenges to sustainability faced by criminal justice demonstration programs. For example, the U.S. Department of Justice Office of Juvenile Justice and Delinquency Prevention funded the development of a toolkit in 2002, B


Aarons, Hurlburt, and Horwitz, 2011). At least one paper defines sustainability as program continuation from the moment of first implementation (with implementation and sustainability as concomitant processes) (Pluye, Potvin, Denis, Pelletier, and Ma


les. Their empirical work, a qualitative analysis of a heart health promotion program in five community health centers, suggest that at least some aspects of routinization can begin with initial program implementation (Pluye, Potvin, Denis, Pelletier


orative structure, such as a coalition; and maintaining attention to the issues addressed by the program.
Factors Affecting Program Sustainability
The empirical research on factors that reliably predict or affect program sustainability comprises a na


funding streams, and public-academic collaboration.
Shediac-Rizkallah and Bone (1998) suggest that four broad classes of factors affect a program’s prospects for sustainability: (1) factors related to program design and implementation (such as financ


In another paper, examining behavioral health interventions, Hogue and colleagues echo this message, arguing that sustainability is
7
achieved by “solidifying the funding and regulatory resources, agency and supervision infrastructures, model modific


analysis of BJA programs in Chapter Four.
8
Table 2.1: Factors Affecting Program Capacity for Sustainability in Public Health
  Factor
Funding stability Political support
Partnerships
Organizational capacity
Program adaptability Program evaluation
Co


nnovation in partnership with BJA, the primary factors reported to “make or break” a program’s success were
9
comprehensive planning, stakeholder support, responsiveness to emerging challenges, and valuation of strong leadership (Cissner and Farole,


t were sustained but eventually terminated because of factors outside its control. After the establishment of this program, three separate bodies with more resources and greater clout developed similar initiatives, prompting its leadership to shut do


or Court Innovation both have strong records in establishing criminal justice reform efforts that thrive over time. For example, Vera created the nation’s first pretrial release and first victim/witness demonstration programs circa 1970. Both of thes


funding. The interviewee noted that “the toughest programs [to sustain] are those funded by a single grant that has a sunset clause.” A third interviewee echoed this: “Programs that diversify funding sources tend to survive. Therefore, local match is


ility. In one case, an interviewee commented on the influence of “well-designed research” on a treatment court. It yielded positive outcomes and may have contributed to the state providing funding for court staff. Another interviewee explained that “


Examples include comprehensive planning, stakeholder support, responsiveness to emerging challenges, and valuation of strong leadership (Cissner and Farole, 2009), as well as the ability to mitigate and recover from failures (Labriola, Gold, and Kohn


vices in a judicially supervised court setting with jurisdiction over nonviolent, substance-abusing offenders. Eighty-seven programs were funded between 2002 and 2015 (final start date was 2012). Six of them had not finished spending the initial BJA


factors previously shown or suspected to be associated with sustainability. Five research assistants were trained to identify, evaluate, and code relevant variables into spreadsheets for each research domain. Response types included “yes/no” judgmen


inment days) was not available because of a low item response regarding program start and end dates. Thus, sustained operations was defined as the self-reported presence or absence of continued program operations following cessation of BJA funding (s


veyed grantees reported that local stakeholders were involved in the start-up process. Eighty- nine percent reported that the program was modifiable to meet local needs. Of the
42 grantees who reported that their initial project leaders left the prog


.7
20.6 11.8 0.0 5.9 61.8 22.9 94.0 50.0 91.8 79.1 100.0
83.3
34.3
45.7
29.5 37.0 66.0 9.1 (1.0)
      NOTE: Values represent percentage of valid N endorsed.
a Pooled totals are percentages from all observations without regard to program type.
24
Fac


