[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
RESTORING THE TRUST FOR FAMILIES
AND WORKING-AGE AMERICANS
=======================================================================
HEARING
before the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, SEPTEMBER 21, 2016
__________
Serial No. 114-22
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COMMITTEE ON THE BUDGET
TOM PRICE, M.D., Georgia, Chairman
TODD ROKITA, Indiana CHRIS VAN HOLLEN, Maryland,
SCOTT GARRETT, New Jersey Ranking Minority Member
MARIO DIAZ-BALART, Florida JOHN A. YARMUTH, Kentucky
TOM COLE, Oklahoma BILL PASCRELL, Jr., New Jersey
TOM McCLINTOCK, California TIM RYAN, Ohio
DIANE BLACK, Tennessee GWEN MOORE, Wisconsin
ROB WOODALL, Georgia KATHY CASTOR, Florida
VICKY HARTZLER, Missouri JIM McDERMOTT, Washington
MARLIN STUTZMAN, Indiana BARBARA LEE, California
FRANK GUINTA, New Hampshire MARK POCAN, Wisconsin
MARK SANFORD, South Carolina MICHELLE LUJAN GRISHAM, New Mexico
STEVE WOMACK, Arkansas DEBBIE DINGELL, Michigan
DAVE BRAT, Virginia TED LIEU, California
ROD BLUM, Iowa DONALD NORCROSS, New Jersey
ALEX MOONEY, West Virginia SETH MOULTON, Massachusetts
GLENN GROTHMAN, Wisconsin
GARY PALMER, Alabama
JOHN MOOLENAAR, Michigan
BRUCE WESTERMAN, Arkansas
JIM RENACCI, Ohio
BILL JOHNSON, Ohio
Professional Stafff
Richard May, Staff Director
C O N T E N T S
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Page
Hearing held in Washington, D.C., September 21, 2016............. 1
Hon. Tom Price, M.D., Chairman, Committee on the Budget...... 1
Prepared statement of.................................... 4
Hon. John A. Yarmuth, a Representative in Congress from the
State of Kentucky.......................................... 6
Prepared statement of.................................... 8
Edward J. Pinto, J.D., Resident Fellow/Codirector,
International Center on Housing Risk....................... 10
Prepared statement of.................................... 12
G. Keith Smith, M.D., Managing Partner/Co-Founder, Surgery
Center of Oklahoma......................................... 24
Prepared statement of.................................... 26
William Spriggs, Ph.D., Chief Economist, AFL CIO............. 28
Prepared statement of.................................... 30
Thomas Lindsay, Ph.D., Director of the Center for Higher
Education, Texas Public Policy Foundation.................. 37
Prepared statement of.................................... 39
Submissions for the record............................... 47
Hon. Tom Price, M.D., Chairman, Committee on the Budget,
Submission for the record.................................. 106
RESTORING THE TRUST FOR FAMILIES AND WORKING-AGE AMERICANS
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WEDNESDAY, SEPTEMBER 21, 2016
House of Representatives,
Committee on the Budget,
Washington, DC.
The committee met, pursuant to call, at 10:00 a.m., in Room
210, Cannon House Office Building, Hon. Tom Price, [chairman of
the committee] presiding.
Present: Representatives Price, Rokita, Cole, Woodall,
Sanford, Brat, Grothman, Yarmuth, Pascrell, Ryan, Moore,
Castor, McDermott, Pocan, and Norcross.
Chairman Price. This hearing will come to order. We want to
welcome everybody to the Budget Committee and our hearing
entitled Restoring the Trust for Families and Working-Age
Americans. For over a year, the House Budget Committee has been
engaged in an initiative called Restoring the Trust for All
Generations. Today's hearing is the fourth in this series of
hearings this committee has held to advance this initiative.
Restoring the Trust is an effort to raise awareness among
both our colleagues in Congress and probably, most importantly,
the American people that we represent about the serious fiscal
and policy challenges facing our Nation's health, retirement,
and economic security programs.
These are programs that are funded automatically without
any annual appropriation or necessarily any congressional
oversight. They are what is known in this town as ``mandatory
spending.'' It means that the money continues to be spent and
is increasing and will continue to increase until Congress and
the President agree to reform the programs.
The unchecked growth and spending in this area, whether it
is Medicare or Medicaid, or Social Security, or numerous
Federal housing, education, and safety net programs is eating
up a larger and larger portion of the Federal budget. It is
crowding out other government functions, other national
priorities, and contributing substantially to the budgetary
imbalance that has our national debt over $19 trillion and
climbing. As we have discussed in this committee previously, in
addition to the fiscal challenges, we know that these programs
are not necessarily serving the beneficiaries all that well.
At the same time, and perhaps less appreciated, is the fact
that many of these programs create substantial distortions and
foster perverse incentives in the private market in areas like
education, health care, and housing. Those distortions drive up
the cost of goods and services for all Americans.
For many working age Americans and their families, they may
have no direct interaction with these automatic spending
programs, but these programs and government policies generally
are increasing demand for services while simultaneously
limiting supply, and results in prices that are outpacing
wages, and that hits the middle class particularly hard.
In today's housing market, affordability is the missing
element. The fundamental problem is a supply/demand imbalance
that works against families struggling to afford the mortgage
or rent as home values appreciate faster than wages and
inflation. The average family's housing cost rose 63.3 percent
between 1997 and 2015. According to the U.S. Census Bureau,
home ownership rates are at their lowest level in 50 years and
currently equal the same level of 62.9 percent that was
achieved in 1965.
In higher education, evidence points to Federal student aid
distorting demand, and it has been linked to rapid rises and
increases in tuition. A 2015 study conducted by the Federal
Reserve Bank of New York reports a passthrough effect on
college tuition from increased Federal student aid. For every
additional dollar in subsidized loans, tuition increases by an
estimated $0.65, and for every additional dollar in Pell
Grants, tuition increases by $0.55.
More generally, our current education system contributes to
higher costs by stifling innovation; innovation that could
offer flexible, customized, and more affordable education
experiences catered to the lives of working students with
families who are seeking to realize their full academic
potential.
Washington's current approach to health care clearly has,
under the assumption of knowing what is best for patients
across America, has restricted them to health programs that are
an unsustainable path while driving up costs. According to the
Kaiser Family Foundation, the average premium in America has
increased 61 percent in the last decade. Similarly, deductibles
have increased more than 250 percent, meaning increased out-of-
pocket expenses for individuals and families. Thanks to heavy-
handed governmental intervention in the Nation's health care,
costs for families continue to rise without gains in quality or
value.
Furthermore, competition and innovation are stifled, and
providers spend nearly as twice as much time completing
paperwork as they do caring for patients, lending itself to a
paper-centered system as opposed to patient-centered healthcare
delivery system. In short, the status quo is not working.
However, positive solutions can be discovered in the private
sector and successful government programs. We should work to
advance free market policies that will foster competition. In
order to have a well-functioning marketplace, it is necessary
to allow entrepreneurs to meet the demands of consumers,
creating better products for lower prices through innovation.
In short, allowing America to work.
To provide views on these issues of critical importance to
so many Americans, we have a wonderful panel of witnesses with
us today. We want to welcome each and every one of you. Edward
Pinto, the resident fellow and co-director of the International
Center on Housing Risk at the American Enterprise Institute;
Dr. Keith Smith, managing partner and co-founder of the Surgery
Center of Oklahoma; Dr. William Spriggs, chief economist at the
AFL-CIO; and Dr. Thomas Lindsay, co-director of the Center for
Higher Education at the Texas Public Policy Foundation.
I want to thank you all for being here and for being
willing to share your insights and your firsthand knowledge
about how our Nation's automatic spending programs are
impacting the lives and livelihoods of families and working age
Americans. We look forward to your testimony, and I am pleased
to recognize the gentleman from Kentucky, Mr. Yarmuth.
[The statement of Chairman Price follows:]
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Mr. Yarmuth. Thank you very much, Mr. Chairman. Good timing
on your part. Welcome to all the witnesses. We look forward to
hearing from you. Two weeks ago, we had a discussion on the
future of Medicaid and Medicare. There was widespread agreement
on the problem that we have to find long-term solutions to
providing quality care while reducing unnecessary spending. We
had very different views on how to solve that problem, but at
least we started from the same place.
Today, we start from very different places. This is not a
hearing on improving the way the Federal Government helps most
American families obtain quality housing, health care, and
education for American families while reducing unnecessary
spending. This is about a hearing about whether the Federal
Government can have any productive role, or make any sound
investment, in these areas.
Some of the suggested solutions are extreme even for this
Congress, and I would guess even too extreme for some of my
colleagues on the other side of the aisle. We will have this
debate today and discuss think tank theories about the economy
and free market principles. As an exercise, that is fine, but
we already know what works in the real world. We know the
investments in housing, health care, and education help
American families build better futures while spurring economic
growth for our Nation. It is not academic theory. It is the
reality of the last 7 years. Just look at the facts.
President Obama inherited the weakest economy since the
Great Depression. Hundreds of thousands of jobs were being lost
each month, and millions of American families rightly feared
for their economic future, but through swift action and smart
investment, we have turned that around. We are now in the
fourth longest economic expansion in American history, with 15
million new private sector jobs and an unemployment rate that
has been cut in half.
Last week, new Census Bureau data proved that we are still
on the right path. In 2015, median real household incomes rose
by the fastest rate on record with the highest growth for those
lower on the income scale. The poverty rate dropped
significantly and the percentage of Americans with healthcare
coverage is now at its highest rate ever. This is great
progress, but there is so much more work to be done. Our
economy still largely benefits the wealthy few at the expense
of the middle class and those struggling to get by.
I would suggest that we attack these problems by building
on the successes of the last 7 years and continue providing
better opportunities to American families and workers. Let's
invest in infrastructure, education, and R&D to create good,
high paying jobs and boost the productive capacity of American
workers for years to come. Let's give American families help
now by raising the minimum wage, increasing access to
affordable childcare, providing paid sick leave, and family and
medical leave, and guaranteeing a secure retirement.
Let's make their worries our priorities. That is what the
American people want. They do not expect us to agree on
everything, but on minimum, they want us to try and find common
ground on ways the Federal Government can make their lives
better. History proves the Federal Government has an enormous
potential to make lives better. I hope going forward we can
agree to start from there. Thank you, and I yield back.
[The statement of Mr. Yarmuth follows:]
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Chairman Price. Thank you, Mr. Yarmuth. We appreciate your
opening statement. I want to, once again, welcome all of the
witnesses. Mr. Pinto, Dr. Smith, Dr. Spriggs, and Dr. Lindsay,
thank you for appearing before us today. The committee has
received your written statements, and without objection they
will be made a part of the formal hearing record. You each will
have 5 minutes to deliver your oral remarks, and Mr. Pinto, you
may begin when you are ready.
STATEMENTS OF EDWARD J. PINTO, J.D., RESIDENT FELLOW/
CODIRECTOR, INTERNATIONAL CENTER ON HOUSING RISK, AMERICAN
ENTERPRISE INSTITUTE; G. KEITH SMITH, M.D., MANAGING PARTNER/
CO-FOUNDER, SURGERY CENTER OF OKLAHOMA; THOMAS LINDSAY, PH.D.,
DIRECTOR OF THE CENTER FOR HIGHER EDUCATION, TEXAS PUBLIC
POLICY FOUNDATION; WILLIAM SPRIGGS, PH.D., CHIEF ECONOMIST,
AFL-CIO.
STATEMENT OF EDWARD J. PINTO
Mr. Pinto. Thank you, Chairman Price and Ranking Member
Yarmuth. Thank you for the opportunity to testify today. The
committee's goal of restoring trust for all generations is to
be applauded; however, as the committee has observed, it is
regrettable that government programs developed over 8 decades
to meet worthy aims are now failing the very people they were
intended to serve.
My research has found that the same is to be true with
respect to decades of ill-conceived housing programs. In most
cases, these policies increase housing demand, but do little or
nothing about supply. When supply is increased, it drives up
prices, layers the subsidies that are used, and a host of
unintended consequences result.
First and foremost, it yields higher prices and higher
rents particularly for low income or minority households, the
very ones these programs were designed to assist. Today's
subsidy laden, government-centric, finance system is something
I called an ``economics-free zone.'' I call it that because it
is indifferent to supply and demand. As a result, housing has
become less, not more, affordable and less, not more,
accessible.
Turning to the home loan market, 60 years of affordable
housing policies have failed to achieve its two primary goals:
increasing home ownership and achieving wealth accumulation for
low and middle income borrowers. The chairman has already noted
that today's home ownership rate of 62.9 percent is the precise
same as 1965, and not much higher than 1960 or 1957.
Further, we have not been successful at building wealth for
the very groups these policies were aimed to help. This is
primarily due to excessive leverage, namely low down payments,
30-year mortgages that have a lot of debt leverage in terms of
income. Home buyers have become addicted to debt very much like
the Federal Government.
Federal lending policies rely on higher level debt to
finance home buying by households with limited financial means.
The debt is used to finance a single asset, one that is highly
illiquid and has volatile prices and large transaction costs.
This means they start with little equity and build more equity
very slowly.
