Ford School Podcasts
Listen to Podcasts from previous public lectures.
1–15 of 157 items
[ Applause ]
I'd also like to thank our MPP student and David Bennett Fellow [assumed spelling], Adrianna McIntyre [assumed spelling]. Adrianna's connection to Avik and John helped us bring them to the Ford school. Like our speakers, Adrianna writes extensively on health policy. We're grateful for her hard work.
[ Applause ]
Today's program brings together two of the country's top commentators on an issue that interest not only us but affects many of us in this room. Health policy, please join me in welcoming Avik Roy and Jonathan Cohn.
[ Applause ]
Avik Roy studied Molecular Biology at MIT and is a graduate of the Yale University School of Medicine. In addition to his role as opinion editor at Forbes, Avik is a senior fellow at the Manhattan Institute for Policy Research, a conservative think tank. He was part of Republican Presidential candidate Mitt Romney's health care policy advisory group during the 2012 national campaign. Avik is also a columnist for the National Review Online popular blog, the Apothecary, which has been recognized for its critique of Obamacare as one of the best takes up from Conservatives on Health Care Reform. John Cohn is an alumnus of Harvard University where he was President of the Harvard Crimson. John has written extensively on health policy. His 2007 book "Sick: The Untold Story of America's Health Care Crisis and the People Who Pay the Price," advocated a federal universal health insurance programs for Americans. He is currently a senior editor at the New Republic, a magazine known for its liberal commentary on American policy since 1914. Both Avik and John have discussed their views on health policy and Obamacare and particular in writings for a variety of publications and on numerous television and radio shows. But today, we're looking forward to hearing their perspectives but also their engagements with one another. Given their backgrounds, it promises to be an insightful and lively debate. Before I ask our speakers to begin, a brief word regarding today's format. We'll start with Avik and John laying out their positions at the podium respectively. Next, both Avik and John will be seated for some back and forth. We'll save approximately half an hour for questions from the audience. I'd like to remind our audience, that if you have a question for Avik or John, please write it on one of the cards that were passed out at the entrance. Ford School volunteers will begin collecting those questions cards at around 3:15 PM. Our students, Adrianna McIntire and Ruth McDonald [assumed spelling] will ask those questions. And if you're watching online, you can submit by your question via Twitter using the hashtag policy talks. Avik, John, the floor is yours.
[ Applause ]
[ Pause ]
Thank you for the introduction. I'm sorry, I didn't bring my PowerPoint. I stored it on a network, it turns out it was the same people who run HealthCare.gov. So, I had a little trouble accessing it, so I'm here without slides. I want to thank the University of Michigan. I want to thank the Ford School for setting this up. One of the things that Avik and I discovered in our many exchanges on Twitters that we share the love to the University of Michigan and its sports teams. So, as I'm particularly honored to both of us to be here. And I want to thank Avik for being part of this. You know, today, there was an announcement that the House of Leadership of the Republican--of the Republican House Leadership was planning on unveiling a new health care plan but at least based on the initial reports and they could be wrong. There's not really much to it and that's been the tender of debate in Washington. There are those who favor the Affordable Care Act. There are those who want to get rid of the Affordable Care Act and those who want to give rid of it don't really spend a lot of time talking about what they would do instead. But there has been a group of people, conservative intellectuals on the right who have been thinking about it, have been writing about that. Avik is one of them. He's done a lot of work and I think that conversation despite the many differences I think you will see between our approaches is a constructive conversation and one that belongs to the university but also eventually in the rest of the country. And hopefully, what we do here today can be the beginning of that. So, I thank him, I thank the university and the topic are--we are supposed to be here to discuss as beyond Obamacare and the future of Health Care Reform in the United States. And I hope we will get a lot of time to talk about the future in our different visions for where we should go from here. But I don't believe we can talk about future without talking about the past. You know, for me, health care, I have been writing about health care for what is disturbingly close now to two decades. And I spent a lot of that time speaking with people who have been victims of the American Health Care