 Partnerships were defined as the combination of the percentage of the total budget that the grantee subcontracted to a third-party partner or consultant (archival variable) (on the assumption that grantees that provide more support to their
2 Note t


mmarizes the results of the 16 a priori analyses of the association between predictors of sustainability and actual sustainment (eight for each dependent measure). Two of these results are noteworthy. First, consistent with predictions is the result


ams whose applications contained more letters tended to be more likely to procure subsequent funding. However, this effect was not observed when sustainment was defined by continuation of program operations. (Further statistical details are reported


partnerships, organizational capacity, program evaluation, public impact, and strategic planning.
The relatively small number of factors found to be related to sustainment is consistent with some prior studies that have also found few empirical predi


 addition, 29 programs had end dates that could not be found in their files. It is not known whether these missing data points were never reported by the applicant or reported but not coded into the BJA archive.
Moreover, even the small number of sig


lore such hypotheses systematically.
In the present study, the vast majority of survey respondents chose to respond via an electronic structured survey mode. This method permitted them to respond on their own schedules, a fact that allows the respond


initial submission to postaward follow-up. They should contain mechanisms for coding qualitative statements from application materials into quantitative scores. The agency archives should include more-detailed financial information to support more-s


s. This need is especially important in the field of criminal justice, wherein the safety of communities is at stake. The present report represents an early effort to organize, expand, and apply strategies for assessing sustainability to criminal jus


ues
Coding Scheme
0–100, NF 0–xxx,xxx, NF 0–100, NF
Vague, specific, NF
Y, N, n/a
Y, N, n/a, NF High, low, n/a, NF
Y, N, n/a, NF Text
Y, N, NF
Strong, moderate, weak, n/a, NF Favorable, mixed, unfavorable, n/a, NF
Low, medium, high, n/a, NF Number, n


 2
13. Was the program modifiable to meet local needs? ○ Yes
○ No
○ Unknown
14. Was there a person who originally thought up the project idea and championed the program from start to finish?
○ Yes. Name and Contact Information:
○ No  Go to question


o Program Sustainability: What Helps Programs Survive?” Evaluation and Program Planning, Vol. 29, No. 2, February 2006, pp. 149–152.
Chovav, H., and T. Weinstein, Continuation or Cessation? A Follow-Up Study of Projects in Neighborhoods Where Project


ia Kohn, Innovation in the Criminal Justice System: A National Survey of Criminal Justice Leaders, U.S. Department of Justice Bureau of Justice Assistance, May 2013. As of March 20, 2014: https://www.bja.gov/Publications/CCI-InnovationSurveyReport.pd


 Planning, Vol. 28, No. 2, May 2005, pp. 123–137.
Porowski, Allan W., Kenneth Burgdorf, and James M. Herrell, “Effectiveness and Sustainability of Residential Substance Abuse Treatment Programs for Pregnant and Parenting Women,” Evaluation and Progra


ars/December2002/Weiss. pdf
Yin, Robert K., “Life Histories of Innovations: How New Practices Become Routinized,” Public Administration Review, Vol. 41, No. 1, January–February 1981, pp. 21–28.
48


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ission is required from RAND to reproduce, or reuse in another form, any of our research documents for commercial use. For information on reprint and linking permissions, please see the RAND permissions page (www.rand.org/pubs/permissions.html).
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onal living, older adult services, HIV/AIDS education and prevention, and other related health services to the residents of Southern California.
  iii
(Sarah_Hunter@rand.org). For more information about the Safety and Justice Program, see http://www.


ity Reinforcement Approach
ACC Assertive Continuing Care
BHS Behavioral Health Services, Inc.
CITI Collaborative Institution Training Initiative
CSAT Center for Substance Abuse Treatment
GAIN Global Appraisal of Individual Needs
GAIN-I Global Apprais


early 6 in 10 juvenile offenders return to court before the age of 18 (Snyder and Sickmund, 2006).
In response to the need to provide substance use treatment to previously incarcerated individuals, the Substance Abuse and Mental Health Services Admin


project and evaluation is provided in appendixes at the end of this report.
2
Chapter 2: Program Overview
In response to the SAMHSA/CSAT grant opportunity, a partnership was proposed between Homeboy Industries (HBI), Behavioral Health Services, Inc.


tivational Enhancement Therapy (Miller et al., 1994) was proposed for use with the older population (19–25), as MET/CBT-5 has not been well tested with this older population. Also, Seeking Safety (Najavits, 2002) groups, which provide evidence-suppor


nd experientially
o Access to MET and MET/CBT-5 training
Established HBI Community Partnerships
o Dept. of Juvenile Justice
o Los Angeles County Department of Probation
o Behavioral Health Services (licensed substance abuse treatment provider)
o Bien


quality improvement, this framework builds practitioners’ existing capacity, empowering them to address aspects of planning, implementation, and evaluation of their programs rather than relying on external resources and evaluators. The process is de


