Student loans

I've been meaning to blog about the student loan reforms included in the health care reform "fixes" legislation.  Had this happened on its own, it would have been a fairly major deal, yet it happened almost completely under the radar while everyone was so focused on health care.  Not quite sure the Democrats would have pulled off this very smart move above the radar (too many recalcitrant Democratic Senators who want to prop up the wasteful student loan industry in their states).  The New Yorker's James Suriowiecki had a great post about the absurd state of affairs back in September:

 A couple of years ago, in a column about the perverse economics of the
student-loan business, I wrote, “For decades, student-loan
companies have had one of the cushiest businesses in America.” The loans
companies like Sallie Mae make to students are subsidized and almost
entirely guaranteed by the federal government, so that if a student
defaults, it’s the government, not the private company, that eats the
loss. It’s a quintessential example of the “heads the corporation wins,
tail the government loses” business model—a model that many Wall Street
firms are now reaping the benefits of—and over the years it made student
lending a very profitable business to be in. Now it looks like there’s a
chance, at least, that the entire system is about to be overhauled. The
House of Representatives yesterday passed a bill that would abolish the loan guarantees and subsidies, and
allow the federal government to make all new federal college loans
itself.

There really is no argument against this bill on the merits. Ever since
the Clinton years, the government has been making college loans
directly, and the only reason it hasn’t already become the biggest
player in the market is because the private lenders have lobbied to
restrict it (doing so, of course, with the money they make from
government subsidies and guarantees). According to the Bush
Administration’s own figures, it costs the government four times as much
to back private loans as to make the loans itself, and the Obama
Administration estimates that getting rid of the subsidies and
guarantees will save close to $90 billion.

As to where the savings go, some of it is plowed back into health care and others go into expanding Pell grants.  So, basically, you are creating more government efficiency, and using the money to fund health care and college educations for less well-off citizens and spending less money to go to the vacation homes of bankers.  Sounds like a pretty good trade-off.  Naturally, Republicans are against it.  As nobody else can, Jon Chait eviscerates the incoherence of their support.  This policy is win, win, win all-around.  It's a shame Republicans cannot bring themselves to support something this obviously sensible.    And for students and the American taxpayer– hooray!

 

Mega quick hits

I've been a bad blogger.  I've got a ton of tabs saved up I've been meaning to blog about and have not done so.  In the list of at least clearing this out, here goes…

1) We so over-screen for Prostate cancer.  Unless things really change, no PSA test for me.  The costs so clearly outweigh the benefits but everyone is irrationally (though understandably) afraid of cancer.  

2) A really important and not fully appreciated point is how much politicians actually shape public opinion.  Yglesias has a great post on how Republicans so consciously and successfully managed to shape opinion on health care. 

3) For all those idiots complaining about how evil, unconstitutional, and liberal the individual mandate is, you might want to mention that the idea basically comes from the Heritage Foundation.  This post from Ezra Klein very much speaks to this point as well. 

4) Charles Blow to tea partiers: "You may want “your country back,” but you can’t have it."  I.e., Uneducated whites are an ever-shrinking part of the population.

5) I've said it before, I'll surely play it again.  I really don't have a big problem with a pro-market philosophy.  I've got a real problem with being pro-business.  The Republican party (and sadly, the Democrats to a considerable degree) are decidedly in this latter category.  Ezra explains. 

6) For a young woman selling her eggs, an increase of 100 points on the SAT is worth about $2300 in the value of her eggs. 

7) Interesting story about the lobbyist working for Catholic Bishops who did his damnedest to bring down health care.  

8) At Census time, prisoners are counted as residents of the county in which they are imprisoned.  It's not fair. 

Me on the 2010 Midterms

So, after listening to all the ridiculous media coverage suggesting that the health care vote was going to cost Democrats seats in November, I decided to set the record straight– at least for readers in the Raleigh area.  Here’s my Op-Ed in today’s N&O.  A snippet below:

Political science research on midterm elections suggests, however, that although Democrats will almost surely lose a substantial number of seats in the House of Representatives come November, the vote on health care will have little, if anything, to do with that…

In 2010, Democrats are doubly vulnerable, as they picked up a significant number of normally Republican-leaning seats in both 2006 and 2008. Only once in the 20th century did one party gain House seats three elections in a row. Currently there are over 50 House seats held by Democrats in districts that lean Republican and fewer than 10 seats held by Republicans in districts that lean Democratic. Obviously, this fact alone makes it much easier for Republicans to pick up seats…

We’ve surely all heard too much of the “making legislation is like making sausage” metaphor, but it now proves especially apt, as people really enjoy consuming sausage even if they don’t like to see how it’s made. Despite key health care reforms not kicking until 2014, the Democrats wisely frontloaded the legislation with benefits such as
fixing the Medicare “donut hole,” extending coverage for young adults and ending (or at least intending to end) pre-existing-condition exclusions for children. Thus media coverage will no longer be about the unsavory process, but the more amenable end-result.