It gives them little protection against life's vicissitudes
and volatile home prices, and the debt-inflated prices
themselves create price volatility, and we just went through a
cycle of that--I would only point out that in 1954, interest
rates and financing costs were about the same as today, 4.5
percent including the mortgage insurance premium, yet the size
of homes have doubled, house prices have gone up much faster
than incomes. The only way that happens is to increase
leverage, and FHA has done that with a vengeance.
The government policies create debt and fuel wealth, not
wealth supported by real income growth. The result, we saw, was
catastrophic, and it was due to these low down payment loans
that are prone to default. Before this expansion leverage,
FHA's foreclosure rate just about rounded to zero, and yet the
home ownership rate was, as I said, about the same as today.
Over the period of 1975 to 2013, this is after the leverage
started getting added to the housing finance system, FHA
borrowers would suffer 3.4 million foreclosures.
There were 3.4 million claims to FHA. Before that, these
numbers literally were very low. One in eight such buyers
suffered that result, and it is even higher in low income and
minority households. The entire market since 1975 has
experienced eleven to twelve million foreclosures. As
troubling, the reliance of government loan policy on excessive
household debt crowds out the ability to save for one's
retirement and pay for one's children's post-secondary
education.
As I said, total debt to income ratios have risen. Today, 1
in 6 FHA buyers have a total debt income ration, pre-tax, of 50
percent or more. We all know how this works. You are buying a
home. You are told you can get approved for a loan of this
amount based on your income. They are all calculated on a pre-
tax basis.
The focus is not on how much you need to put forward on
retirement. Not what your children are going to need to go to
post-secondary education 20 years from now. It is focused on
what is the maximum amount of house you can buy today. No
consideration is given to these other items, and I have two
charts included that describe that.
As you craft solutions, please keep these facts in mind.
Wealth is the antidote for poverty. We have focused on
redistribution, not wealth. Wealth equals one's accumulated
savings for 50 years. Government policies have ignored wealth,
focusing on income transfers. The racial wealth gap is 3 times
larger than the racial income gap, and middle income and
working class families need a straight broad highway to wealth
building. I have laid out alternatives in my written testimony,
and I submit those to your consideration. Thank you.
[The statement of Mr. Pinto follows:]
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Chairman Price. Thank you very much. Dr. Smith, you are
recognized for 5 minutes.
Mr. Smith. Thank you. Thanks for having me. While everyone
agrees there is something terribly wrong with the healthcare
delivery system----
Chairman Price. Do you want to turn on your mike, please?
Mr. Smith. Oh sorry. Is that better?
Chairman Price. Perfect.
STATEMENT OF G. KEITH SMITH
Mr. Smith. While everyone agrees there is something
terribly wrong with the healthcare delivery system in this
country, it is becoming increasingly clear the problem
represents not the failure of the free market but the absence
of the free market. This is highlighted not only by burdensome
regulations, but also by the difficulty in obtaining pricing
information prior to receiving a healthcare service. In
contrast, the plastic surgery and Lasik markets, neither of
which is distorted by third-party payment government or
private, have traditionally displayed pricing and have shown
lower prices and higher quality over time.
It is my opinion, the focus on the lack of insurance
coverage rather than the cost of care represents a significant
distortion by governments at all levels and is a distraction
from the powerful, but simple solutions to high cost, spot
equality, and poor access that the free market can provide. I
believe the transparent pricing of healthcare services will
eliminate most of the distortion and fog attached to this
industry, government-generated or otherwise. As Dr. Jane Orient
has remarked, ``It turns out that coverage is not care.''
Indeed, the first patients to respond to our putting prices
online at Surgery Center of Oklahoma were Canadians.
Canadians have coverage after all, just poor to no access
to the care that many of them require. The most common Canadian
patient story we hear remains the woman tired of receiving
blood transfusions, waiting interminably for a curative
hysterectomy. It is instructive that one of the fastest growing
parts of our business is the patient with an ACH exchange plan.
Their plight is similar to the Canadians after all, for they
have coverage, but they have poor access to care. Shockingly,
they have a better out-of-pocket experience paying our full
website fee than meeting their deductible and co-pay using
their insurance. Like many Canadians, they have discovered the
only single payer upon which they can truly rely is themselves.
While the Surgery Center of Oklahoma was the first to
publish online pricing for surgical care, we have been joined
by many others, almost all of whom coordinate and share
insights through the Free Market Medical Association, a group
which seeks to connect buyers and sellers of healthcare
services without the distorting influences typically involved.
This price transparent, and therefore market-based approach,
has led many otherwise price gougers to match our pricing
rather than risk patients traveling, for instance, to Oklahoma
City for their care and lose the business. Our price is
typically \1/6\ to \1/10\ of what traditional hospitals charge
represent what we believe it costs to render care without the
fluff to build an empire and provide fat administrative
salaries.
Patients from all over the country have saved tens of
thousands of dollars by coming to the Surgery Center of
Oklahoma and by not coming to the Surgery Center of Oklahoma,
but leveraging a deal in their home town using our pricing. I
have changed the pricing at the Surgery Center of Oklahoma
twice in the 8 years that our prices have been posted online,
and in both instances, have lowered the prices, both times as a
result of the action of my competitors. This highlights my firm
belief that market pricing cannot be the result of top-down,
central planning but rather emerges from competitive activity.
Our prices, it should be noted, are bundled, including all
aspects of care, and are less than Medicaid currently pays the
not-for-profit facilities in our area. Imposed, top-down
pricing is always too high or low it seems, predictably leading
to a surplus of unneeded services or shortages of needed
services. Electronic medical records, coding and reporting
mandates, combined with low, formulaic pricing have had an
intense, and combined have had a distorting effect on
healthcare markets and access to care in certain specialists.
As you can imagine, our model has proven attractive to the
poor, the uninsured, those with high deductibles, foreigners
unable to access care, cost-sharing ministries and charities,
who found that they can purchase 3 cochlear implant procedures
at our facility for the price of one at the not-for-profit
hospital across town and by the same surgeon, I would note.
Our model has been widely popular with self-funded ERISA
health plans who are seeing their actual yearly costs fall
while achieving steerage to facilities like mine by waiving all
employee out-of-pocket expense including travel expenses. The
health plan of the employees of the State of Oklahoma is the
latest ERISA plan to sign up and actuaries anticipate a $200-
million savings for the State in its first full year of
implementation.
Keep in mind that without this arrangement, the deductibles
and co-pays would have made access to these life-changing
surgeries prohibitive for many of these families. In December,
we often have the privilege of hearing patients say that they
are going to have Christmas this year at the result of waiving
their out-of-pocket expense. This arrangement has preserved the
budget priorities of these families that would otherwise have
been usurped by price gougers in the industry.
Finally, I would like to comment about the relationship of
price and quality. High healthcare prices are simply an
indication of the absence of market competition where quality
is likely stunted due to a lack of fear of competition. Lower
and falling prices are an indication that newcomers are
entering a healthcare marketplace.
Additionally, attaching a reasonable price to surgical
procedure indicates the caregivers at that facility have
predictable results and know what they are doing. In the
absence of a vibrant market, you get what you pay for simply
does not apply.
[The statement of Mr. Smith follows:]
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Chairman Price. Thank you, Dr. Smith.
Mr. Smith. Thank you.
Chairman Price. Dr. Spriggs, you are recognized for 5
minutes.
STATEMENT OF DR. WILLIAM SPRIGGS
Mr. Spriggs. Thank you, Chairman Price, and thank you,
Ranking Member Yarmuth for this opportunity. To restore the
trust of the American people, we must restore what the
government does. From 1946 to 1979, the wages of Americans grew
with their productivity. Income gains were roughly equally
shared by each quintile of the income distribution.
That was the result of deliberate Federal policies to
invest in the American people, to invest in America, and to aim
those policies at shared prosperity. The American people want
you to invest in them. The best investment anyone can make is
in the American people and in American children in particular.
It will always, always pay to bet on American children. There
are lots of key programs that the government put in place that
made this happen.
We invested in our GIs returning from WWII. We gave them
opportunity for higher education and for home ownership. That
transformed America. It gave us the middle class. We learned,
when they were puny like my dad when he volunteered before
WWII, they were underweight, young men, that we needed to
invest in feeding our children, and the national student lunch
program is a huge investment in making sure that our children
are healthy. That changed everything.
We invested in making sure that the labor market was fair
by having hands-off and keeping the National Labor Relations
Board apolitical so that our unions could grow and our workers
could fairly bargain over the increase in productivity, and
each administration up to 1979 fought to raise the minimum
wage, and it was a bipartisan vote. The majority of Republicans
and Democrats voted to raise the minimum wage. It was not a
partisan issue.
Under Republican President Dwight Eisenhower, in response
to Sputnik, he got the Democratic Senate, in less than one year
in response to Sputnik, to put in place the National Student
Loan Program, and that launched not only the scientists who got
us the Internet, got us personal computers, but it also meant
that we had teachers to train those people, and President
Eisenhower invested in America.
He built the Interstate Highway System, which transformed
America and gave us higher productivity. President Johnson
added by adding Head Start, a program which pays for itself in
the gains of the earnings of children who go through that
program. Medicare and Medicaid. Young women who have had access
to Medicaid when they were young have higher earnings, have
more education, and the young people who have had access to it
end up with higher earnings paying back and higher taxes, the
way that we get to afford these programs.
Now, what economists are finding out is that the reason
these programs worked is that inequality hurts growth.
Inequality hurts growth for a number of reasons, but one of
them, the IMF found, was that if income growth goes to the top
20 percent, you really slow growth. In the United States the
top 20 percent control over half the income. They spend over,
well over, a half of the money on education, well over a half
of the money spent on housing. That distorts prices. In a free
market, it is $1, one vote, not one person, one vote, and
suppliers will always chase the dollars. That makes tuitions go
up. That makes housing prices go up. Umbrellas do not cause
rain.
We have the government having to chase these price tilts in
order to make sure that everyone can benefit from them. The one
sure way we have learned from the OECD studies for why
inequality hurts growth, is because it hurts human capital
formation. At high levels of inequality, the bottom 40 percent
simply do not get enough education. Invest in Americans. That
is how you make the economy grow and get their trust back.
[The statement of Mr. Spriggs follows:]
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Chairman Price. Thank you, Dr. Spriggs. Dr. Lindsay, you
are recognized for 5 minutes.
STATEMENT OF DR. THOMAS LINDSAY
Mr. Lindsay. Thank you, Mr. Chairman, members of the
committee. I appreciate your extending me the opportunity to
present my research on the question of how we might increase
opportunity for everyday Americans through higher education. I
am encouraged by the growing bipartisan consensus on the need
for higher education reform, and my research conducted on this
question, points to the need to promote greater innovation and
higher education delivery through fostering greater competition
among higher education providers.
This country embarked long ago on a very well-intentioned
set of Federal policies aimed at increasing college access for
which all are to be commended for their earnestness.
Nevertheless, as with all policies, there have been unintended
consequences. The work ahead of us must consist in no small
part in moderating some of these policies in order to better
align higher education demand with supply as well as to better
balance student access with success. The need to improve our
Federal policies is seen by the following facts.
Over the past quarter century, average college tuition
nationwide has jumped 440 percent, nearly 4 times the rate of
the CPI over the same period. To attempt to pay for these
historic increases, students and their parents have amassed
historic debt. At roughly $1.3 trillion, student loan debt now
exceeds even national credit card debt for the first time in
our history, and this in a country fairly addicted to credit
cards. The problem here is not a lack of government spending.
The Federal Government has been very generous. In fact, the
United States spends twice as much on higher education as the
average OECD nation. This is not a money problem. Rather, when
we look at the students today who graduate, and as I said, only
half the students who enter college today graduate.
Of those who do graduate, 36 percent we know from studies,
show little to no increase in critical thinking and writing
skills, those skills that a degree is meant to signify.
Moreover, when it comes to student loan debt and defaults, 70
percent of student loan defaults come from those who do not
finish college. Low graduation rates increase defaults. Even
sadder today, a smaller percentage of recent college graduates
comes from the bottom 25 percent of income distribution than
was the case in 1970, when these generous Federal programs
began.
So, from these points, what we see is this, half the
students who attend college never graduate. Of the half who do,
only 64 percent attain any significant learning. What that
means is that today, only 32 percent of students who enter
college both graduate and do so with the learning that a
college degree is meant to signify, meaning the odds are 2 to 1
that you will not get both. That is a scandal, but there is
good news. There are solutions available to us.
In Texas, in 2014, we launched the Affordable Baccalaureate
Degree Program. It can cost half as much as a traditional
degree. You can finish it sometimes twice as quickly even if
you come into college with no credit. You can get a degree in 3
years for between $13,000 and $15,000. Clearly, you cannot do
this with all degrees. You cannot do this with a biology degree
or a philosophy degree or engineering, but you can do it with
applied degrees, and that is what these programs aim at. And
there is something that we all need to take account of.
When we talk about college today and what we can do to help
college students, we think of the four-year residential campus
where students are attending full time. That is no longer the
case. Only 1 in 5 college students fits that description. The
new majority of students seeking some sort of education after
high school, be it a two-year degree, a four-year degree, or a
certificate, are non-traditional students, meaning they are
over twenty-five, and/or working full time, and/or with
families of their own to support.
The traditional models that have worked for us in the past
simply cannot address their needs. There are other
recommendations I would like to make, and I would be happy to
offer them during Q&A. They are contained in my written
statement. Thank you very much.