The outreach and recruitment staff discussed at the meeting the reasons they were or were not able to meet the recruitment goals, and other team members provided input and support to them. Changes in the processes were documented in the project team


t of the treatment.
Considerable efforts were put into ensuring adequate response rates at the three, six, and 12-month follow-up time points. The Request for Applications specified a goal of an 80 percent response rate for the six-month time point.


tment.
Community Partnerships
The project was contingent upon gaining entry to the juvenile probation camps, where potential participants were recruited. Staff at HBI already had a relationship with Los Angeles County Juvenile Probation that allowed


e-release case managers at HBI were assigned to the project for conducting the outreach, screening, and referral activities at the juvenile camps. This work entailed visiting the camps to first meet with staff that had identified youth that were with


, as well as a better understanding about the program requirements than the initial staff assigned to this responsibility.
Assessment
As stated in the logic model, eligible youth who agreed to participate in Project STAR were initially assessed using


ardless of age, were referred to MET/CBT-5. All participants were screened for additional needs that HBI could meet, e.g., mental health, education/job training, tattoo removal, parenting classes, and were referred and assisted in accessing those on-


gs for the three-year period facilitated by the Program Director. Staff from HBI, the treatment provider (BHS), and evaluation team (RAND) participated in these project team meetings. The typical agenda items included: Outreach/Recruitment, Admission


eported using illegal drugs. Marijuana was the most common drug, with one-quarter (26 percent) of individuals reporting marijuana only or marijuana and alcohol use. Few individuals (15–22 percent) reported any impact of their substance use on feeling


4 40.6 43 20.8 46 22.2
0.5 9 4.3 127 61.4 62 30.0 8 3.9
3.4 1.0
  *Other category includes one participant older than 25 and one participant with missing age information.
17
N % None 71 34.3
N Mean 136 22.8
95 22.1
82 25.8
46 17.4
SD Median
Range 3 t


those that consented to treatment, 90 percent participated in at least one MET/CBT-5 treatment session, and 73 percent successfully completed the five-session treatment within six months (see Table 2).
Table 2. MET/CBT-5 Treatment Attendance Rates


six-month assessment, and Table 4 displays data from participants who completed both assessments and all five sessions of MET/CBT-5. Because the program was ongoing throughout the entire three-year period, there were some participants enrolled in th


nterviews, we recommend only comparing across those that have completed both a intake and follow-up interview; therefore, we display the data from those who completed the three-, six-, and 12-month assessments (i.e., the “matched” sample, n = 64) and


omes and the proposed objectives.
a) Outcome: Reduction in substance use. This outcome was measured by responses to
GPRA Section B.1–2:
During the past 30 days how many days have you used the following: Any alcohol. During the past 30 days how many d


partment, room, or house. This definition included living in a room, boarding house, public or subsidized housing, hotel/motel, room at the YMCA/YWCA, and living in an RV or trailer. Using this definition, we found that:
• 37 percent of individuals a


n this program will display increased social connectedness.
    28
We defined “social connectedness” as having supportive interaction in past 30 days OR reporting having someone to turn to.5 We found:
• 91 percent of individuals reported social conne


ts were uncommon in this population across all time points. Of those who reported being arrested in the past 30 days, few had more than one arrest. We also found that:
• 83 percent of individuals had not been confined in the past 30 days at six month


pleters consistently had better outcomes in employment, recovery support, and confinement avoidance/reduction, compared to noncompleters (Table 4). The high level of employment is likely a reflection of HBI’s organizational focus. Individuals who are


tment offered in other programs varied. For example, the Request for Applications also encouraged the use of the Adolescent Community Reinforcement Approach (ACRA) coupled with Assertive Continuing Care (ACRA-ACC). ACRA-ACC is a longer, more intensiv


ed 207 participants into the STAR program. During that period, over 70 percent of the participants successfully completed MET/CBT-5, an evidence-supported substance use treatment program. In addition to the MET/CBT-5, all participants were employed i


living in the community—the majority did not report experiencing negative consequences from their use, which suggests that their use may not yet have escalated to the level of a substance use disorder or they had yet to recognize their use as a prob


s in substance use treatment settings. Participation in recovery support activities was reported to be around 50 percent at intake and decreased over time to about 20 percent at the 12-month time point, suggesting that more work may be needed to cont


ing the program requirements and expressing interest in participating never visited HBI upon release or attended only once or twice. Although it was not formally documented, the main reasons that identified young offenders did not access services as


treatment was perceived as too short and not intensive enough to address substance use and other co-occurring mental health and related issues that the targeted population faced. The analyses of the outcome data echo this perspective. Weekly recover