System sitting in their living rooms, listening to their stories. And there was a recurring pattern of stories. There were people who I remember meeting, someone who works for a defense contractor in Upstate New York who lost his job and was hired back. And the new job was a contract job. It didn't have health care benefits. He was not able to get health insurance for him and his family. And when his wife fought cancer and eventually passed away, he was left with so many bills that he had to declare bankruptcy. And there was a realtor, a woman in Central Florida who worked very hard in her business but her levering insurance lacks because she couldn't afford it. When she tried to get back on coverage, she had diabetes. She was not able to get coverage and she was eventually taken by a fraudulent insuring left with five digits in medical bills. And there were stories like this over and over again. You've heard all of these stories. And they're familiar, although today, when your rights watch the news, you hear a different set of stories about victims of the Affordable Care Act. And so, what I would like to do is remind everybody about where we came from. And we had a system with 45 million people who were uninsured. We had a system where millions more couldn't pay for their insurance without making other very serious sacrifice. So, we had a system where millions of people were walking around with health insurance that didn't cover their needs. And they might not know it because after all, you don't know if your insurance is adequate until you actually get sick. But then they did and they discovered they had crushing medical bills. And even the people who were in the situation always lived under a cloud of insecurity because after all, you were always just a lost job or an illness away from losing your health coverage. And as all this was going and we had the system that didn't cover enough people. We were imposing a huge economic cost on the country, on its businesses, on its taxpayers, a system that did not have a way to control cost. We were paying more than any other country in the world and yet we weren't getting healthcare or healthcare access that was better in any other countries in the world. So, that's where we were. That's where we were a few years ago. I will be honest, if you would ask me five, 10 years ago, "Jonathan Cohn, how would you fix the nation's health care system?" I would have been ready with an answer. I would have told you to do a single payer health care system. I spent a wise time setting systems abroad and I'm very impressed with what they do in France and what they do in Taiwan. I think those systems are great. But you didn't ask me, you elected the guy with the big ears. And they had to deal with the Democrats and the Republicans in Congress and all the special interest. And what they got was the Affordable Care Act which was a compromised plan and a plan designed to take some ideas from what Conservatives had once championed and blend them into a liberal approach for universal coverage. And it as a compromised plan that they had more compromises built onto it as it went through Congress. And what came out on the other side didn't really look that right. And so, I'm sort of in a strained position here because if we're talking about how to reform the Health Care System, I am really not here to tell you that the Affordable Care Act is the perfect plan or even the near to perfect plan. It is not an ideal plan. All I want to do is convince you and I'm just going to take a few minutes because we're going to go back and forth about this, convince you that it makes the system better, and puts us on a trajectory to make it better still. Now, you guys, you look like a pretty informed audience. You're sitting here at the Ford School. I'm not going to bother to go through the details of the plan, you know, the one thing I will stress, the people always seem to forget is that, you know, the basic promise, the Affordable Care Act, you hear how complex it was, was to actually be a little simple, not to mess with too much. The basis say, "Look, there's lots of people get insurance from Medicare, let them keep getting in for Medicare." And there's lots of people who have employer insurance, let's for the most part, let's let them keep it. And there's a program for low-income people that's called Medicaid. Let's let them keep it. We'll expand that to include more low-income people and then we'll create this new market with the subsidies and the regulations and the mandate for everybody else. You know, it wasn't basically was built on what we have. Again, not the way I would have done it but, you know, not an unreasonable approach. And it's an approach that, you know, promised to make insurance available to anybody who wanted it regardless of preexisting condition, an approach that offered financial assistance for people who needed it, an approach that would have guaranteed that everyone with insurance will have a comprehensive set of benefits.