[The statement of Mr. Lindsay follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Price. Thank you, Dr. Lindsay, and thank you to
all of you for your testimony. I think it was really helpful in
framing the discussion, and let me put up the first slide,
please. I want to talk very briefly about the goals that we
have, because I think that one of my goals is to make certain
that we recognize that we are all trying to push in the same
direction. We all want housing that is appropriate and
affordable for folks. We want health care that is of the
highest quality and available for individuals who want
education that allows each and every American to realize their
dreams.
So, the question is not what the goals are. The question
is, are we doing, as a Federal Government, the right thing that
allows those goals to be accomplished, and if you look at this
slide. This is the last 30 years and the increases in family
spending on housing and health care and education compared to
inflation, so the average increase for those items ought to
basically track inflation unless there is something else going
on.
Housing and health care and education obviously are
increasing significantly greater than inflation, so there is
something else going on, and that is what I would hope that we
concentrate on, so let me drill down a little bit on this.
Mr. Pinto, you talked about the area of housing right now,
government-centric housing finance system that creates economic
free zone, and you talked specifically about the challenges in
the area of the home loan market, in the area of the rental
market. Take a few minutes and expand on what the solutions
that we could look at here to make it so that that kind of
economic-free zone does not exist.
Mr. Pinto. Okay. Thank you, Mr. Chairman, for that
question. The problem is we have a debt-centric approach, so
the income tax deduction subsidizes debt. The government,
through all of the housing finance agencies and the guarantee
agencies, subsidize debt, and this drives up the prices. Of the
things you have up there, the thing they all have in common is
an excess of government involvement, and in the case of housing
and education, it is debt-driven, so the solution is to rely on
less leverage, so you have to start with the income tax code
and reduce the incentive to take out debt and have an interest
deduction for that, and replace it with paying down the debt so
that you are building equity in the home. You cannot rely on
the price appreciation. We saw what happened there.
The second thing would be for low-income individuals. What
we have done is a whole host of programs that funnel the money
through a lot of third parties, either private sector or
adversary groups. That is where the money groups and various
government entities. We need to have the money go, as a rifle
shot, directly to the consumer, so one of the things that we
have proposed is a wealth building home loan, which would
replace the 30-year loan with a small down payment, which
virtually everybody has today, with a 15- or 20-year loan with
actually no down payment.
Then, use that money that would have gone for the down
payment to lower the interest rate along with other things to
increase the buying power to be almost equivalent to what the
30-year loan is. And then for a low income person, for a
household, you can add what we call the LIFT home, low-income
first time home buyer tax credit, so instead of having these
tax deductions that run for 30 years, and the more debt you
take out, the more benefit that you get, and if you are low
income, you do not actually get any benefit from that, you can
target that to a low income individual and say, ``We will give
you an amount. 3 percent. Say $6,000. It is one time. You have
to take out a shorter term loan.'' You now have the wealth
building. You put them on a path to wealth building.
The next house they buy 5 or 6 years down the road, they do
not need any assistance, and if you couple that with savings
for retirement, if you couple that with you pay off the loan by
the time your children are 18 years old, all of a sudden, you
have solved the education problem and other things.
Chairman Price. Oh wow. Yeah. Exactly. I was really struck
by your comment that the wealth gap is three times greater than
the income gap. So Dr. Smith, let me switch. My pension is to
talk about medical care and health care itself, but I want to
talk about the finances, and you were so low key in your
presentation, it was wonderfully stimulating and, I think, a
very striking story.
Let me read a couple of the sentences from your testimony,
``Our prices. Your prices. Typically, \1/6\ to \1/10\ of what
traditionally hospitals charge what we believe to be the cost
to render care, and then once again, our prices, it should be
noted, are bundled including all aspects of care and are less
than Medicaid currently pays to not-for-profit facilities in
your area.'' How on earth can you do this? Where are your costs
being saved? Where are you margins being cut?
Mr. Smith. Well, fortunately the question I am asked with
less frequency is that question, how can we be so inexpensive?
Increasingly, the question is being asked of the price gougers,
you know, why can you claim to not make a profit and charge 10
times what those guys do across town? The answer is, the prices
that we have online are what we believe that cost to take care
of patients, and we are making money, so what is not included
is, you know, buying expensive advertising.
It is not buying billboards, buying out physician
practices, buying out competitors, buying all of the practices
of rural physicians so that the, you know, local/rural hospital
can be brought to their knees and purchased cheaply by the big,
corporate hospitals. We do not do any of that. We just take
care of patients, and that is what we believe it costs to do
that.
Chairman Price. If you could put up the slide on healthcare
inflation, please, because I think it is really striking. Here
is the healthcare inflation since 1965 compared to regular
inflation CPI: 668 percent for regular, and 2100 for health
care. What are the hurdles that are preventing the regular doc
out there taking care of patients to do what you are doing?
Mr. Smith. You know, many of the hurdles are local and
State hurdles at the government level. There are Federal
hurdles in that there are so many strings attached to accepting
Federal money, and the electronic medical record mandates.
Those sort of things just drive up the cost of a practice to
insane levels, but certificate of need laws are a real problem.
The Federal Government, I think, has backed out of that, but
some States keep these certificate of need laws so that
entrepreneurs and newcomers cannot enter the marketplace.
There is also the Federal prohibition on physicians owning
and controlling facilities like mine, and that has always been
a problem that Washington has addressed with prohibiting
physician ownership of facilities, but traditionally,
physicians have a hard time participating in the bankruptcy of
their patients with institutional charges from facilities they
own, so there is an accountability there that is lost with the
prohibition on physician ownership. I think that ought to be at
least looked at.
Chairman Price. Right. Remarkable story, and I would urge
my colleagues to take a peek at it, because \1/6\ to \1/10\ of
the prices that are being charged by competitors in your area
with as high quality or higher quality. Great, great story.
Thank you.
Mr. Smith. Thank you.
Chairman Price. Dr. Lindsay, I have just a few minutes
left, but I want to touch on your notation in the area of
education. Talk about tuition hyperinflation and the burdensome
student loan debt, and we have got a slide on the level of
student loan debt that is now exceeding $1.2 trillion, higher
than credit card debt in this country, higher than loans for
automobiles. And you talked a lot about the problem, but I want
to give you a couple of minutes--a minute and a half--to talk
about what are the solutions to reverse that.
Mr. Lindsay. Sure. The problem has been, in part, a
consequence of our very good intentions, and about 45 years
ago, it became a part of a natural mantra that virtually all
high school students should go to a four-year college. Now, we
know that as today, as we have moved from an industrial economy
to an information economy, that indeed, at least 60 percent of
high school students are going to need to get some sort of
education after high school, be it 2 year, 4 year----
Chairman Price. Talk about the hyperinflation of tuition,
because I am intrigued.
Mr. Lindsay. Yeah, well, you know, looking at your graph on
healthcare costs. As bad as the healthcare cost increase,
student loan debt and tuition have increased at twice the rate
of healthcare costs during that same period. As you mentioned
earlier, the Federal Reserve Bank has found that Federally
subsidized student loans are a big part of the driver of
tuition hyperinflation. Every time this body increases Pell
Grants by $1, universities charge $0.55 in tuition.
Every time this body increases Federally subsidized loans
by $1, universities raise tuition $0.65. So, again, the problem
is we have very good intentions, but we need to inject some
economic reality into what we are doing, because while our
intention has been to help students, in fact, and as I said,
the odds today under the current system are two to one against
a student both graduating and getting the learning that a
degree is meant to signify. We can do better.
Chairman Price. Yeah. Thank you. I appreciate that, and I
would draw folks' attention to your entire written testimony,
because it really is remarkable. Mr. Yarmuth, you are
recognized. Mr. McDermott, you are up.
Mr. McDermott. Thank you, Mr. Chairman, Mr. Yarmuth. Dr.
Smith, I am fascinated by your testimony, as like Dr. Price, I
am also a physician. How big an emergency room do you have at
your surgical center?
Mr. Smith. We do not have one.
Mr. McDermott. So everything is done electively?
Mr. Smith. For the most part.
Mr. McDermott. I went online with your name. Keith Smith,
and I looked for your prices. I was trying to see where the
transparency was, and I could not find it. So explain to me, if
I am a patient, and I am in Oklahoma City, and I need a gall
bladder done, how do I find out what you charge for gall
bladders?
Mr. Smith. All of our prices are at SurgeryCenterOK.com.
Laparoscopic cholecystectomy is $5,865 for surgery, anesthesia,
and facilities. All supplies.
Mr. McDermott. I am just a plumber. I work for the school
district, and I want to find out this. Where do I go when I get
online?
Mr. Smith. On a search engine.
Mr. McDermott. I am just an ordinary Joe.
Mr. Smith. I think some of the Google search. For instance,
terms, affordable surgery, you know, upfront pricing for health
care, those kinds of things. We treat patients from all 50
States. Except for Hawaii.
Chairman Price. But you gave your website, did you not?
Mr. Smith. Yeah. SurgerycenterOK.com.
Mr. McDermott. I got to go on Google, and I just say----
Mr. Smith. Affordable surgery, yeah.
Mr. McDermott. And I will find it?
Mr. Smith. Surgical pricing. That is how patients most of
the time--they find us. Yes. The two States that send us more
patients than any other States outside of Oklahoma are Alaska
and Wisconsin. It is amazing just even the small procedure like
a carpal tunnel release. Someone will come see us from
Anchorage or Boise, Idaho and travel because their travel cost
added to our price is still far less, multiples less, than they
would have paid----
Mr. McDermott. But you are saying that is if everybody in
the country would go to Affordablehealthcare.com and pick out
their surgery, we could reduce all the problems in health care
or most of the problems, or?
Mr. Smith. Yeah, it is increasing that one of the problems
is there is not a consumer market, and the ACA has changed that
in some ways because the deductibles are so high. As I said in
my remarks, many of the procedures on our website are less than
patient's deductibles, so they can actually buy their surgery
out-of-pocket for a better price than having used their benefit
paying deductible.
Mr. McDermott. Let me ask you a personal question.
Mr. Smith. Yes, sir.
Mr. McDermott. You do not have to answer. Have you ever had
an emergency surgery or had any emergency medical problems?
Mr. Smith. I have not.
Mr. McDermott. You have not? So you are saying to somebody
who has a kidney stone, they should go online when they have a
kidney stone and ask, ``Where is the affordable place? The best
place to get that done in Oklahoma City?'' The answer that you
provide or that you are presenting here----
Mr. Smith. The plan that I am presenting is the beginning,
and that is 90 percent of health care, which is purchased,
which is elective, one of the most exciting developments is
that a full-service hospital is now working with us to price
exactly what you have described, and that is tiered visits in
the emergency department. They also are pricing maternity care
where almost any imaginable maternity visit and care can be
priced. There are some that cannot, and for that uncertainty,
that is why we have insurance. That is why we should have
insurance, is for the uncertainty.
Mr. McDermott. So you believe in insurance?
Mr. Smith. Not the way it is currently. Currently, it just
represents pre-paid care.
Mr. McDermott. I will give you a case. My son had a second
child, and the child stopped moving around inside his mother,
and so the doctor said, ``Come on down to the emergency room,
and we will take a look.'' Now, they are driving down this
highway in California. They are not going to be sitting on
their computer figuring out which is the cheapest place to get
a C-section or whatever is going to be necessary when they get
to the emergency room.
They do not know what is necessary. They are not doctors or
anything, so they are just driving down there, because the
doctor said, ``Come on in.'' How does this work for that kind
of thing? What should my son have in your system? He is going
to have all the prices on his computer for elective stuff, but
what about the emergency stuff? How is he going to know that?
Mr. Smith. And, again, this is a new concept, and I really
should not be here. All I do is say, ``Here is what I do, and
here is how much it is.'' That is what every other industry in
this country does, so it is new, and there are more and more
full-service hospitals that are becoming intrigued and
interested with the idea of telling people up front, you know,
``Here is what I do, and here is how much it is.''
For an example, an emergency C-section at a hospital that
we work with in Oklahoma City, they have given me prices for
that, and that includes the ER, that includes the C-section,
that includes the pediatrician, and it is probably about
$12,000, by the way.
Mr. McDermott. So everybody would be able to--I mean, what
you are talking about is a system where we are all online,
and----
Chairman Price. Gentleman's time has expired. Mr. Cole, you
are recognized for 5 minutes.
Mr. Cole. Thank you, Mr. Chairman. I want to thank you very
much for the hearing. This is very fascinating stuff, and I
want to thank our witnesses for their presentation. Dr. Smith,
as a fellow Oklahoman, I am very impressed and very pleased
with your business model. If I am correct, you do not take any
Federal payment for any of the services. Is that correct?
Mr. Smith. Correct. We see Medicare patients, but we do not
accept any money from the government.
Mr. Cole. Can you quickly tell us what were the reasons
that you came to that decision that it was really better from
your standpoint not to be involved directly involved in
something like Medicare?
Mr. Smith. There are just too many strings attached going
way back to how the stark laws affect physician-owned
facilities, all of which have very unintended consequences and
all of which would prevent this successful model like ours. I
also am a firm believer in that rational pricing emerges from
competitive activity, and the idea that prices can be dictated
from on high is just wrong.
I mean, the prices are either too high or too low. They are
always wrong. If they are too low, then there is rationing.