When all is said and done on Nov. 2, however many seats Democrats lose – and they will lose many – it would’ve been far worse for them had they failed to
pass health care, not better.

Good losers and bad losers

Great post by "Big Steve" today.  I'm just going to borrow my favorite parts:

 I have come to the belief that much of the grumbling over the past year
in US politics is due to the fact that the Republicans are sore losers. 
That's right, they are LOSERS.  They lost the election, and now they
lost a major policy battle.  The strange thing is that over the course
of time, folks of a certain persuasion have felt entitled to rule and to
win.  But rule number one of democracy is that sometimes you lose and
you have to accept it. 

Democrats are good losers.  Hell, we are great losers.  We are used to
losing elections and getting tossed out of power, losing major policy
battles and moving on.  Despite the fact that the Democrats dominated
Congress for much of the postwar period, Republicans, perhaps due to 12
years of rule from Reagan to Bush I, have become used to ruling.  The
entire Clinton administration seemed to be one big hissy fit because the
GOP candidate came in 2nd.  Hey, at least, Bush and then Dole didn't
finish third. 

So, now we have some death threats, minor actors of violence and so on
in the aftermath of the health care vote.  What these Americans forget
is that the Revolution's key slogan was No
Taxation Without Representation, not We
Must Always Get What We Want.  What the founding folks
wanted was Taxation with Representation.  Representation does not mean
winning–it means that your views are represented, that folks you vote
for are involved in the decision-making process.

Love that last point, so I'll end my excerpt there  

Too big to fail

I'm not sure I've done any posts on financial regulation, so here's a first.  I've long been intrigued by the "too big to fail" problem and without too much knowledge on the subject, it's struck me that "too big to fail" is "too big."  This article is a very wonky, but very clear explanation of the too big to fail problem.  From what I've read from trusted bloggers on the matter, we're not addressing this significantly, but now I can understand exactly what they're talking about.  And, now I definitely believe that too big to fail is too big. 

 

Keep it Classy, GOP

I suppose that after all the hysteria from the right over health care, we should not be surprised that many Democratic members of Congress have received death threats and had their offices vandalized.  Are Republican lawmakers and media talking heads responsible?  No.  Do they bear some responsibility?  You bet.  When you go about whipping your followers into a frenzy over mythical "socialist takeovers" "death panels" and "Armageddon" is it any wonder that the less mentally stable of these rubes are going to take stupid, violent action.  It's also a nice rebuttal to the "both parties do it" nonsense people are always throwing about.  It's not like it was attack of the liberals after Bush's tax cuts.  The Huffington Post has assembled some of the more over-the-top quotes complete with video.  I also really like this compilation of Republican quotes on major legislation from the past.  Needless to say, somehow America remained a democracy even with Bill Clinton's budget!  Of course, nothing beats Ronald Reagan's doom-saying on Medicare: ""[I]f you don't [stop Medicare] and I don't do it, one of these days you
and I are going to spend our sunset years telling our children and our
children's children what it once was like in America when men were
free."  You'd think people would stop believing the ridiculous Republican rhetoric on this stuff.  Well, at least the smarter people, do.  Unfortunately, this time the dumbest have turned violent. 

 

The deliverables

The White House posted a nice memo that clearly lays out how Americans will benefit from the health care reform now (or at least in the very near future).  Kevin Drum highlights some of the key points:

• This year, children with pre-existing conditions can no longer
  be denied health insurance coverage. Once the new health insurance
  exchanges begin in the coming years, pre-existing condition
  discrimination will become a thing of the past for everyone.
• This year, health care plans will allow young people to remain
  on their parents' insurance policy up until their 26th birthday.
• This year, insurance companies will be banned from dropping
  people from coverage when they get sick, and they will be banned from
  implementing lifetime caps on coverage. This year, restrictive annual
  limits on coverage will be banned for certain plans. Under health
  insurance reform, Americans will be ensured access to the care they
  need.
• This year, adults who are uninsured because of pre-existing
  conditions will have access to affordable insurance through a temporary
  subsidized high-risk pool.
• In the next fiscal year, the bill increases funding for
  community health centers, so they can treat nearly double the number of
  patients over the next five years.
• This year, this bill creates a new, independent appeals process
  that ensures consumers in new private plans have access to an effective
  process to appeal decisions made by their insurer.
• This year, discrimination based on salary will be outlawed. New
  group health plans will be prohibited from establishing any eligibility
  rules for health care coverage that discriminate in favor of higher-wage
  employees.
• Starting January 1, 2011, insurers in the individual and small
  group market will be required to spend 80 percent of their premium
  dollars on medical services. Insurers in the large group market will be
  required to spend 85 percent of their premium dollars on medical
  services. Any insurers who don't meet those thresholds will be required
  to provide rebates to their policyholders.
• Starting in 2011, this bill helps states require insurance
  companies to submit justification for requested premium increases. Any
  company with excessive or unjustified premium increases may not be able
  to participate in the new health insurance exchanges.
• This year, small businesses that choose to offer coverage will
  begin to receive tax credits of up to 35 percent of premiums to help
  make employee coverage more affordable.
• This year, new private plans will be required to provide free
  preventive care: no co-payments and no deductibles for preventive
  services. And beginning January 1, 2011, Medicare will do the same.
• This year, this bill will provide help for early retirees by
  creating a temporary re-insurance program to help offset the costs of
  expensive premiums for employers and retirees age 55-64.
• This year, this bill starts to close the Medicare Part D 'donut
  hole' by providing a $250 rebate to Medicare beneficiaries who hit the
  gap in prescription drug coverage. And beginning in 2011, the bill
  institutes a 50% discount on prescription drugs in the 'donut hole.'