[ Applause ]
Let me echo John's comments in thanking the University of Michigan for hosting us today. I grew up in Oakland County, born and raised there, watching the Bo Schembechler stopped down the sidelines in Michigan Stadium. So, it's always a pleasure to be here in Ann Arbor on a day that is not a game day so not to deal with the traffic. My mom often will--kind of friends will call her and say, "Hey, you know, I saw your son on TV. Why is he such a Republican?" Mom says, "I don't know how I raised such a Republican." And the great thing about today is that Adrianna who is here who helped to organize this event was a kindergarten student of my mom's not so long ago. So, if my mom was to know what could have been if she had not raised a Republican, she could have--she can switch her allegiances this afternoon. And I also want to thank John for being here because he and I--again, we--and out of us went here with what they called a Walmart [phonetic] Wolverines because [inaudible] of us went to the school but we both love the team and we're sorry about what happened yesterday. But I want to touch on something that is relevant to the ACA which is, you know, we Conservatives are not supposed to call it Obamacare because that's considered impolite. A more accurate name for the law we're told is the Affordable Care Act. So, let's examine what the Affordable Care Act does to make health insurance more affordable. And I think what I'm going to contend here today is that well, certainly, for some people who lost, spends a lot of money to subsidize the cost of health insurance. The law actually drives up, not down the underlying cost of health insurance. And everyone agrees that the biggest problem with our Health Care System is that it's too expensive. So, one of the things you heard a lot in the roundup of the ACA is that well, we've got to have--we got to expand coverage because otherwise, people are going to get all this free care in the emergency room. And it turns out that actually only about 1.74 percent of national health expenditures is uncompensated emergency room care which only a fraction or actually people who are low-income and insure. So, it's not why health insurance is so expensive in America. Health Insurance is not expensive in America because some people are going to the emergency room and not paying for their health care. The reason why there are so many people who are uninsured in America is because health insurance is too expensive, right? If health insurance cost nothing, then more people would have it. It's because it's so expensive that people have it. It used to be that health insurance cost about 11 percent of wages in 1996. Now, we're at about 19 percent. This is of course 2010 data. It's gone up somewhat since then. Health insurance is too expensive and that is why a lot of people go without it. Who tends to go without health insurance? Young people. Why is that? Because young people tend to have less health problems. So, if you're generally healthy and health insurance is really expensive and you don't go to the doctor that often, why would you spend 200--300 dollars a month on something that you barely use, right? So, you know, there's been this kind of perception out there in the world that the only reason young people don't have insurance is 'cause they're slackers. They're irresponsible slackers who are just--they love to ride on motorcycles and do wheelies and do flips and, you know, on mountains off piece and they're just crazy people who are reckless and if they were just responsible like the rest of us, they would spend 3,000--4,000 a year on health insurance. No. If your average consumption of health care, this is for all 27-year-old to 25-year-olds in America is a thousand bucks a year. Why would you spend 4,000 bucks on health insurance? It doesn't make a lot of sense. And so that problem--that problem is precisely the problem with the uninsured. If you notice on this chart, a majority of the Americans who are uninsured, this is according to census are under the age of 35. 72 percent are under the age of 45. The reasons why people are uninsured in America is because health insurance is too expensive and they don't make enough money to afford these expensive products. What does the ACA do to address this problem? A big part of what it does is it sets off these exchanges where it drives up the cost of health insurance, for healthy and young people. It uses a tool called "community rating" and the point of community rating is to say, healthy people and young people, because young people tend to be healthier should pay a lot more for their health insurance so that older and sicker people pay less. And what that leads to in a conventional market is so the tip, the way the statistics work, the way the math works is in a free market jungle let's call it. In the free market jungle which is a fully underwritten health insurance market, the average 18-year-old spends about 800 dollars a year on health care in America. And the average 64-year-old spends 4,800 dollars a year, about six times as much. What the ACA does is it narrows that band to three to one. So, insurance can only charge three times as much their oldest customers as to they do to their cheapest customers. That dramatically increases the cost of insurance for young people. And if half of those young people drop out because they think that's a raw deal for them, the irony is that the cost of health insurance still goes up for the elderly because those young people aren't there to cross-subsidize them. And that's one of the things the ACA does. The ACA because of all the regulations and mandates that it imposes on insurance and you might or some people might agree and John would agree that a lot of these things that the ACA does to regulate the insurance market are good. The fact that it requires insurance to cover all sorts of things that insures and have to cover for, the fact that it has caps on lifetime limits. All those things you might think are good, but they drive up the cost of health insurance and it depends on the state. The reason--One of the reasons why there's a lot of variation among the states is because some states already have those regulations to begin with. Others did not. And so, the markets in each of these states are going up in different rates. But most states, according to a study that I did with some colleagues, the Manhattan student, the average state is we're going to see a 41 percent increase in the cost of health insurance and that's taking into account the fact, that's adjusting those premiums to four preexisting conditions. If you don't take that into account, the increase is actually much higher.