Recidivism%20Report.FY0405.%20FINAL.DJJ. pdf
Chandler, Redonna K., Bennett W. Fletcher, and Nora Volkow, “Treating drug abuse and addiction in the criminal justice system: Improving public health and safety,” Journal of the American Medical Associati


lism, Project MATCH Monograph Series, Vol. 2, 1994.
 Najavits, Lisa, Seeking Safety: A Treatment Manual for PTSD and Substance Abuse,
 New York: Guilford Press, 2002.
 Office of Applied Studies, Results from the 2002 National Survey on Drug Use and H


1
2
3
4
5
6
7
8
9
10
11
12
                                                                                43
Appendix B: Treatment Progress Log
                                     ID
MET #1
MET #2
CBT #3
CBT


se Case Case Case Intake Intake Field
Project Project Data Mgr Mgr Mgr Mgr Coord Coord Itvwrs DV Gp RP Gp Prog Survey Field Tx Tx Tx Div
Role/Position: Admin Director Mgr Supvr 1 2 3 1 2 (n=6) Facil Facil Eval Coord Intvwr Counslr Supvr Dir Affiliati


85.1 70.6 86.9 49.7 55.9
49.3 41.6 30.2 21.3 Criminal behavior avoidance or reduction
No Arrests
No Confined Days No Crimes
92.3 85.1 89.9 85.3 67.5 86.9 86.1 79.7 44.2 55.9 49.6 50.7
            (1) Intake percentage reflects those with zero days/ti


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ce is dedicated to reducing workplace injuries and illnesses. The center provides objective, innovative, cross-cutting research to improve understanding of the complex network of issues that affect occupational safety, health, and workers’ compensati


 Before Adjustments for Inflation and Geographic Location............................................................................................................ xiv
Table S.2 Impact of Resource-Based Relative Value Scale Implementation on Maximu


 is to be updated annually to reflect changes in procedure codes, relative values, and inflation and is to include, as appropriate, payment ground rules that differ from Medicare payment ground rules.
The RBRVS fee schedule, which is maintained by th


transition specified in §5307.1(a)(2), we computed separate CFs for anesthesia, surgery, radiology, and all other services based on current OMFS allowances and assessed the impact by comparing estimated total aggregate allowances under the OMFS with


athology (–29.0 percent). Because pathology is grouped with other services that have low OMFS payments relative to Medicare payments, the transition policy does not work as intended for pathology services. The reduction is greatest in the first year


atewide GAF for anesthesia because the RVU components do not differ across procedures. We also examined the impact of using either Medicare’s nine payment localities or a single statewide GAF for all services other than anesthesia. Using the 2011 WCI


physicians. Paying nonphysician practitioners based on 100 percent of the amounts payable to physicians would increase total RBRVS aggregate allowances 0.4 percent.
Alternative Conversion Factors
We calculated two alternative CFs that grouped patholo


unt for a considerable proportion of the total time and work associated with surgical procedures in the RBRVS, but there is some concern regarding whether the global billing rules provide sufficient recognition of work-related components of follow-up


clude services furnished by ASCs or hospitals that are currently paid under the OMFS for physician services in our baseline impact analysis. Medicare ground rules would pay for any nonsurgical services provided to hospital outpatients under its prosp


alendar year
discounting factor
durable medical equipment
durable medical equipment, prosthetics, orthotics, and supplies California Division of Workers’ Compensation electrocardiogram
emergency department
evaluation and management
Primary Treating P


ornia’s WC program. The OMFS establishes the MAA for services unless the payer and provider contract for a different payment amount. The OMFS for physician services applies to all services performed by physicians and other practitioners regardless of


the relative values in the current fee schedule are based on historical charges, which tended to undervalue E&M services relative to procedures. Overvaluing a service provides an incentive for unnecessary utilization, while undervaluing a service co


amount) until the AD adopted a physician fee schedule no earlier than January 1, 2006. As amended by SB 228, §5307.1 of the Labor Code did not specify the type of fee schedule that the AD should adopt but required that the schedule be revised no less