 That's a lot of good stuff that will make a real difference in many people's lives.

 

Why November will be good for Republicans

It's most definitely not health care.  Democrats saved themselves from electoral disaster by passing the bill.  No, it's just the basics of elections.  Democrats are over-extended after two really good election cycles.  They hold a ton of seats that are in areas that actually lean Republican.  Without Barack Obama at the time of the ticket (or George W. Bush to enrage them, as in 2006), many of these Democratic voters who put these Democratic Congress members in office simply will not be voting this November.  Thus, Republicans should be expected to reclaim a lot of these seats.  This is a classic pattern of voting trends in American politics that we political scientists even have a name for: surge and decline.  2008 was the surge, 2010 is inevitably the decline– especially with a bad economy.  Check out this cool chart based on the Cook Partisan Voting index (scroll down).  There's a ton of seats that are red in the left column (i.e., leaning Republican) but blue in the right column (i.e., held by a Democrat).  Almost all of these are inherently vulnerable.  In contrast, there's only two of 435 seats that represent the converse.  When Republicans pick up a bunch of seats in the Fall, this is 90% of your explanation.  When the time comes and various media sources tell you it was all about health care or some other short-term factor, you'll know they don't have a clue.

 

A little more on repeal

There's a reason the Ezra Klein is an awesome widely-read blogger and I am not.  Here he explains exactly why repeal is a complete non-starter much more clearly and succinctly than my attempt:

Cornyn and his colleagues repeatedly said that they wanted to ban
discrimination on preexisting conditions during the debate and that
their argument was with all the other stuff. But all the other stuff,
Ponnuru says, flows from the ban on preexisting conditions. If you're
going to change the insurance market such that the sick can't be left
out, you have to make sure that the risk pool doesn't become so sick and
expensive that the healthy flee. That's why you do the mandate. And if
there's a mandate, there needs to be subsidies to make sure people can
afford what they're being asked to buy. And then of course, we need to
define what they're being asked to buy, and so you get minimum benefit
regulations.

The repeal silliness

Smarter Republicans (there's a phrase I don't use often) are already realizing that it is politically untenable to ask for a full repeal of the bill.  To wit, John Cornyn (via Steve Benen):

National Republican Senatorial Committee Chairman John Cornyn
(R-Tex.), who's responsible for the Senate GOP's election-year strategy,
told the Huffington Post he doesn't
quite see it that way.

"There is non-controversial stuff here like the
preexisting conditions exclusion and those sorts of things," the Texas
Republican said. "Now we are not interested in repealing that. And that
is frankly a distraction."

What I think most Republicans simply fail to understand it that this idea is quite simply, impossible.  An individual mandate, which seems to currently so enrage Republicans, is essentially part and parcel of eliminating preexisting conditions exclusions.  To take away the mandate and leave this in is a recipe for: 1) shocking increases in health care premiums; and 2) the health insurance industry fighting like you wouldn't believe.  That's why repeal can never happen– not only is it bad policy, it's even worse politics. 

And, if I don't get around to it later, just to be clear, the legal arguments are a joke.  From the Times (via Benen, again):

[C]onstitutional scholars suggest that such cases would
likely amount to no more than a speed bump for health care legislation.

The reason, they say, is that Congress has framed the mandate as a
tax, which it has well-established powers to create. And Congress's
sweeping authority to regulate the nation's economy, they add, has been
clear since the 1930s.

"The attack on this bill," said Jack M. Balkin, a professor of
constitutional law at Yale University, "is not merely an attack on the
substance of this particular measure. It's also a challenge to
understandings that come with the New Deal."

But in the meantime, an Ezra
Klein observation bears repeating: "[L]et me propose a new rule: No
conservative who supports these legal challenges can complain about
activist judges ever again."