Either soft or hard rationing results. And if the prices are
too high, then you wind up with a bunch of stuff going on that
perhaps is unnecessary.
So, to accept Federal money is to legitimize that pricing,
and we just do not do that. I have talked to patients directly,
eye to eye, and if they are having trouble that month, I do not
charge them at all. It is just the way my great uncle practiced
in Chickasha, Oklahoma. You just deal with people as
individuals, and if they are able to pay our website fee or
some portion of it, then we deal with them on an individual
basis.
Mr. Cole. Do you think that the model that you have would
be transferable to something like primary care or other
branches of medicine as opposed to just elective surgery?
Mr. Smith. Yeah. Primary care is probably the area where it
applies most perfectly, and the direct primary care movement
here in the United States is one of the most exciting parts of
this free market movement led by Dr. Lee Gross from Sarasota,
Florida and also by Dr. Josh Umbehr from Wichita, Kansas. His
model is called Atlas MD, and it is the perfect solution for
patients that have chronic disease management issues. Patients
will pay a subscription price of $50 to $70 a month, and they
have unlimited access to primary care, so for the diabetic,
hypertensive with a foot ulcer that needs to be seen every 7 to
10 days, that is perfect for them.
Mr. Cole. That is amazing. Do you find that the model that
you have is being replicated other places? Do you get a lot of
contact from other physicians or physician-owned facilities
about what you do, and are you seeing this spread at all?
Mr. Smith. Yes. We have started an association, the Free
Market Medical Association, because it has become so widely
popular. People are interested in our model because it feels
like the right thing to do, and then there are other people who
are interested in the model because it scares them, and they
have lost a lot of business to us in Oklahoma City. So, the
Free Market Medical Association is a very vibrant and growing
organization, and we had our last annual conference in Oklahoma
City at the Historic Skirvin Hotel, and sold it out. I do not
think we will be able to have it there again. It is a very
vibrant movement.
Mr. Cole. Well, I would love to contact you some time and
just come by and see your facility.
Mr. Smith. I look forward to it.
Mr. Cole. Very impressed. In the limited time I have left,
Dr. Lindsay, if I could move to you. I actually chair the
subcommittee where we do Pell Grants, so your testimony was
wonderful to me, and let me ask you this. One of the things we
see is a problem sometimes is that a lot of States really have
pulled back in the degree to which they support students, and a
lot of that cost has shifted to the Federal Government. Does
your experience suggest that is the case?
Mr. Lindsay. Yes, sir. When you look at the numbers as the
role of the Federal Government is increased, the contribution
that States can make is decreased not only because the Federal
Government has taken it over, but also because the States have
big items in their budgets such as Medicaid. So, here you have
two Federal policies dueling with each other.
Mr. Yarmouth. Excuse me, member, but the causation runs the
other way. It is the state----
Mr. Cole. Well, if I could ask my questions, I am about out
of time here so I would prefer to choose the witnesses I would
like to question. Thank you very much. I am out of time so I
will yield back, but thank you, Mr. Chairman.
Chairman Price. Gentleman yields back. Mr. Pascrell, you
are recognized for 5 minutes.
Mr. Pascrell. Thank you, Mr. Chairman. We have heard our
witnesses and some of our colleagues that government is the
problem most of the time. That the solution to best aid working
families is to tear it down. The government that is. Well, what
happens when we leave private industries to set the rules of
the road? Are they really better at investing in the economy
and in the working men and women of our society? Do they, left
to their own profit-seeking motives, protect the vulnerable?
And there are many vulnerables here. Not just people who are
incapacitated. Vulnerable means a lot of things, a lot of
groups.
We used to have less regulated capitalism in the early part
of the 20th century and we saw children working in factories
and men, women, and children alike losing limbs and lives in
hazardous workplaces. And let me interrupt what I am saying
here to say that the comments to me about higher education are
something to be considered. And housing, something to be
considered. All of you, I believe--I have read your
documentation--all of you make good, good suggestions and some
of them are debatable. That is what democracy is when we, you
know, practice it. But you will have to admit that the
progressive movement ushered in child labor laws.
And somebody did not wake up one morning and say, ``Let's
have child labor laws.'' There was a reason for them and it
built up, and it built up. And the best changes came when there
was bipartisan support. The best changes. Labor unions
advocated for an 8 hour workday. So, I do not know if it is a
good idea if we leave everything to the private sector to
decide what is good and what is bad.
And this thing about regulations is the most mythical part
of the center of destroying the American government. It is
mythical when you look back at even the number of pages that
are set aside for human regulation 20 years ago and this
President of the United States who has been accused of
everything but the plague. That is probably coming. We created
government agencies like the FDA to regulate our food and meat
production. Food safety is a major issue. When we talk about
trade deals it is a big, big issue.
Today, we have workplace safety laws and agencies like OSHA
to inspect for hazards on the job. You do not have to go any
further than look at the regulations that we have been--oh my
god, at the banking industry. When the guy that is getting a
bonus of $120 million is standing up and saying, ``Well, we got
rid of those 5200 clerks in that bank and that is going to
solve everything.''
I put money into that bank. I got money in that bank. I am
going to take it out. You want citizen advocacy, we will have
it. I do not care what area you are talking about. Health care,
financial, workplace. Prior to Medicare, about half of seniors
did not have health insurance. In my district, now with
Affordable Care Act we are down fairly low, 9 to 10 percent. I
am sure it is the same with many people around here.
So, the government has no part in anything. The government
has no part in helping the police and fire. That is a local
issue. Without social security, 44 percent of our seniors would
be living in poverty. And yet, we want to now privatize. We
want to distort what social security was all about. Thankfully,
today because of that program only nine percent do live in
poverty. Seniors. That is too many. Government--the people's
representatives did that. Not a corporation, not an economic
theory, an honest to goodness government.
Chairman Price. Gentleman's time has expired.
Mr. Pascrell. And I hope we have a second round.
Chairman Price. Mr. Blum, you are recognized for 5 minutes.
Mr. Blum. I would like to yield my time back to the
chairman.
Chairman Price. Mr. Brat, you are recognized for 5 minutes.
Mr. Brat. Yeah, I was a professor for the last 18 years
before I got this new job and so I would just kind of like to
go down the line. I was very interested in some of the
education comments and what the kids are actually getting when
they are done at the end of the road from everybody. There is a
lot of talk on the money. Our chairman showed some of the
inflation statistics, et cetera. We are investing $12,000,
$13,000, $14,000 per kid for 13 years right now, currently.
I was just in a jail 2 days ago with heroin addicts, 40,
and they were all telling me what they want in terms of
education and it was shocking. They want a moral component.
They said, ``No counselor ever spent any time with me as a
person.'' They said, ``Everybody is talking about tests and
isosceles triangles and whatever, and no one gave me any hope
as a human being. What am I aiming at? What is my career? What
is morally good? What is a good life?'' And, so I am just
curious on your comments.
I follow--Deirdre McCloskey is one of my economists here.
She has got a six-volume set that shows that modern economic
growth began in about 1700. Why then, when all human history
made $500 bucks a year? She said that, ``That is when moral
language changed such that we started calling the businessman
and businesswoman morally good.''
And so, I am just curious on if you have got any comments.
Just real quickly going down at the end of K through 12, kids
do not know what a business is, right? I mean, I taught
freshman in college. They do not know what a revenue is from a
cost from a price from a whatever. And a lot of them will not
go to college and they are stuck.
So, first of all, the business aspect, are we teaching is
business morally good or morally bad? Are we aiming our kids at
something they think is morally bad? And then the moral
component. Any comments you have? Just 30 seconds each or a
minute each would be great. Yes, Dr. Pinto.
Mr. Pinto. Thank you for that question. For me I have to
bring it back to housing and you mentioned, Dr. Smith,
Sarasota. There is a free market movement going on there in
multifamily housing that has been going on for about 10 or 12
years. We have been studying it for about 6 months. We have a
conference on it in about two weeks and it is called Economical
Housing by Design. The subsidy programs are affordable housing
buy subsidy. Spend $200,000 a unit for a rental unit and then
subsidize it for the next 15 to 20 years. Incredibly expensive.
The alternative is to put higher density, put lower cost
housing, smaller units, that is what the people, our service
workers, need. And then, the management runs it and you can
have rents that they can afford and you put it near where they
are working. That is going on in Sarasota. We want to make that
a model for the rest of the country. People start out and then
they can move from an efficiency to a one bedroom, two bedroom,
and buy a house. We used to do that 50 years ago. We got away
from it. We locked people away in subsidized housing and that
is the end of it.
Mr. Brat. Good. Dr. Smith.
Mr. Smith. Yeah, the leader in teaching medical students
about free enterprise, about mutually beneficial exchange
without distorting third parties is the Benjamin Rush
Institute, and they are almost heroic in their efforts to bring
this message to medical students. The other leader, I would
say, in education of physicians who many times have no business
or economic training at all, is the Association of American
Physicians and Surgeons. And they have been the leaders in that
area for quite some time to preserving the sanctity of the
relationship between the doctor and the patient, but also to
hammer home the idea that an exchange between two individuals,
if it is mutually beneficial, is moral by nature.
Mr. Brat. Right, and thank you. And doctor, 30 seconds and
30 seconds. Sorry to be so quick.
Mr. Spriggs. So, what happened is because States cut back
on their support for education and turned it into a free
market. Colleges of course will chase the dollars, as is the
way you do it in the free market. That increased tuitions
because I want students who will pay and they all have
Harvard's model. Harvard follows the top one percent. What
happens to their incomes? Their incomes have been going up much
faster than inflation, much faster than the average American.
Mr. Brat. Thank you.
Mr. Spriggs. The Federal Government then has to catch up to
help out the other students.
Mr. Brat. You believe in equity. Let's do it. Here we do,
doctor.
Mr. Lindsay. Sir, with regard to the moral component of
education, it is sad. Over the last 50 years, universities have
largely abdicated their prior responsibility for civic
education. According to the U.S. Department of Education
statistics today only one in three college students graduates
having even taken one course in American government so they do
not get a serious treatment of why equality? Why inalienable
rights? Why government by consent?
Chairman Price. Gentleman's time has expired.
Mr. Brat. Sorry for the 30 seconders.
Chairman Price. Mr. Pocan, you are recognized for 5
minutes.
Mr. Pocan. Sure, thank you, Mr. Chairman. So, I have some
questions for Dr. Lindsay, but I have to admit I am going to go
real quick first too, if I can, Dr. Smith. Your concept
intrigued me and I did find your website right away, by the
way. The prices, it took one simple search. So, let me go back
to--Mr. McDermott was talking about examples.
So, I worked at an auto parts manufacturer and my job got
sent to Mexico. I have been out of work for a little while. I
have got a torn rotator cuff. I call you guys up. But if I
understand right from the other question, you do not take
Medicaid or Medicare? So how does that individual access, if
they do not have the savings to do that, how do they access
your model?
Mr. Smith. The patients that come see us usually with the
help of their family and friends can afford our prices because
they are low and in some cases there have been surgeries
financed at our facility by church bake sales, so.
Mr. Pocan. Okay, so, I do not mean these words wrong, but
kind of survival of the fittest as opposed to someone who might
actually need the service. They are going to have to go to
other models then at that point. How about the example of the
school teacher that Mr. McDermott started talking about? If
they come in, now they have got insurance and the one thing I
did see also on your site is this little asterisk after every
price and there is a disclaimer. It says, ``Note if you are
scheduled for surgery at our facility and we are filing
insurance for you, the prices listed on this website do not
apply to you.'' So what does that mean?
Mr. Smith. That means we take a lot of risk dealing with
the insurers who on the front end will say, ``Yes, we will pay
for this cochlear implant surgery.'' And we will have all the
documentation. We will do that surgery; buy a $25,000 implant
and place in a child. And then the insurance company will say,
``Sorry, we are not paying.''
Mr. Pocan. What happens to the price for that individual?
Because it says, ``Those prices do not apply to you.'' What do
you do to the price?
Mr. Smith. The prices you see on our website are what we
extend to anyone who is paying us.
Mr. Pocan. So if you have insurance it says, ``These prices
do not apply to you,'' what does that mean for that individual?
Mr. Smith. We do not file very many insurance claims.
Mr. Pocan. Okay, I think that answers my question. Thank
you very much.
Mr. Smith. I am sorry.
Mr. Pocan. No, no problem. So, Dr. Lindsay, so one of the
questions that came from Mr. Cole about the State support and I
agree, I have seen that happen in Wisconsin and across the
country, in 2008 in the crash. There was an article in the New
York Times a couple of years back. Most States have started
putting some money in. States like Wisconsin have unfortunately
not yet. But that has made tuition go up and that is one of the
bigger drivers.
You said you thought it was financial aid, but I am looking
at a report from the Institute for College Access and Success
and they say specifically, if I could just read this, ``A
number of the Nation's most respected experts in higher
education public policy have reviewed the research and found no
convincing causal relationship between Federal aid and college
prices.'' What are you referencing that is different?
Mr. Lindsay. Yes, sir. Thank you for the question. More
than 30 years ago, then Secretary of Education William Bennett
said that growing subsidies would allow colleges, ``Blithely to
increase tuitions without fear of repercussions.''
Mr. Pocan. Okay, so I think I got it, this study versus a
30-year-old comment from Dr. Bennett.
