Apr 21 JDN 2458595

Last week was one of the “hard parts” of the Green New Deal. Today it’s back to one of the “easy parts”: Guaranteed education and healthcare.

“Providing all people of the United States with – (i) high-quality health care; […]

“Providing resources, training, and high-quality education, including higher education, to all people of the United States.”

Many Americans seem to think that providing universal healthcare would be prohibitively expensive. In fact, it would have literally negative net cost.

The US currently has the most bloated, expensive, inefficient healthcare system in the entire world. We spend almost $10,000 per person per year on healthcare, and get outcomes no better than France or the UK where they spend less than $5,000.

In fact, our public healthcare expenditures are currently higher than almost every other country. Our private expenditures are therefore pure waste; all they are doing is providing returns for the shareholders of corporations. If we were to simply copy the UK National Health Service and spend money in exactly the same way as they do, we would spend the same amount in public funds and almost nothing in private funds—and the UK has a higher mean lifespan than the US.

This is absolutely a no-brainer. Burn the whole system of private insurance down. Copy a healthcare system that actually works, like they use in every other First World country.

It wouldn’t even be that complicated to implement: We already have a single-payer healthcare system in the US; it’s called Medicare. Currently only old people get it; but old people use the most healthcare anyway. Hence, Medicare for All: Just lower the eligibility age for Medicare to 18 (if not zero). In the short run there would be additional costs for the transition, but in the long run we would save mind-boggling amounts of money, all while improving healthcare outcomes and extending our lifespans. Current estimates say that the net savings of Medicare for All would be about $5 trillion over the next 10 years. We can afford this. Indeed, the question is, as it was for infrastructure: How can we afford not to do this?

Isn’t this socialism? Yeah, I suppose it is. But healthcare is one of the few things that socialist countries consistently do extremely well. Cuba is a socialist country—a real socialist country, not a social democratic welfare state like Norway but a genuinely authoritarian centrally-planned economy. Cuba’s per-capita GDP PPP is a third of ours. Yet their life expectancy is actually higher than ours, because their healthcare system is just that good. Their per-capita healthcare spending is one-fourth of ours, and their health outcomes are better. So yeah, let’s be socialist in our healthcare. Socialists seem really good at healthcare.

And this makes sense, if you think about it. Doctors can do their jobs a lot better when they’re focused on just treating everyone who needs help, rather than arguing with insurance companies over what should and shouldn’t be covered. Preventative medicine is extremely cost-effective, yet it’s usually the first thing that people skimp on when trying to save money on health insurance. A variety of public health measures (such as vaccination and air quality regulation) are extremely cost-effective, but they are public goods that the private sector would not pay for by itself.

It’s not as if healthcare was ever really a competitive market anyway: When you get sick or injured, do you shop around for the best or cheapest hospital? How would you even go about that, when they don’t even post most of their prices and what prices they post are often wildly different than what you’ll actually pay?

The only serious argument I’ve heard against single-payer healthcare is a moral one: “Why should I have to pay for other people’s healthcare?” Well, I guess, because… you’re a human being? You should care about other human beings, and not want them to suffer and die from easily treatable diseases?

I don’t know how to explain to you that you should care about other people.

Single-payer healthcare is not only affordable: It would be cheaper and better than what we are currently doing. (In fact, almost anything would be cheaper and better than what we are currently doing—Obamacare was an improvement over the previous mess, but it’s still a mess.)

What about public education? Well, we already have that up to the high school level, and it works quite well.

Contrary to popular belief, the average public high school has better outcomes in terms of test scores and college placements than the average private high school. There are some elite private schools that do better, but they are extraordinarily expensive and they self-select only the best students. Public schools have to take all students, and they have a limited budget; but they have high quality standards and they require their teachers to be certified.

The flaws in our public school system are largely from it being not public enough, which is to say that schools are funded by their local property taxes instead of having their costs equally shared across whole states. This gives them the same basic problem as private schools: Rich kids get better schools.

If we removed that inequality, our educational outcomes would probably be among the best in the world—indeed, in our most well-funded school districts, they are. The state of Massachusetts which actually funds their public schools equally and well, gets international test scores just as good as the supposedly “superior” educational systems of Asian countries. In fact, this is probably even unfair to Massachusetts, as we know that China specifically selects the regions that have the best students to be the ones to take these international tests. Massachusetts is the best the US has to offer, but Shanghai is also the best China has to offer, so it’s only fair we compare apples to apples.