Chart of the Day

Not all that surprisingly, health care reform is instantly more popular when it is a passed law, rather than a hotly-debated (and very misunderstood) bill.  Here's the latest polling (via Yglesias)

 

Got that– decidedly more popular than unpopular. 

On a semi-related note, Mark Kleiman has a nice post explaining how the media's status quo bias now works in favor of health care. 

 

Many random thoughts on health care reform passage

1) Hooray!!!  This is a very big deal. This is hugely important legislation and it is damn good legislation.  Sure, it's not perfect– what is– but it sets down a structure that can be improved upon.  Want a public option to compete with private insurers in the exchange– it can be done.  Want to open up the exchanges to all employers to start moving us away from an employer-based system– it can be done.  Want to implement more Medicare-based priced controls to drive the market– it will be done.  And, there's a good chance these things will happen in the medium-term.  This bill extends health coverage to millions of Americans who otherwise would not have it– that saves lives and makes many, many lives a hell of a lot better.  It also makes a very important start on cost controls.  This part needs some work, but the CBO estimates on cost control are pessimistic, if anything, and very importantly, we've got basic structures in place that make getting costs down further much more technically and politically feasible. 

2) The Republican party has absolutely embarrassed themselves on this issue.  They've completed foregone any shred of intellectual dignity they have had.  From "death panels" to arguing about a "socialist government takeover" of medicine, their rhetoric has been absolutely absurd and intellectually incoherent.  We could have actually had a better plan, e.g., a more effective excise tax, more movement away from an employer-based system, if the Republicans did not demagogue the issue so.  Of course, in many ways, given the stunning ignorance of so many Republicans in Congress, I'm not sure it could've been any other way.  In his recent visit to NCSU, David Frum suggested that their might be only a dozen or so Republicans in the House who truly understand policy.  I won't even waste but a sentence on the tea-baggers.  Talk about embarrassing– what complete and total ignorant buffoons they are (oh, and racist, too). 

3) As Ezra Klein has pointed out repeatedly (and I think I parroted here), this is quite a moderate and centrist bill– bipartisan in spirit, if not actual practice.  This is pretty similar to what moderate Republicans were proposing in the 1990's.  That said, in one sense it is actually not so moderate any more.  It is clearly liberal.  And that's not because of anything about liberals or Democrats, but because Republicans are in the process of driving themselves off a rightward cliff.  Thus, what used to be considered centrist (e.g., market-based health care reforms; market based energy policy reform), is now clearly liberal because the Republicans have gone so far right. 

4) It was an interesting development the way in which abortion, which really has nothing to do with this bill, almost brought it crashing down.  In the end, Obama's executive order was nothing but a face-saving move for Stupak and friends to walk back from their intellectually untenable position. What I'll take away from this aspect…the US Conference of Catholic Bishops behaved in a shockingly ignorant and immoral (yes, immoral, damnit) manner.  They were willing to sacrifice the lives of tens of thousands already-born Americans for legislation, which, in all likelihood would diminish, rather than increase abortions.  Also, the institutional right-to-life movement showed themselves to be nothing more than an arm of the Republican party.  A recent NRLC committee claimed this to be the "most pro-abortion legislation" in history.  Talk about a lack of intellectual credibility.  I actually used to be somewhat sympathetic to the pro-life movement, but they have shown repeatedly that their interests in life end at birth and that they have decided whatever is good for the Republican party is good for them. 

5) The Democrats are going to lose a lot of seats in 2010.  But not because of the health care vote.  The economy is still very weak and the Democrats are overextended after two very strong Congressional elections.  It's inevitable to lose a lot of seats.  They would be so much worse off if health care reform had failed.  That would've have allowed Republicans to completely define the issue and why it failed; and showed the Democrats to be completely ineffectual.  I think I heard EJ Dionne on the radio say today something to the effect of, the only thing worse than a socialist is an ineffectual socialist.  The press and the country for the longest time has been totally focused on the process.  We're done with the sausage metaphors!  Except this: sausage is awfully tasty.  Of course, a lot of the taste doesn't kick in till 2014, but we've got some good nibbles to take effect soon (e.g., closing the Medicare donut hole; allowing young adults to stay on parents' insurance until 26).  The Democrats can now actually defend a good solid bill, not just mythical abstractions and lies (not that the Republicans won't keep lying, but at this point the media can be much more straightforward in rebutting lies). 

6) I've basically been obsessed with the issue for probably about a year and a half and paying real close attention ever since I started teaching Public Policy in the Fall of 2000.  I think I shall always remain a health care policy wonk (now that I think about it, I did an undergraduate paper comparing European health systems way back sophomore year in college), but I'm looking forward to not being totally obsessed with the present political battle. That said, there's still lots of room for improvement in our health care policy that I look forward to following, but, this jumped us at least half-way up the staircase.