Mr. Lindsay. For 30 years, academics did studies of that
and said, ``Oh no, no correlation.'' Now I am an academic, we
had an interest in saying no correlation. But nevertheless, the
Federal Reserve Bank of New York, last summer really settled
this issue. There should not be any more debate about this. Nor
should there be this false charge out there which we hear every
day.
Mr. Pocan. So there is no academic organization or
institution that has information that says there is a link to
tuition and financial aid. Just a yes or no.
Mr. Lindsay. Sir, if you see the Federal----
Mr. Pocan. I have a few more questions.
Mr. Lindsay. Take a look at the Federal Reserve Bank.
Mr. Pocan. I will take that as a no. So let me ask you a
question again about the lack of support. So when you look at
public versus private institutions, especially you have seen
all the stuff we have had with some of these private colleges
for profit that 90 percent of their money is coming from the
Federal Government or more. Is there a difference in
distinction you see in that model versus the public institution
model and other private college models?
Mr. Lindsay. All of us are sad to see that some private for
profits have engaged in fraudulent practices. Nevertheless,
only 10 percent of students get postsecondary education from
for profits. The real problem that we have to address if we are
going to help the majority is to address public higher
education.
Mr. Pocan. Got it. In the last 42 seconds I think I have
left, so one of the things that we have been looking at is
trying to make it less expensive for students. They do not have
to have so much in debt. You know, one of the things we have
said is refinancing student loans. You know, you have these
weird rates that are out there. But upfront, an idea that if
you increase financial aid through work studies the average
student might work 10 or 15 hours a week relive the university
of some of those costs of that work and then do the university,
and then get that as the financial aid. So they essentially can
leave with no debt out of a 4 year program. What is your quick
opinion on that?
Mr. Lindsay. Certainly, I have no objections to that, but I
think that is nibbling at the edges. There are netter
solutions.
Chairman Price. Gentleman yields back. Mr. Stanford, you
are recognized for 5 minutes.
Mr. Stanford. Thank you, Chairman. Okay. I guess first
question would be on housing so I am going to come to you.
Andres Duany is a land planner/architect. He has done some
interesting thing in this movement called new urbanism, and its
basic premise is, ``Much of our zoning is based on the
industrial age and revolution. We are going to put the factory
over here and the houses over here and we separate
everything.'' And yet that is not how our country developed,
right? If you look at places like Charleston or Savannah, it
was all sort of thrown in there together and oftentimes you
lived above where you worked.
And why do we not go a bit more back to that? You had a
granny flat in the back. Grandmom came to live in the back.
When grandmom died you could rent the house, the little unit
out. And this idea of mixed use. Are there two municipalities
out there that from the standpoint of code, because much of it
is driven by zoning, the government dictates in essence higher
pricing on housing? Are there two municipalities that you would
recommend for me to do further study on places that have got it
right in your view?
Mr. Pinto. Thank you for that question. So, new urbanism
has now been replaced by sort of the founder of it, with lean
urbanism. And that is because the founder of new urbanism said
it became too over burdened with excessive regulations and
driving the costs up. And so now it is lean urbanism. We have
looked at it, so Bradenton, which is just north of Sarasota,
this developer that I mentioned.
After Bradenton heard about this in the newspaper,
approached--it was actually Manatee County where Bradenton is
located, approached the developer and said, ``We have this
Knight's Inn that has 240 units and there is five acres or four
acres next to it. Could you come in and do something?'' And so
within less than a year he purchased that building, it got
rezoned, converted.
He is in the process of converting 240 units to
efficiencies. He has already converted 120 that rent for $625
furnished with utilities and then he is going to build about
130 units new, two bedrooms on the four acres. It is located
downtown Bradenton close to service jobs and----
Mr. Stanford. The bottom line is Bradenton is----
Mr. Pinto. Bradenton is one example. We are working with
other localities. I did meet with a city in South Carolina.
Mr. Stanford. Okay. How about the micro homes? You know, it
is an RV, it is a trailer, but no, it is a home. I love the
concept. I love, you know, the idea of smaller is better. Is
there a municipality that has it right with regard to micro
homes and----
Mr. Pinto. I have looked a little bit at that. Again, the
other answer, it is a little bit of nibbling around the edge. I
think you are better off looking at efficiencies at 300 to 400
square feet and one bedrooms at 400 to 500. Those sound small
today, but those were the norm back 56 years ago before the
Federal Government pumped everything up.
Mr. Stanford. Okay. Going over to the world of education.
When I wore a different hat in South Carolina, I dealt with the
happy index extensively and the point, the phenomenon that you
have pointed out, which is the proportionate raise in tuition
based on the amount of new money we seem to put in at State
level. Is there a State in your view that has it most right
with regards to terms trying to correlate inflation with the
pricing of their higher education system?
Mr. Lindsay. Well, sir, I do not want to--just because I am
from Texas, talk about Texas, but we have been trying to
address this problem and I hope that what we are doing can be
instructive. The problem is that we are expecting too many
students to go to four-year traditional colleges. That is not
helping them. That is why you have two to one odds of failing
today if you start college. We are looking at, and have begun
to expand across the State, what we call the affordable
baccalaureate program, which as I mentioned in my opening
remarks, can cost half as much as a traditional degree and can
be completed quicker.
Now, these are not degrees in biology or philosophy as I
mentioned, but we have to bear in mind the new majority of
students out there today seeking our help are non-traditional
students. And for them, these affordable baccalaureates which
use online learning, competency-based criteria; that is their
only ticket to the American dream.
Mr. Stanford. I see I have 6 seconds. I would love to ask a
question but I do not think that is permitted. Thank you, Mr.
Chairman.
Chairman Price. Thank you, gentleman. Time is expired. Ms.
Castor, you are recognized for 5 minutes.
Ms. Castor. Well, thank you Mr. Chairman and thanks
everyone for being here today to talk about how we lift the
American workers and American families. I think it is important
to reflect that this country has made it through a very
remarkable time. We have bounced back from the worst recession
in our lifetimes thanks to American workers and a lot of the
recovery act policies that invested in American families and
small businesses. Just think about this, it was less than 10
years ago that people were losing their homes. They were losing
their jobs.
The unemployment rate in Florida topped out at a little
over 11 percent. We are already down at 4.7 percent in our
unemployment rate in Florida where we have a real boom and bust
cycle. It hit us particularly hard, but here all across the
country the unemployment rate is down to 4.9 percent. We have
more than cut the unemployment rate in half. We have created
over 15 million private sector jobs just since 2010.
Then think about, did you ever think you would see gas
prices at $2 a gallon for so long? I mean, in the Tampa Bay
area I represent, we have been hovering at a little over $2 per
gallon now for many months at the same time that we have been
able to double our clean energy production.
The Affordable Care Act has been a godsend for working
families, and in Florida we have a very competitive marketplace
now with healthcare.gov. 1.7 million Floridians now have access
to the health insurance that they did not have before because
for too long a time we allowed companies to discriminate
against people who had preexisting conditions like asthma or
diabetes or a cancer diagnosis; 1.7 million Floridians. So, the
uninsured rate now, we know is at its lowest level in the
history of the country. And most people still have private
insurance through their employer.
In Florida, 60 percent do, and their premiums and co-pays
and cost increases are now at the lowest level that they have
been in many years so that is good news. And, if you have been
fortunate enough to have money in the stock market over the
past decade you have done very well. The stock market has
practically tripled.
But, we still have this problem with how we increase wages
and income for families. The good news was the Census Bureau
said last week real median household incomes grew by 5.2
percent over the last year. The number of people in poverty
fell by 3.5 million. That was the largest one-year drop since
1968. But we have got to do so much more. We have got to build
on this success.
And Dr. Spriggs, I love it that you say we have got to
invest in the American people. We have got to invest in this
country. And there are a couple of things that just really
stick out. We have got to improve our infrastructure in this
country. And I wonder if you could comment on that, Dr.
Spriggs. I look back at home we have so many needs in our
roadways, our water systems, our waste water systems. Interest
rates are low. Would not this be a good time to invest in our
communities back home and create jobs?
Mr. Spriggs. Absolutely, Congresswoman. Right now we are
running a deficit in our infrastructure because it is
deteriorating. So, if you look at it from a net perspective,
you are running negative. We are leaving to our children the
debt of repairing infrastructure that our parents and
grandparents paid for. So, we are not leaving them the legacy
that we were left with. We are leaving them the debt of trying
to fix it.
That is not right. And at the moment, there is a consensus
among economists that the one thing missing from this recovery
was further fiscal stimulus whether you look at the father of
expectations or someone on the other side of economists like
Krugman. Nobel laureates all agree that we need this stimulus.
The IMF has been urging the United States at these low interest
rates, invest. Make the investment in your infrastructure. The
OECD is telling us, invest. And we are not responding. The
Budget Committee has a responsibility for the full employment
of Americans through the Humphrey Hawkins Act and that is a
responsibility we should take seriously.
Ms. Castor. Well, my neighbors back home see this and they
see those low interest rates and they understand this would be
a great time to invest in our communities. And then the other
thing I hear is that people are clamoring for more modern
workplace policies. Family Medical Leave has been very popular,
and it has sustained a lot of folks. But we have got to do more
on sick leave, paid family and medical leave, and good
childcare. How would that improve our----
Chairman Price. Gentlelady's time has expired.
Ms. Castor. Well, maybe you can reply back to the committee
on that topic for workforce.
Chairman Price. There will be questions for the record that
you are welcome to offer. Mr. Palmer, you are recognized for 5
minutes.
Mr. Palmer. Thank you, Mr. Chairman. Got a couple of
questions then I want to make some comments. It has been
mentioned how well the economy has been doing. I would just
like to point out that under this administration the economy
will have averaged 1.55 percent growth through two terms and it
will be the first administration, I believe, in the history of
the United States which there was never even one quarter in
which the economy grew at least three percent. One out of every
six working age males are unemployed. And in terms of the
unemployment rate, I do not think they count people who simply
quit looking for work. And we could go on.
Mr. Spriggs mentioned infrastructure. We passed an $860-
something billion stimulus bill back early in the first term of
this administration. And various reports have indicated just
over 3 percent of that actually went to infrastructure when it
was supposed to be shovel-ready jobs. So we had an opportunity
to do something about infrastructure but chose to spend the
money elsewhere. So, I take some exception to that. And then we
were talking about Head Start.
The government's own studies indicated that Head Start, by
the time kids reach the fourth grade show no impact. And regard
overall to education, one of the issues, Dr. Lindsay, that I
have with what is going on in higher education is the amount of
money that States and parents and students are having to spend
on remedial education. I think it is about 30 percent of the
students who enter college today are having to take remedial
courses and that is basically taking a high school course but
paying for it at college cost. You want to comment on that?
Mr. Lindsay. Yes, sir. This is a consequence of our notion
that virtually all high school students should attend a 4 year
college and that is just not the case. We are not serving them.
So it seems to me the question is not whether to invest in the
American people. The question is, what policies by which we
invest in them help them?
And with the best of intentions over the last 40 years the
growth of Federal involvement in higher education has now
helped them. I mean, think about the fact that today a smaller
percentage of college graduates come from the bottom 25 percent
of income than in 1970 when these programs started. So no one
here is talking about whether we should invest or not invest in
the American people. Let's do it in a way that actually helps
because when 68 percent of students either do not graduate or
graduate not having attained the learning that a college degree
is meant to signify that constitutes a scandal.
Mr. Palmer. In my district we have a couple, two or three
centers, technology-related, vocational related for high school
students in Blount County in particular. You have got young
people graduating from high school that know how to weld and
their first jobs are earning $50,000 to $60,000 a year. And the
thing that I have tried to emphasize is that those students can
go into those jobs but they could still go to a 2 year college
or they could go to college later. It gives them a chance to
earn money and save up, pay for their education. Because, as I
found out, the more mature you are the better student you
become. But these are people that are starting businesses.
Mr. Lindsay. No, that is right. With the exception fields
like law, medicine, engineering----
Mr. Palmer. Well, we need more lawyers.
Mr. Lindsay. With the exception of those fields, most
students--I mean, 4 years is much too long. Much of this can be
done at the community college level. And we have been hearing
things about free community college. Let me tell you, in 2014,
the average Pell Grant was $3,300. The average community
college cost was $3,300 so we have got that already. As I said,
the problem has not been a lack of generosity. Quite the
contrary. We spend twice as much per student investing in their
higher education than the average OECD nation.
Mr. Palmer. Well, I am the first person in my family on
either side to do to college. My dad was a logger. He had about
an eighth grade education. That is what I spent my summers
doing and it was a lot of motivation to go to college. Dr.
Smith, quickly, opting out of government funding with health
care has greatly improved your practice and pricing structure.
You mentioned the electronic medical records coding, reporting
mandates combined with low and formulistic pricing that had a
distorting effect on healthcare markets and access to care and
certain specialists. Can you speak to that? And I would like
for you also to speak to ICD10 and the prospects of ICD11.
Mr. Smith. Well, any mandate where, you know, physicians
have to spend money that they do not think they ought to spend
is a problem. It increases the cost of practicing medicine.
Chairman Price. Dr. Smith, I am going to have to have you
answer that question for the record afterward. Mr. Yarmuth, you
are recognized for 10 minutes.