Public education has benefits for our whole society. We want to have a population of citizens, workers, and consumers who are well-educated. There are enormous benefits of primary and secondary education in terms of reducing poverty, improving public health, and increased economic growth.

So there’s my impassioned argument for why we should continue to support free, universal public education up to high school.

When it comes to college, I can’t be quite so enthusiastic. While there are societal benefits of college education, most of the benefits of college accrue to the individuals who go to college themselves.

The median weekly income of someone with a high school diploma is about $730; with a bachelor’s degree this rises to $1200; and with a doctoral or professional degree it gets over $1800. Higher education also greatly reduces your risk of being unemployed; while about 4% of the general population is unemployed, only 1.5% of people with doctorates or professional degrees are. Add that up over all the weeks of your life, and it’s a lot of money.

The net present value of a college education has been estimated at approximately $1 million. This result is quite sensitive to the choice of discount rate; at a higher discount rate you can get the net present value as “low” as $250,000.

With this in mind, the fact that the median student loan debt for a college graduate is about $30,000 doesn’t sound so terrible, does it? You’re taking out a loan for $30,000 to get something that will earn you between $250,000 and $1 million over the course of your life.

There is some evidence that having student loans delays homeownership; but this is a problem with our mortgage system, not our education system. It’s mainly the inability to finance a down payment that prevents people from buying homes. We should implement a system of block grants for first-time homeowners that gives them a chunk of money to make a down payment, perhaps $50,000. This would cost about as much as the mortgage interest tax deduction which mainly benefits the upper-middle class.

Higher education does have societal benefits as well. Perhaps the starkest I’ve noticed is how categorically higher education decided people’s votes on Donald Trump: Counties with high rates of college education almost all voted for Clinton, and counties with low rates of college education almost all voted for Trump. This was true even controlling for income and a lot of other demographic factors. Only authoritarianism, sexism and racism were better predictors of voting for Trump—and those could very well be mediating variables, if education reduces such attitudes.

If indeed it’s true that higher education makes people less sexist, less racist, less authoritarian, and overall better citizens, then it would be worth every penny to provide universal free college.

But it’s worth noting that even countries like Germany and Sweden which ostensibly do that don’t really do that: While college tuition is free for Swedish citizens and Germany provides free college for all students of any nationality, nevertheless the proportion of people in Sweden and Germany with bachelor’s degrees is actually lower than that of the United States. In Sweden the gap largely disappears if you restrict to younger cohorts—but in Germany it’s still there.

Indeed, from where I’m sitting, “universal free college” looks an awful lot like “the lower-middle class pays for the upper-middle class to go to college”. Social class is still a strong predictor of education level in Sweden. Among OECD countries, education seems to be the best at promoting upward mobility in Australia, and average college tuition in Australia is actually higher than average college tuition in the US (yes, even adjusting for currency exchange: Australian dollars are worth only slightly less than US dollars).

What does Australia do? They have a really good student loan system. You have to reach an annual income of about $40,000 per year before you need to make payments at all, and the loans are subsidized to be interest-free. Once you do owe payments, the debt is repaid at a rate proportional to your income—so effectively it’s not a debt at all but an equity stake.

In the US, students have been taking the desperate (and very cyberpunk) route of selling literal equity stakes in their education to Wall Street banks; this is a terrible idea for a hundred reasons. But having the government have something like an equity stake in students makes a lot of sense.

Because of the subsidies and generous repayment plans, the Australian government loses money on their student loan system, but so what? In order to implement universal free college, they would have spent an awful lot more than they are losing now. This way, the losses are specifically on students who got a lot of education but never managed to raise their income high enough—which means the government is actually incentivized to improve the quality of education or job-matching.

The cost of universal free college is considerable: That $1.3 trillion currently owed as student loans would be additional government debt or tax liability instead. Is this utterly unaffordable? No. But it’s not trivial either. We’re talking about roughly $60 billion per year in additional government spending, a bit less than what we currently spend on food stamps. An expenditure like that should have a large public benefit (as food stamps absolutely, definitely do!); I’m not convinced that free college would have such a benefit.

It would benefit me personally enormously: I currently owe over $100,000 in debt (about half from my undergrad and half from my first master’s). But I’m fairly privileged. Once I finally make it through this PhD, I can expect to make something like $100,000 per year until I retire. I’m not sure that benefiting people like me should be a major goal of public policy.

That said, I don’t think universal free college is a terrible policy. Done well, it could be a good thing. But it isn’t the no-brainer that single-payer healthcare is. We can still make sure that students are not overburdened by debt without making college tuition actually free.