[ Applause ]
So, John, was I mean to you? Was I fair, unfair? Tell me what I said wrong?
No, you were very fair. And I was right, we agreed on a lot. We both like University of Michigan basketball which they had one yesterday. You know, I do think you had shown a quote of mine I believe from the Pricewaterhouse survey and I remember that very distinctly. I remember that in the backroom in that just so people know, this was when the Senate Finance Committee was debating the final health care bill in 2009. And there was a lot of give and take with the insurance industry. They had--There were a lot of arguments about how the law would affect people. If I remember correctly, the Senate Finance Committee had been, you know, they have spent all summer debating this and they were set to vote on that Tuesday. And about Sunday night at about 8 PM, the story drops in the Washington Post with a survey. And it was fed to a reporter, this is what you do when you're a lobbying group in Washington and left and right where everybody does that this is not innate to the insurance industry. They dropped the study and they got a big fat headline in the Washington Post the next morning saying, "Insurance industry study, Health Care Reform will jack up your premiums XX dollars." Now, I'm pretty my argument then was I'll have to go back and read what I wrote.
OK. So, first of all, let me say I don't think it's sneaky for PricewaterhouseCoopers to analyze the underlying cost of insurance. They acknowledge in their report that they were taking account of subsidies because the purpose of the report was not to take in account subsidies. This is to say what's the underlying increase in the cost of insurance not how much subsides will cushion that below for a certain subset of the population. University of Michigan jacks up its tuition by 20 percent and the federal government subsidizes that tuition increase for the bottom 20 percent of the country. Well, that's great for them. That's not great for everybody else. In fact, that's one of the biggest problems with higher educations is that universities have jacked up the cost of tuition and education at a rate that far exceeds the ability of the middle class afforded. And the same problem is true in healthcare. As to your point about--do remind me the question. I'm sorry because now I've just gone this digression-
But you want to answer it.
So, my question is this there are--in the old status quo, you could sell a policy with the--
You remember now.
Right. So, a couple of points, on the issue of high deductibles in particular, yes, you could buy plans in the old system that had high deductibles, not many people did though. Many people--not many people wanted a plan with 12,000-dollar deductibles. So, those plans didn't actually sell that well. Plans with say a 3,000, 4,000, 5,000 dollar deductible did sell well. Why is that? Because actually that's the kind of insurance that a lot of Americans want. They want a plan that has say a five, you know, we rhetorically heard from the Democrats all in 2009 and 2010 was, "Thanks to the Affordable Care Act, no one will ever go bankrupt because of high medical bills." Well, that's what a high deductible health plan of a deductible that consumers actually want to buy actually does. The reason why those plans were popular is because that's the kind of protection people wanted. They didn't want the stoop to nuts, bells and whistles plan. They've covered every single thing and had two extra premiums as a result. And one of the plans that, you know what, I just like with my car insurance. I don't need my car insurance to pay for my gasoline or my wiper fluid. I want my health insurance just like with my car insurance to cover me if I get hit by a bus, if I have cancer, if I have stroke. And then if we had a system that only did that that actually genuinely did have financial protection for everybody in America, it would cost a fraction. Not only what the Affordable Care Act cost but of what the entire healthcare system in America cost.
So, let me ask you, let's talk about what's exactly in this minimum health plan. So, should mental health be part of the minimum health plan?
So, you don't think it's important.
You don't think it has to cover it. You would be OK with health policies out there with people could buy without mental healthcare?