Mr. Yarmuth. Thank you, Mr. Chairman. It has been a very
interesting conversation. I am not sure that we have figured
out a way to restore the trust for families and working age
Americans yet in the hearing. But maybe there is some ideas
that can work. You know, we debate all the time in this
committee essentially what the priorities of government should
be. That is basically what this committee is about.
We debate it through a budgetary process and then we debate
it in hearings such as this. And, over the last few years there
has been a substantial difference in the attitudes of
Republicans and Democrats as to what the thrust of our spending
should be. And, as we have mentioned many times before--Dr.
Spriggs, as you mentioned in your testimony, we Democrats are
pushing for investment in infrastructure and investment in
education, research and development and so forth. Things that
traditionally have provided stimulus for the economy and I
think have improved people's lives.
On the other hand, we have proposals from the Republican
side, first, I guess, formulated when Paul Ryan was chairman of
this committee and he proposed budgets that took a very
different path.
And now we have the better way. His plan as Speaker, which
among other things would reduce the amount of non-discretionary
spending in this country to its lowest level as a percentage of
the economy and the budget in modern history. So, Dr. Spriggs,
I ask you, I know a lot of the times we get the argument from
the other side, that, ``Yeah, we would like to do a lot of
these things, but we have a lot of debt and we cannot afford
it.'' Would you discuss the downside of not investing in
infrastructure and education and research and development?
Mr. Spriggs. Well, the growth of the United States was so
phenomenal because we did make the investment in our people.
So, you look at our public land grant colleges. One of the
things we have left out in discussing what education does is
that our education system included providing the research for
our growth. Those land grant colleges insured that American
farmers would be the most productive and when you look at the
results they have continued to be the most productive because
of the research that takes place. Unfunded research. And that
is the difference between a high education and a low cost
education.
It is an investment that gave us Hewlett-Packard, that gave
us Google. All of those things were possible because of the way
we run in the United States our higher education. It is not a
glorified high school. So, that investment pays off. Whether it
is Medicare and what happens to extending the work life of
seniors or Medicaid and giving young people the entry to have a
healthy life and to have more education, to seek more
education, to inspire them to be doctors.
All of this plays a role and it has paid off. The research
on Head Start has new findings against what the government
initially found because we have done better research as
economists. And that is what happens when you have researchers
who get supported.
So, our better research has indicated that Head Start, in
fact, does have lasting effects because the earlier study did
not consider that Head Start has spawned lots of preschool
programs. And that earlier research looked at Head Start
ignoring that people were also getting other program and
support. So when you actually looked at it more carefully, we
have found that Head Start pays off through the life of the
person and most importantly when it comes to State costs, it
reduces the criminal justice system costs because we know that
Head Start and investments at a younger age does reduce
criminal activity. So, all of this points to the success of
these investments.
Mr. Yarmuth. Thank you. I want to talk about the union
situation in the country. You work for the AFL-CIO and it seems
to me you can pretty much track the growth and income disparity
in this country not necessarily by race or gender but just by
income, rich and the poor, with a decline in union
representation in the country. Could you discuss the impact of
unionization and the declining unionization on kind of the
general welfare and income levels of the country?
Mr. Spriggs. Yes, and the International Monetary Fund,
which is not union-supported at all or union friendly has
looked at this in a comparative way, so we can see what has
happened for countries that have seen declines in union
density. And they found the most strong relationship between
declining union density and growth and inequality particularly
for people who are the top one percent.
So, in other words, what happens is when you do not have
workers at the table being able to negotiate with their boss
about what happens to this productivity increase it goes to the
boss.
It does not get shared by the workers. When you look at it
in the United States, as you mentioned, the graph just pops
out. That is the way the graph looks--declining unionization,
growth of income at the top 1 percent. There is a perfect
correlation. Non-union workers hurt because of that. The wages
of non-union workers are seven dollars off from what they would
be per hour depending upon their education level and even
greater for those with less education. So, the wages of non-
union workers are hurt when workers are not organized. So, it
increases inequality and it hurts non-union workers as well.
So, it is very important that we maintain our commitment to
Americans having the right to organize.
Mr. Yarmuth. I thank you for your answer. A couple of
things I wanted to follow up on the statements that have been
made by the various witnesses. Dr. Lindsay, you compared twice
what we spend in the United States to what is spent on higher
education in OECD countries. Could you point to any one of the
OECD countries that you would prefer be the system we use
versus theirs?
Mr. Lindsay. Sir, my point in drawing out attention to that
fact is this--this is not a money problem, right? And so I was
not saying that--that was not an invidious comparison. My point
is this--we are, the Federal Government has been very generous
in investing in Americans' education. My point is we can do it
better because I do not think any of us--sir, I am sure you are
not happy. When these Federal programs began in the early 70s,
as I said, today fewer students graduate from the bottom 25
percent of income than in 1970 when these programs began. I do
not question the intentions.
Mr. Yarmuth. I understand that. Because in most of the OECD
countries higher education is free, correct?
Mr. Lindsay. You know, I am glad you raised that point
because we hear that all the time. We think, ``My goodness, I
want to move there.'' But you know what? No more than 20
percent of those students go to college. In Europe they track.
Meaning, at a very young age you are told, ``You are not going
to a liberal arts college. You are going into the trades.'' So,
when we say it is free it is not free for everybody. It is free
for the 10 to 20 percent that qualify through the tests. So,
thank you for giving me that opportunity.
Mr. Yarmuth. You are welcome. No, I do not think it makes
any point one way or the other, but glad that you cleared that
up. Because I do not think there is much value in a comparison
to OECD countries because they are very different systems.
Mr. Lindsay. No, the value of the comparison is this: We do
not have a money problem. What we have is a priorities problem.
Mr. Yarmuth. Thank you for that. Dr. Smith, just one
question. I will be a little bit snarky here, but, you know,
oftentimes we hear about the sanctity of the patient-doctor
relationship and from what you are telling me is that the
patient-doctor relationship is irrelevant to the patient
getting care in your situation. They go online; they have no
relationship with you. They decide basically on price to come
to your service and they do not have any idea who you are, so I
just want to throw that out there. But that is not the question
that I want to ask.
Just in terms of solutions to our healthcare challenges--
and everybody agrees we have tons of them. And I actually have
raised points before in hearings about the fact that you can
get a colonoscopy for $600 or $700 in a freestanding clinic and
the same thing is $4,000 in a hospital and what sense does that
make? It makes no sense.
Particularly, if the government is paying for it. But, is
it not true that the vast majority of costs in the system writ
large are treating cancer, diabetes, heart disease,
Alzheimer's? These are hundreds of billions of dollars a year
that the system is trying to deal with. And those are diagnoses
that would have no relevance to the type of system you are
talking about?
Mr. Smith. I am not an economist so I do not have any idea
whether those figures are right or not. I do not know.
Mr. Yarmuth. Yeah, well, generally speaking they are right.
I will yield back, thank you.
Chairman Price. Gentleman yields back. Mr. McClintock, you
are recognized for 5 minutes.
Mr. McClintock. Thank you, Mr. Chairman. I thought Mr.
Pascrell made the best point of the day in defense of the free
market when he said, ``I have got money in that bank. I am
going to take it out.'' I mean, is that not the ultimate
consumer protection? The ability to say, ``No, your prices are
too high. No, your service is not adequate. No, I will take my
business down the street to somebody who can provide me a
better service at a lower cost.''
Is that not how we punish bad actors in a free market? And
is that not the ultimate punishment that they go out of
business? And we reward good actors by giving them our
business. Now, Dr. Smith, your patients choose you. They do not
have to go to you for services, correct?
Mr. Smith. That is correct.
Mr. McClintock. Why do they choose you?
Mr. Smith. People that search online are many times
initially attracted to the price because otherwise they find
their care unaffordable in their local market.
Mr. McClintock. So, better service at a lower price they
come to you. Is that not a good thing?
Mr. Smith. It is the market at work, we believe.
Mr. McClintock. Will and Ariel Durant in their history of
civilization asked the question, ``What makes Ford a good
car?'' Chevrolet. Competition. The fact that there is somebody
down the street doing the same thing and is competing for
people's free choice for where to go. But, I saw that the
Kaiser Foundation has just estimated that in some 30 percent of
American counties, people will have no choice over their
Obamacare policy.
They have to choose only one plan. That is not a choice at
all. In 60 percent of markets they will have a choice between
two plans and that is all. That is not much of a choice at all
and I wonder what will happen to quality if people cannot move
their business from people who are doing lousy service to
people who are doing good service.
Mr. Smith. And just as powerful as competition's effect on
the marketplace, which drives quality up and prices down in
every industry--just as powerful is the lack of fear of
competition. And that is----
Mr. McClintock. Now, the price you cited to Mr. McDermott
was around $5,000 for a procedure. His question is, ``Well,
what if you cannot afford that?'' I am wondering what is the
difference between paying you $5,000 for the procedure and
having Obamacare policy with a $5,000 deductible? Aren't I out
of pocket $5,000 in either case?
Mr. Smith. Yeah, and many of the procedures on our website
are less than the deductibles for many of the ACA exchange
plans. So, people's out of pocket experience is actually
superior paying for the entire procedure at our place.
Mr. McClintock. And would it not also make more sense to
put health care back within the financial reach of Americans? I
mean, we give these huge tax breaks to companies so they will
go out and make a choice for their employees that their
employees are stuck with. Their employees lose if they lose
their jobs. Why do we not give those same tax breaks to the
employees themselves so they can afford to go out and make
their own choices for the best services at the lowest price?
Does that make more sense to you?
Mr. Smith. Yes. And a consumer market is full of people who
actually care what things cost, but if they do not know what it
costs then there is a lack of price transparency then they are
at a real disadvantage. That is why I think that we need to
focus more on what does this cost not does everyone have
coverage.
Mr. McClintock. I want to go to Dr. Lindsay for a second.
The two areas when the government has been helping people the
most has been helping them to afford their health care and
helping them to afford and education. And it strikes me those
are the two areas of the economy where prices are growing much
faster than inflation.
Last time I checked, health care was growing at twice the
rate of inflation. Tuition is growing at four times the rate of
inflation. And from your testimony, I seem to take from this
the fact that as we throw more money into the system the
universities accept that by raising their tuitions.
And the more they raise their tuitions, the more we have to
help students try to afford those tuitions by doubling Pell
Grants, by dangling all you can borrow loans in front of
students. And the more we do that the higher the tuitions go
and we are in a negative feedback loop.
Mr. Lindsay. Yes, sir. Exactly. It is just simply an
economic fact.
Mr. McClintock. What is the biggest cost driver in
education?
Mr. Lindsay. Federally subsidized student loans.
Mr. McClintock. Those student loans, and I think I have the
distinction of having one of the highest parent plus loan
balances in the entire Congress. This is a cause near and dear
to me. Does this not make it virtually impossible for students
to qualify for consumer loans or for mortgages? Is that why we
are seeing young people start families later? No longer able to
afford to buy. They are now renting. And consumer spending
being extremely sluggish because they cannot qualify for
consumer loans in an economy where two thirds of economic
growth depends upon it.
Mr. Lindsay. Exactly.
Chairman Price. Gentleman's time as expired. We will take
that as a statement instead of a question.
Mr. McClintock. One with which I agree.
Chairman Price. Exactly.
Mr. McClintock. The answer was exactly.
Chairman Price. There you go. Mr. Norcross, you are
recognized for 5 minutes.
Mr. Norcross. Thank you, Mr. Chairman. I got to say, this
is probably the most entertaining committee hearing I have been
since sitting on Budget Committee. Sort of remarkable. And I
would like to thank all of those testifying today. But I hear,
live where you work. We are talking about Potterville here
again. I think the only place you get to live where you work
for free is in Congress when you live in your office. But that
is a different story. I guess we will not go into that.
I have to disagree with my colleague who we got sworn in
together, Congressman Brat, when he says, ``If you do not go to
college you are stuck.'' No you are not.
You have choices. Those who go to serve our military,
service to our country, is of great value. Those who go to the
other four-year college called an apprenticeship, that is great
value. You know, in this country versus Europe and many others
it is somehow if you do not go to college you are less than. No
they are not. They are great people living a great dream
whether they were coal miners or truck drivers. That is exactly
quality, accessible, affordable, flexible college.
What I want to talk about what we are seeing here and
hearing here today. It literally is a tale of two countries. I
think the data speaks for itself. We can interpret it very
differently and I agree with my colleagues on this side of the
aisle that the facts are irrefutable and you are not changing
those. You heard it mentioned where we were a half a dozen
years ago and where we are today.
There is a recovery. It is who is enjoying it or who can
enjoy it? The disparity in wages has grown exponentially from
those who are working with their hands and those who are
running the companies. Fifteen million jobs, that is pretty
good. But those are jobs that are much less than when they
started, and that tends to be one of the concerns that I am
dealing with middle class.
So, when they make a choice to do to college can they
afford to send their kids there or are they saddled with a
quarter of a million dollars of debt? I think we get back to a
much more flexible system that addresses the real core issues
of what is going on is probably the most important thing that
we can do. But, when it comes to the comments, Dr. Smith, it is
an interesting model. I just wanted to ask one quick question.
You post the prices. Do you have specials like twins today get
half price off? Do you do things like that?
Mr. Smith. Let me write that down. That is a----
Mr. Norcross. Okay, we would be interested in that. You do
not have to answer that. Dr. Spriggs, minimum wage. There is a
number of bills. I have one to increase that to $15 an hour by
2024, gradual increase and then to incentivize it with tax
credits. My colleague Congressman Pocan, Senator Sanders joined
together in a second bill called the Workplace Democracy giving
the NLRB the ability to have essentially a check off, and
certify those who are willing to come together to try to make
it easier to form unions. There is a concern that the recovery
is not felt by all. How do you think these two bills if they
were to be enacted and signed into law would impact the
economy?
Mr. Spriggs. Well, they would help to restore fairness to
the economy to make sure that rises in productivity by workers
show up in their paycheck. You know, the market is a wonderful
way to allocate resources, but it only means something if you
have the resources to respond to the market. Having lower
health care does not mean anything if I cannot afford $5,000.
Having affordable housing that is dictated by prices from the
top does not mean anything if I cannot afford housing.
So, we have to address what happens to the wages of
workers. So, pushing wages up from the bottom to ensure that
even those at the bottom enjoy productivity growth is
necessary. That is one of the keys we learned from the period
from 1946 to 1979. And then, making sure that those in the
middle can negotiate fairly with their boss.
I am more productive. Do I not get to share in this
productivity? That makes all the difference in the path and
study after study is pointing this out by economist. That the
economy becomes more stable because higher minimum wages mean
that those workers are more resilient and can respond to market
pressures. And the ability to negotiate wages mean that wages
can be more flexible so we can have a more efficient labor
market. So, we see that as more efficient.
Mr. Norcross. Thank you. I yield back.
Chairman Price. Gentleman's time is expired. Mr. Woodall,
you are recognized for 5 minutes.
Mr. Woodall. Thank you, Mr. Chairman. Thank you for holding
the hearing. Mr. Yarmuth mentioned in passing that he was not
sure we reestablished any trust here today. I came in late, and
so I may have missed a more cynical part of this panel. But I
have got to tell you, when you, Dr. Lindsay, are focused on
trying to get folks not just with access to education, but
access to education that benefits them long term. When you, Dr.
Spriggs are trying to tie workers' wages to their productivity
and life folks up out of poverty.
When Dr. Smith has taken something that is impossible to
understand and impossible to afford and trying to deal with
both of those issues at the same time. And when Mr. Pinto is
telling folks that maybe we have been complicit in turning
something that was supposed to be a wonderful opportunity into
a terrible burden, that is exactly what folks back home want us
to be talking about and I cannot believe that there is not just
a little bit of agreement here, but a lot of agreement. That is
what I want to focus my question on. Dr. Lindsay, I agree with
you about the Stafford loan program. My question is, who on the
left would work with us?
When I go into a high school today and say, ``Who wants all
the free money you can borrow and a degree in art history? Or
who wants a co-op program, a work-study program, you want to
graduate with employer experience and no debt?'' Who on the
left would work with us to redirect these Federal incentives to
putting real people in real jobs?
Mr. Lindsay. Well, sir, I think there is a growing
bipartisan consensus. I mean, you have seen candidates on the
left and the right. President Obama, former Texas governor Rick
Perry, could not be as different in politics, but they all
agree that we have to reform our policies to better serve
college students. Meaning, to help them find gainful employment
after their degree.
And so; therefore, I think the time really could not be
better than right now to start to go back and recognize that
with the best of intentions we have produced some consequences
that do not help the intended beneficiaries. I mean, there was
an AEI study by Jorge Klor de Alva. He found that under the
current system average working people pay more to support elite
institutions of higher education than they do for the schools
to which they are likely to send their own kids. I mean, the
average school gets $2,000-$3000 in support. The elite
institutions get $12,000 to $13,000 per student.
Again, in another well-intentioned income based repayment
and loan forgiveness you probably saw the Washington Post
report last year. They now counsel their students at Georgetown
Law School on how to game the income based repayment and loan
forgiveness plan so that, says the Post, ``Tax payers are
transferring $160,000.''
Mr. Woodall. I will not say that you are not dealing with
reality. We are slipping back into cynicism. Because that is
what folks worry is happening. The same thing is true with Mr.
Pinto's topic. I live in one of the densest Congressional
districts in the State of Georgia. You cannot find an
efficiency in my district. It is not for sale, and if I call my
bank they are going to say, ``Rob, we stopped doing loans for
houses under 600 square feet. We do not do those any longer.''
Who on the left, Mr. Pinto is going to help me? Instead of
having, as I do in my district, a 2000 square foot house with
14 people living in it. A 3000 square foot efficiency with two
people living in it? Who on the left will partner with me to
make that happen?
Mr. Pinto. I cannot name anyone offhand. But I can think
about it but I cannot name anyone offhand.
Mr. Woodall. Because the whole discussion we are having is
how do we love people? How do we support people? How do we
advantage our neighbor? And I believe that is a unifying
statement, and I struggle with that in the housing industry as
much as anywhere. Dr. Smith, I love what you are doing. I love
my medical savings account. My Obamacare plan keeps getting
canceled, and I sign up for a new one and it get canceled, and
I sign up for a new one, but I am trying to say in the medical
savings account space, yes.
Telling someone they have a card that gets them care with a
$9,000 deductible is not valuable in my district and I know
that we can bring costs down if we understood it more. What is
going to drive more of your peers to adopt that model? How do
we get more folks to do what you are doing, which is to give me
access to information as a consumer?
Mr. Smith. What is driving more people to do it now is
losing patients to facilities like mine that are not price
gouging. In answer to your other question, there was not a
single vote in the Oklahoma legislature, Democrat or Republican
against this initiative with this new no out of pocket for the
teachers and State employees in Oklahoma plan. So, there is
bipartisan support and there should be for cheaper and better.
Mr. Woodall. There is a lot here today for us to work on,
Mr. Chairman, thank you for holding the hearing.
Chairman Price. I thank the gentleman. His time is expired.
Mr. Ryan, you are recognized for 5 minutes.
Mr. Ryan. Thank you, Mr. Chairman. Several of the issues
you talked about I would be happy to work with you on. I think
that would be great and I will even come to your district and
spend time with you because I am sure that would benefit you
politically as well for you to be with me in your district. Mr.
Smith, before we get into the deep policy, as a member from
Ohio and an Ohio State football fan, I want to say I am sorry
about your loss on Saturday. I am sorry Mr. Cole is not here to
share with him the Ohio State-Oklahoma game.
Several questions I have because I really think that there
are some issues here that we should be able to hammer out. I
think that every member--and when I was not here I was watching
in the back--has made some really good points on college costs,
making sure the Pell grants that we send down to the schools
actually hit home and actually reverberate in the household and
increase or lessen the dependence that families are spending on
some of these programs. The student loan issue is a huge one.
And I think there does need to be some controls on our colleges
with us just sending them money and tuition keeps going up, and
I will say it as a Democrat, the bureaucracy of the
universities growing in a way that is not as focused.
And maybe we do need to look at how schools in States can
focus on specialties. I want to give Dr. Spriggs a minute to
talk about the higher education costs because I know that it
has been brought up and I want to give you a minute to just
kind of express your opinion about what has been stated with
the panel so far.
Mr. Spriggs. So, previously our model was that we wanted as
much education as possible and our States made heavy
investments to make that possible, and make it affordable. So
not only did we get affordable, but high-quality colleges. One
of the big trade surpluses for the United States comes from our
universities because of the research that takes place there
that we have all benefited from, and given us the innovation
that has led our Nation.
We have de-invested, we have taken them from being public
to private, and that market competition, more than anything
else, has lowered the access to low income students because, if
I am the university, and you are going to tell me, ``I am not
supporting you anymore,'' we had a drop from 1975 of 63 percent
State support to today where it is under 33 percent.
I am going to want students who can pay. I am going to want
out-of-state students. I am going to want foreign students. I
am going to want to teach classes with teaching assistants. I
am going to want to have as many classes as I can, done in some
inexpensive way. I am going to have adjunct professors
everywhere, right? I will lower my cost, and I will cut access
because I do not want low income students, and I will raise the
price because I am chasing dollars, and those in the top 20
percent spend much more on education than everybody else.
So that distorts the market. That is the distortion that we
have allowed to take place. We went from a public commitment
to, ``It is free-market, and that means I am a business now. I
am not into caring about whether or not----''
Mr. Ryan. Right, and I appreciate that and I think that is
a great point, Mr. Chairman. This is a great hearing, and I
think that is a great point. So we need to sit down and figure
out how, because only 20 percent of the people are using it. It
is the high 20 percent end. People have got some money--is
distorting the market, and we send money that is distorting in
its own way. We are trying to help kids, but it is not getting
to exactly where we want it to get. So I appreciate that and I
agree with you with 1,000 percent.
Because I only have 40 seconds left, I think this model in
Europe is a good one. I think what Germany does is great. I
think we need to get kids on a track, starting as early as
possible, and that means stem education. That means home
economics 2.0. That means workshop 2.0 in our high schools that
are gone, to get kids on a track to go into the trades; to get
a skill, so when they are 18 years old, they are not living in
our basements because they do not know what to do or they end
up, worst-case scenario, like you said, Dr. Lindsay, both in
debt, and not with a college degree.
But that is going to take us sitting down. They are doing
it in South Carolina because they have so many German companies
that have moved into South Carolina. They are starting to
implement this model. This is something that is not heavy
lifting for us to create some incentives, Mr. Chairman.
Chairman Price. I appreciate that.
Mr. Ryan. And I hope, because I know you are an open-minded
guy.
Chairman Price. I appreciate you coming. Thank you.
Mr. Ryan. Let's do this.
Chairman Price. Gentleman, your time has expired.
Mr. Ryan. Let's do this, even though I am complimenting
you, I cannot get more time? No?
Chairman Price. I have tried that and that would set a bad
precedent.
Mr. Ryan. I want a change of the rules here.
Chairman Price. Mr. Grothman, you are recognized for 5
minutes.
Mr. Grothman. Okay, first, Dr. Smith, before I got here,
you apparently said the two States that flow into your clinic
from other places are Alaska and Wisconsin. I was just
wondering why Wisconsin? What do you attribute that to?
Mr. Smith. There is a large group of farmers there, I
understand, who do not believe in insurance or participating in
insurance schemes is moral, and, for whatever reason, they
found us and I believe the market there has some of the highest
prices in the country.
Mr. Grothman. Okay, so that is what you are getting. You
asked these people what they were doing before you and they
said, ``I do not have any insurance or I am part of this--'' I
know there are some Christian groups out there that have their
own kind of pools that they go. That is where you are getting
people from, okay, interesting.
Next question I have: with regard to making it more
difficult to realize the American dream, part of that is
unquestionably education costs. We have gone out of control
and, by the way, Dr. Spriggs, I will say: when I tour the
places where they have apprentices or pretty much the
construction trades, I would talk that up more.
I mean, a lot of the people in the trades in Wisconsin are
making a lot more money than these people who are going to
college, and I would not emphasize college as much. We need
more people in the trades so I think they are, quite frankly,
more productive in our society, and doing better than a lot of
these people who went to college. It just seems to me obvious:
We have too many people going to college.
But I am going to ask you guys a question on two things
that I think is, in part, contributing to the stagnation in
wages. In America, first of all, we have embarked on a policy
of discouraging work. The most recent policy there was
Obamacare, in which, talking to a CPA a couple of weeks ago, in
which we have these steps at which you lose your Obamacare
subsidy as you work harder, and, you know, the CPA tells me
nothing surprising.
Obviously, the people who voted for Obamacare want to
discourage people from making more money. Okay, they wanted to
stunt their economic growth because when you get to these
steps, maybe you lose a $5,000 subsidy and, of course, who
wants to go above that, and I do not know if that was
intentional. It seems so obvious. I would think it was
intentional, but it is true that other income transfer
payments, earned income tax credit, food stamps, low income
housing: all were designed by people who want to discourage
people from working. I would like some of you guys to comment
on that in the degree to which, to a certain extent, are lower
incomes because we are discouraging people from getting past
first base by setting up----
Mr. Spriggs. Well, Congressman, no, and in a short answer.
What workers are confronting is, in the trades as you
mentioned, that Congress is quite willing to have H2B visas for
skilled workers to come into this country, and undercut the
wages of skilled Americans who need the jobs. So we have H1B
visa workers who will come and undercut Americans who borrowed
money to get degrees in stem. So if Congress wants to be on the
side of American workers, let's be on the side of making
investment and letting the price of work go up.
It is not the workers who do not want higher wages or the
workers who do not want to work up to the higher wages. It is
these kind of policies that put wage caps in the competition
that Americans face, and you are right. Apprenticeship programs
work. Unionized apprenticeship programs are the best, and we
are the, the AFL-CIO, the largest producer and provider of job
training in the United States, other than the United States
Army. So you are absolutely right. That is a path that
Americans can take. But we have to protect them by not having
H2B visas----
Mr. Grothman. Well, I will agree with you there. That was
my question, Dr. Spriggs, but I will agree with you that when
we decide who we are going to vote for the next election, we
should make sure we do not have another President who goes
overboard in allowing too many people in the country.
Mr. Pinto. So, to specifically answer your question, a
colleague of mine, Maura Corrigan, who was the head of the
Department of Social Services in Michigan for 4 years, up until
a couple of years ago, added up all the means tested programs,
and I think there were 80 something of them, and only two or
three have a work requirement. One of them she got added for
the Department of Agriculture food stamps with the help of a
Democratic senator from Michigan, and so that is really at the
base of this; is that you have all of these programs that are
not means----
Mr. Grothman. I am not just saying a work requirement. I
mean, there is a work requirement: The more you work, the more
you lose.