I would look at it much more simply than that. Instead of having the health benefits say which services, you know, micromanaging which services are covered or not, just say if you spend more than 5,000 dollars in a given year, everything above 5,000 dollars will be covered if it's a legitimate health expense. And you can include mental health in that or not but, you know, I don't have a--I don't think that, you know, that the mental health component of a high deductible plan is not important. It's not that substantial.
Well, no but there's like every little piece, you know, we could through it. But let me ask you so, 5,000 dollars. OK, what if there were 6,000 dollars and 12,000 dollars for a family?
I mean again, you know, it's all about what people actually want to buy. I don't think that you and I sitting here in our faculty lounge should decide what Americans want in terms of the financial protection or their health care system. I think that if people actually decide as a country because that's what they're buying that 6,000 dollar deductibles were acceptable. I don't think it's--the governments--not only is that the--not a proper role of the government but actually I think it's counterproductive for the government to say, "No. You must buy plans with 3,000 dollar deductibles," which is what the ACA does--not so much with deductibles specifically but with the actuarial values of the plans, the financial generosity of the plans. It does mandate a certain mix of the deductibles, copays, et cetera, and by doing so it makes these plans a lot more expensive--
But you had said its standard, right? And you wouldn't let them sell any [inaudible], so you would set some standard. There's some limit on how much you spend out.
I don't mind again in the Avik Roy Reform world like--
On the Avik Roy--
--if we're going to have the--if we're not going to talk about the Avik Roy plan, I don't have any problem with have--having a basic bracketing so that there's a basic sense that consumers can have OK I'm buying insurance. It's actually insurance. So, I think some of the things that the ACA did around that are not offensive in that regard. But I do think the ACA went too far with the micromanaging and that's one of the reasons why the plans are much more expensive than they needed to be.
So, [inaudible], you should get to ask me a question 'cause I've been driving this for the last few minutes but and this drives me crazy but you're a reasonable person so maybe you can explain this to me. So, I hear this argument all the time that, you know, I don't like the ACA because it loaded up with mandates. It requires too much and what we really need is catastrophic insurance. Now, if you go and look at what the ACA requires and I know this 'cause I don't like this about the ACA but it's there in the law. The limit on what it--there it does place a limit on how much you could spend out-of-pocket. And it's 6,000 dollars for an individual and 12,000 dollars for a family. That's a really high deductible. It's actually deliberately set at the level for what used to be called high deductible policies. Now, I look at those plans, you know, I looked at the minimum that you are required to buy in the Affordable Care Act and I think oh my gosh. I mean I don't like that. I think if it were up to me in the Jonathan Cohn world, they would be smaller. But, you know, again, you know, this was rather compromising, that's why [inaudible]. So, and this speaks to I think what is sort of hard for me to figure out about where Conservatives can go with this because I see that as pretty catastrophic. There is a difference which is as your income goes down, the government basically reduces that exposure which to me makes a lot of sense. Because if I'm making 20,000 dollars a year, you know, I can't pay 500 dollars or maybe 1,000 at most or whatever. I don't have--there's no way I can even think about it. So, my question is, you know, where, you know, how much lower you want to go?
So, you're kind of--I would call that a false choice. So, let's take the state of California. I read a blog post about this that was based on actually I worked with Sam Richardson on the University of Texas had done. He compared two plans that had the exact same 6,000 dollar out-of-pocket requirement. One was issued in 2013. One was issued in 2014 under the ACA's regulation. Both plans were sponsored by Kaiser, the famous health insurance provider and, you know, provider in California. Both plans roughly covered the same level of service and yet the plan in 2013 cost 100 bucks a month and the plan in 2014 cost 200 bucks a month. So yes, the cost sharing and the out-of-pocket requirements were the same and from your point of view maybe too high. But the plans are the same in their basic architecture. But the ACA version of that plan cost twice as much because of a lot of the regulations that drive up the overall cost of the way that product has to be designed. So, I do find hide, you know, in the bronze plans in the ACA exchanges tend to have deductibles in the 5,000-dollar range or so. And I think that's great. I think 5,000 deductible is pretty typical in terms of what people look for in a high deductible plan. The problem is that those 5,000-dollar deductible plans under Obamacare cost way more than they would need to under a system that was--that offered more opportunity for choice. And so, I think that's where I take issue with the way these plans are designed, how much the government, the federal government in particular restricted the ability of insurance to compete on the way they could design their benefits.
I'm curious about that Kaiser plan now. So, you're saying is Kaiser is offering a new plan that cost twice as much and the benefits are basically the same?
Yeah and what's so--
And what do you think is the--what's up--I mean--
--Kaiser isn't just, you know, they didn't just died and they earn the competitive market. What--tell me, I am sort of backed.
So, one of the things about comparing Kaiser in 2013 to Kaiser in 2014, that's useful is that what a lot of insurers have done in the ACA is it narrowed the choice of physicians in the hospitals that you can use to really contract with more lower cost providers to drive down cost that way.
So, I'd say a couple--
I think actually, Avik, I would say if you could keep your answer really brief then we'll--
I'm sorry and I cut him. I usually have let him, I didn't, so, you know, that's all right.
Well, as a free advertisement for something about to write. So, I'm actually working on a lengthy white paper on this subject for the Manhattan [inaudible] which would be the Avik Roy health plan, how would you reform the ACA along more market-oriented lines that will touch on a lot of these? So, I'll just sort of put that as an asterisk. So, if you want to get a detailed answer, wait, stay tuned for that document which will come out in a couple of months. But I would say that the range of services that the people--the thing you have to understand about health care I guess as a way to answer your question is there are certain things that really qualify as unpredictable events that require insurance. For example, I might have a stroke. That's something that I can't predict. I want to have insurance that protects me from that. I might not want to have insurance that protects me against becoming a crack addict. I might not. And you might say, "Well, no. You might--Avik, you might become a crack addict today and you really should have health insurance that protects you from that." I might say, "You know, I don't know." I might say that, "You know what? I'm not a smoker, why should I have insurance that protects me against chronic obstructive pulmonary disease which is this country is almost entirely driven by chronic smokers? Should I have to pay more for health insurance so that people with chronic obstructive pulmonary disease get unlimited subsidized health care?" I'm not so sure about that. So, I think that's an important--We talk about health care as this one thing that's unit and its not. I think if we disaggregated health care and the things that actually people really want to be protected from in terms of illness and injury and the things that are more about personal responsibility, you could have a much--I think a debate where the--I think the broader public would really embrace. Because and you say, you know, "Yeah, you know, I am willing to pay for those things 'cause I do want protection for in about being hit by a bus. I don't necessarily want protection against being a crack addict." And other, you--someone like you might disagree but I think I might have more public opinion on my side than you on that particular argument. You might have more public opinion on your side about some aspects of it. But I think that's where again the center would be is that people want to disaggregate and let the market have some role on that. Because again, there's things that we so-called health experts might think people want as protection, but then actually, the aggregate of Americans say, "You know what? I'm either OK with that or I'm not. I have things that we don't think people really want protected from." They actually do want. So, I think if we let that sort of--would be crowd source that a bit, we'd have a much better product and a much more cost-efficient product.
Great. Thank you very much. So now, we're going to turn to questions from the audience that had been submitted on the start. [inaudible] Adrianna, do you want to start?
Just to start, what do we make of the reported declining health care cost in the last few years? Have it about the cost curve or is it just a temporary effect of the great recession?
So, just to be very precise. Health cost--health expenditures in the country have not declined. The growth in the rate of--the rate--growth rate of health--national health expenditures has slowed down to some degree. And it is--this is a matter contention. So, there are some people particularly in the White House who think that Obamacare is responsible for the slowdown, even though it started in 2003 when Obama wasn't even a State Senator in Illinois if I recall correctly or maybe he was a State Senator but not a US Senator, something like that. So, but the biggest bulk of the slowdown, if you look at the data and I have slides and that which weren't in my PowerPoint, I regret to say that map this out. And if you actually compare the US to the rest of the industrialized world, you see a very similar curve in the slowdown in growth in national health expenditures which indicates that a lot of this is driven by the global recession. And that's to say all of it is, and a big chunk of the reason why over--it's been a really a 10-year trend more than a one-year trend or a two-year trend is because in the commercial market for health insurance, there's been a migration as health care that keeps getting more expensive to high deductible plans with health savings accounts, more cost sharing, more deductibles, more copays, and things like that. And that in combination with the recession has been a big part of why health spending has slowed down because people are responsible for more that spending themselves and therefore being more careful about utilization.