Mr. Pinto. They are not even required to work in order to
get the means tested assistance.
Mr. Grothman. Okay, I guess we are out of time.
Chairman Price. The gentleman yields back. Thank you. Ms.
Moore, you are recognized for 5 minutes.
Ms. Moore. Thank you so much Mr. Chairman. Now just let me
say upfront that I really regret that other responsibilities
took me away from attending the entire meeting, and so I do ask
the distinguished panel to forgive me if my questions or
comments seem to be a little off base from just the lack of
opportunity to have heard you all the way through. I just want
to be clear. I do not have my bifocals on, so it is hard to
see, but you are Attorney Pinto, right?
Mr. Pinto. I have a J.D., yes.
Ms. Moore. J.D., okay, and so that is M.D. Dr. Smith, Dr.
Spriggs, and Dr.----
Mr. Lindsay. Lindsay.
Ms. Moore. Dr. Lindsay, right. So, okay, I want to get into
the whole thing about educational opportunity.
We often hear about how only 5 percent of the world's
population lives in the United States; 95 percent live out in
the world, so we have lost a lot of the manufacturing; the
kinds of jobs that uneducated, low income people can do. And
even when we talk about technical manufacturing in my district,
these are very high-end, new kinds of technologies that require
education. So I am a little bit confused about this. What I
have heard since I have been sitting here; this sort of, you
know, denigration of higher education.
I am one of those people, you know, the eighth of nine
children, born poor, on the welfare. I had a baby out of
wedlock, who benefited from getting a bachelor's degree, and so
I guess I am just a little curious to ask the panel, so when
you start talking about how the country will not benefit by
increasing educational opportunity, that is confusing for me,
since it seems to me that we are going to retain hegemony in
the world by producing the, you know, the Apples and the
Googles and the kinds of technologies that require higher
education. We will start with you, Dr. Spriggs.
Mr. Spriggs. Well, yes.
Ms. Moore. I see none of you guys chose to go to technical
college but, anyway, go on.
Mr. Spriggs. Well----
Ms. Moore. And none of you people over here either.
Mr. Spriggs. When the United States was building up this
record on productivity increase, we were number one for college
education, for a college educated workforce. We have slipped to
number 17, and that risks our position. That risks our ability
to make the innovations, and the investment we made in those
universities provided the innovation, not only from the
students, but the innovation from the professors.
So my alma mater, my graduate alma mater Wisconsin, your
State, has made huge contributions because of the investment in
that kind of research and so, yes, it pays off----
Ms. Moore. Okay, thank you, Dr. Spriggs. I do not have much
time, Dr. Lindsay. Would you just please just give me a 20
second rebuttal why--especially when you say, you know, like I
know black people would not get to go to college if we had to
rely on tests and so forth. Give me your 20 second rebuttal to
why we do not need people to go to college.
Mr. Lindsay. I know less than you how to increase
educational opportunity. My point is that most of the jobs
today do not require a 4 year traditional degree.
Ms. Moore. Okay, even though most of those jobs are in the
emerging world. Let me ask you just a little bit about
infrastructure. Dr. Lindsay, we are talking about housing. I
think in your testimony you said that, basically, it was kind
of poor people wanting housing and that is sort of the reason
we had the housing crisis. Do you see where appraisers, credit
agencies, subprime lenders, the toxic loan packaging; where
these basically criminal and immoral activities had more to do
with it than, say, the GSCs or people wanting housing, people
who exploited poor people?
Mr. Lindsay. Representative, I know you addressed me, but I
do not think you intended to about housing.
Ms. Moore. Who did I intend? Oh, Dr. Pinto. That is right.
Mr. Pinto. Okay.
Ms. Moore. I mean, J.D. Pinto.
Mr. Pinto. Yes, thank you.
Mr. Pinto. So in my view, and I have researched this
extensively, is the housing crisis was formed and created and
resulted from housing policies promoted and implemented by the
Federal Government, led----
Ms. Moore. But not by appraisers and subprime lenders?
Mr. Pinto. Let me just finish, and led by HUD, FHA,
national home ownership strategy, Fannie Mae, Freddie Mac, and
the private sector followed along, and the appraisal process, I
will say, in the United States is completely broken, but that
is also part of Fannie Mae/Freddie Mac----
Chairman Price. Your time has expired. Mr. Rokita, you are
recognized for 5 minutes.
Mr. Rokita. I thank the Chairman. Mr. Pinto, would you like
to continue on? Anything else you want to add to that response?
Mr. Pinto. Thank you. And this all started in the latest
cycle, in the early 1990s when Congress passed the so-called
Safety and Soundness Act for Fannie Mae and Freddie Mac. We
know how that turned out, and included in that was the
affordable housing requirements, and that built up over about a
12- or 13-year period, including the private sector, which was
brought into this by HUD. All of that is well-documented, and
we ended up increasing that leverage, as I described in my
testimony, and the result was 8,000,000 foreclosures. It was
the result of errant housing policies.
Mr. Rokita. Thank you, Mr. Pinto. I appreciate that. I
apologize, as well, for not being here for the entire hearing.
I was at an education--helping chair an education subcommittee
hearing. So I have that on my mind, so I am going to switch
over to Dr. Lindsay here for a little bit.
It seems, I know. Federal policy over the last several
decades is such that it focused on enrolling students in
college and what is the result, and what is your reaction to
that?
Mr. Lindsay. The result is that half of the students who
start college today fail, and of those who do graduate only 64
percent of them show this substantial increase in learning that
a college degree is meant to signify, which means that the odds
are two to one against you if you start college today, that you
will get both a college degree and the learning it is meant to
signify. That is not what all of these programs intended to do.
It is one of the sad, unintended consequences of Federal
involvement, and the worst consequence of all, we all want to
see those at the lowest income levels be able to rise. That,
through education, that is the American dream, but almost 50
years later fewer college graduates are coming from the bottom
25 percent of income than in 1970 when these large programs
began.
Mr. Rokita. Say that one more time, please.
Mr. Lindsay. Today, fewer college graduates are coming from
the lowest 25 percent of income distribution than was the case
in 1970 when these large, Federal programs began.
Mr. Rokita. That is amazing. I do not think that I have
spent a good deal of my day in education policy. I do not know
that I have heard it stated like that.
Mr. Lindsay. Yeah.
Mr. Rokita. I appreciate that very much. I am going to put
up a slide here, hopefully soon. Yes, thank you guys very much.
Student loans themselves, $1.6 trillion, if you aggregate
all that stuff. That is how much of the household debt student
loans consume. It is my contention that these same policies,
Dr. Lindsay, that you are talking about that have put ``more
money on the education street,'' for example, have done nothing
really but increase college and university budgets, perhaps
professor salaries and the like, and that is what is really
driving our debt. More access to the cash means budgets and
everything go up. You know, that is just the layman's
interpretation of what I see on that committee on almost a
weekly basis. Do you agree or disagree?
Mr. Lindsay. Yes, sir, I think you are correct. Government
funds have increased the demand, but there has not been a
comparable increase in the supply because of strangling
government regulations that limit the innovations that are out
there that are the good news, and that can make higher
education more affordable.
Mr. Rokita. So as a result, some have come up with some
what others would call radical proposals for, not necessarily
getting the government out, all of that would be the effect of
it, but making the government loaning of money in this space
unneeded. They are not going to work for every student or every
discipline, but one in particular I subscribe to; there are
others, is called ISAs or income sharing agreements and, again,
some say that is pretty controversial. Honestly, it is not a
setup question. I just want your opinion on concepts like that,
and you can describe the concept or I can.
Mr. Lindsay. Yes, income sharing agreements are contracts
between future employers and students who get their education
subsidized by the employer. It costs taxpayers zero dollars. I
also think that, in addition to that, I mean, right now under
our Federal program, the people on the hook are the students
and their parents and the taxpayers, right? Let's put the
universities in that mix.
Mr. Rokita. Right, exactly, some skin in the game.
Mr. Lindsay. Some skin in the game, and, you know, these
ideas are getting growing bipartisan support; that for each
student who defaults, that the universities pay a certain
percentage for each student default in their college every
year. That would give them that skin in the game to be more
careful with students and also, perhaps, to focus more on
teaching. Because we know from every study that universities
trying to become Harvard always try to offer lower teaching
loads to full-time faculty. I was a faculty member for 20
years.
Chairman Price. The gentleman's time has expired. Time for
questions is complete, and I want to ask Mr. Yarmuth if he has
any closing remarks?
Mr. Yarmuth. Thank you, Mr. Chairman. I want to thank the
witnesses. I agree with many of the comments my colleagues have
made about how interesting this hearing has been, and while I
joked a little bit about not restoring trust through this
hearing, I think I did not really mean that there are not ideas
here that I think could, if implemented, or if pursued to some
kind of a finality at the Federal level, might not help restore
trust. So when Mr. Woodall, for instance, asked who on the
left, I assume he would consider me on the left, as Mr. Ryan.
I think the idea for coming up with policies that would
incentivize development of smaller apartments that are
available to lower income people: I think it is a great idea.
All of these things, I think, would work; many of the things
that Dr. Lindsay talked about. Yeah, you know, I speak a lot
about the fact that Harvard Business School, at least last time
I checked, did not have an accounting professor on their
faculty because they decided the best accounting professor in
the country was at Brigham Young University and they use his
work through digital means.
So I think each one of these areas, whether it is housing
or education or, well, we have talked a lot about health care
in the last 6 years, and the investments that Dr. Spriggs
talked about are all things that deserve a lot more
conversation, and I think that if we do that and can act in a
bipartisan way to make sense of some--,just one final comment.
When I talked about the colonoscopy disparity in price
between freestanding clinics and hospitals, this was in a Ways
and Means Committee hearing years ago, the answer I got was,
``Well, if you take that income stream away from the hospital,
then they are going to have to find ways to charge more for
other things.'' Well, I said, ``That is not a reason. That is
just evidence of a broken system.''
So I think when we go through all of these areas we can see
Federal policies that are not performing in the way they were
originally intended. We are not creating the right incentives
and I think we ought to spend a lot more time, as a body,
working on those things and, if we did, I think we would find
opportunities for bipartisan cooperation. And that would be a
wonderful thing. So, thank you, Mr. Chairman for the hearing,
and I yield back.
Chairman Price. I thank the gentleman, and I just want to
thank the witnesses. I was a little curious that some of the
comments took a turn toward unions, and I would be remiss if I
did not mention the Employee Rights Act that we have offered. I
was stunned to learn that only 6 percent of union members
currently have ever voted to be in a union. So we talk with
folks back home. None of us are opposed to unions. We just
think that workers need to have consent to be in the union. So
we think it is important to have elections. We think it is
important to have secret ballot elections for union formation
and an appropriate time to notice all those things. So I just
wanted to mention that, as our friends on the other side talked
about unions.
I also wanted to just highlight a particular article that I
noted from last April from the Guardian and I, without
objection, I will insert in the record. It is titled ``L.A.
Unions Call for Exemption from $15 Minimum Wage That They
Fought for,'' and I was curious to read this. This is an
article that highlights the battle that folks are having for a
$15 minimum wage, but then members of the AFL-CIO union in L.A.
are fighting to exempt their union from the $15 minimum wage so
that they can undercut the folks who are going to be required
by the State to have a $15 minimum wage. I found that curious.
But I want to get back to this slide that I started with
and, hopefully, the common ground. The inflation that the
American people have seen over the last 30 years has been 128
percent increase over that period of time. But the three things
that have outpaced inflation--housing and health care and
education--are the things that all Americans have to deal with,
and I would think that there ought to be commonality in trying
to answer the question why?
Why is that the case, and so I am somewhat curious for my
friends on the other side who seem to scoff at some of the
evidence that I think has been put before us on why that is the
case. I would think that we ought to be listening and saying,
``Okay, cannot we make it so that the American people have a
greater opportunity to use their disposable income in a more
responsible way by making certain these costs are held down;''
that we are not gaming the system from the Federal Government's
standpoint if, in fact, that the Federal Government involvement
in this is pumping up prices for folks on things that they have
to spend money on. Why would we continue to allow that from a
public policy standpoint?
So I think the testimony that we have heard here today has
been extremely enlightening. I want to thank each and every one
of you for coming today. I think you have helped us have a
conversation and, hopefully, initiate a bipartisan conversation
and more bipartisan activity so that we can come to some policy
agreements on how to move forward and make it so that the
American people are able to utilize their finite resources that
they have in a much more responsible way, without the influence
of the Federal Government in a way that distorts how much money
they are going to have to spend for these three particular
items.
So with that, we have completed this hearing. I want to
thank you all again; Mr. Pinto, Dr. Smith, Dr. Spriggs, and Dr.
Lindsay for your time today. The committee has received your
statements, and we will allow each member to notice that they
may submit written questions to be answered later in writing.
Those questions and your answers will be made part of the
formal hearing record, and any member who wishes to submit
those questions or extraneous material, for the record, may do
so within 7 days. Thank you all so much. This hearing stands
adjourned.
[Whereupon, at 12:19 p.m., the committee adjourned subject
to the call of the chair.]
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