Oh, do we want to--
So, I would say there's a fair amount of common ground on this which is that the slowdown free gated [phonetic] the Affordable Care Act and Barrack Obama's time in the Senate possibly. The single biggest factor is the economic slowdown. I think or one of the single biggest factors, there were changes taking place in the health insurance, health care system prior to the Affordable Care Act. Some of these were on the insurance side, higher deductibles. I think--look, I think I would totally agree that if you make people pay more out-of-pocket, they're going to spend less on health care and there are good parts and bad parts of that. On the good part is that they spend less, so I think that's part of it. I do think we were already starting to see the beginnings of a reengineering of medical care and particularly as a more forward thinking health care institutions, where I think there is an unknown and maybe we disagree some here is that I do--I think there is anecdotal and nothing more than anecdotal evidence, well, not much more than anecdotal evidence that the payment reforms of the Affordable Care Act combined with the change in the tax treatment of employer insurance which is part of the health care a lot and the cuts to Medicare have reinforced this trend and actually convinced the health care industry to double down in its efforts to find a more efficient way to provide health care. Now, that is not something I am going to stand here and tell you I know for sure because I don't--there's conjecture about this. I certainly hear it talking to people in health care industry, actually a lot of complaining that have pointless some of this stuff is. So, I mean, it's a mixed bag. I think we'll know in 10 years. We won't know until then. My feeling is I am reason--I'm optimistic 'cause I know as a half-class full kind of guy, but we won't really know for sure for a while.
Thank you. I'm Ruth McDonald and like Adrianna, I'm a dual here with getting to Ford School MPP and School Public Health MPH. Our next question is, please address the issues of doctor shortages and how the ACA may impact doctor shortages.
Great question. So, it's a big concern, the supply of doctors is not increasing under the ACA, not--it's just not getting worse, not getting better in terms of the actual supply doctors accept for the fact that just as a baby boomers are retiring, baby boomer doctors are retiring too. So, in that sense, the ratio of patients to doctors was already getting worse over time and of course, the ACA by increasing the number of people with coverage and therefore, the number of people who will be seeking medical services will exacerbate that demand. And I think far, you know, again to go back to the slide I put up about Medicare versus Medicaid versus private insurance, I fear that the result will be that if you're a doctor with a busy practice and you've got all these patients coming at you, which patients are you going to see? You're going to see the ones--some doctors will be very contentious and try to take every patient they can. But the--just a general economic pressures of life or such that there are going to be doctors, a lot of doctors and say, "You know what? I'm going to take the patients who pay me a dollar for the cost of care versus the ones who pay me 25 cents for the cost of care which a lot of Medicaid programs do." So, I fear that a lot of the Medicaid enrollees are going to find that they have a tough time as a result to that. It's not going to affect people with private insurance as much.
I would say we had a doctor shortage before. We are going to have a doctor shortage afterwards. I think logically, getting more people insurance is going to add to that. I don't think that much but I think it is going to add to that burden. The flipside is when we're talking about how do we control the cost of healthcare, you know, this is a big part of the story, physician salaries, apologies to any physicians in the audience and my dad if he's watching this at home but physicians make a lot of money and they're a huge source of cost growth in our economy. I actually I'm fairly optimistic on this one 'cause I actually think what's going to happen, I think this is already starting to happen is that we are going to see health systems and innovators pop up with new ways to deliver health care. And what we're all going to discover is by the way that having a doctor, do every thing a doctor does right now is actual waste of resources. There is a more of a team approach to medicine that takes full advantage of all the differently trained and I think we agree a lot of this, trained professionals. There's a face called practicing at the top of your license and anybody here who's at the UM Health System has heard this because they talk about it. And I do think with a little help from technology and a push to find more efficient ways of health care, we will evolve to a more team approach, a team-based approach to health care and that will mean among other things that when you go to get your health care, you might see a nurse practitioner more frequently and you might see other people. And that's actually going to be a good thing. Because you know what? There are some things nurse practitioners do better than physicians. And if your problem is not that, you know, it's better to take--you want to stay healthy, the best thing you need is a really good dietician to kind of focus with you on the front end about helping you to work out your diet and I actually think in the long run, this is where we would have gone with or without the ACA, whether or not the ACA makes this problem incrementally worse. That's where we were headed and I actually I'm--among the things I'm very optimistic about is that we will actually--that problem will get better. Particularly, if we get young people coming up through the system, we frankly are more used to that. You know, my dad's generation. Now, if it's not an MD, oh my God. And, you know, I usually see nurse practitioner and she's awesome. So, you know, there you go.
So, this is a question from Twitter. Medical malpractice is a big talking point in health policy and how it is that if you drive medical practice shaping up?
You know, I would say and I depart from some of the people in Democratic Party who often like to cite me on this stuff on other things. I actually think medical malpractice is a problem. I think our system is lousy. I don't think it's--this huge driver of our cost problem. I think it has some incremental role and I think anyone who practices medicine will attest that it's a unnecessary wasteful source of anxiety. I also think the people who started this will tell you it's not--it's bad for the physicians and the providers. It's bad for the patients. You know, it's like a lottery basically. If you're--if you have a medical error and you get the right lawyer and the right jury, you know, you can win a whole lot of money. The vast majority of medical errors don't go compensated at all. So, there's a really strong case. There's a conservative case and a liberal case for moving to some other system for people who are victims of medical errors get compensated quickly and easily and you save this out of the court system and it actually--might actually help the cost. There's been some approaches here at the University of Michigan that have been pioneered that way and, you know, the Affordable Care Act, I wish you had done more. Who to blame for that? That's for you to ask, you know, if you ask some people, the White House will, "We were ready to deal on that but the AMA didn't want it." You ask the AMA, they said it would have never had a chance of getting through Congress because the Democrats in Congress would have never gone through it. You know, whatever, there are few little pilot programs in the law designed to encourage experimentation with that and I really hope those blossom 'cause I actually think that's a promising reform that actually I would think has some conservative and liberal support.
I agree with mostly what John said. I had two points. So, the first is that one of the reason to build on something down is one reason we had a lot of medical errors in the first place is because the consumer isn't directly paying for his health care. It's being paid by someone else. And so, if you're a hospital or a doctor, who do you care about? The guy who's paying you. And that guy is an insurance company or the government or some combination there of. It's rarely the consumer that is to say the patient. In most other industries, it's the consumer that pays for the product and therefore people are very attuned to making mistakes, they'll offer refunds if they do something. If you're at a restaurant and the food isn't good, often the restaurant will say, "You know, we'll take it back. We'll get you a new plate or whatever it is." That's because those are consumer-driven industries where if consumer doesn't want to pay you and takes his business elsewhere, you will go out of business. That doesn't happen in health care because the consumer doesn't control those health dollars directly. So, there isn't the same power and economic incentive for physicians and hospitals to care first and foremost about the patient in every situation. So, I think that lack of consumerism is a big part of the problem. Another point I would make is that--actually one of the things that's interesting is as Republicans have talked about their own health reform plans. One of the challenges they have run into is that there's a group of hardcore constitutionalist on the right who say that federal malpractice reform is a violation of the 7th amendment, because tort law is meant to be administered at the state level. And therefore, it's not the federal role of the federal government to limit or constrain tort contacts. You know, tort law in that way. So, as a result, there is--it's complex actually how you would address this problem. You might just have to go by state by state solutions or have a tort of reforms you may tie to things like Medicare or Medicaid which are obviously federal programs where you could say, "Well, for Medicare beneficiaries, here's how we're going to handle toward malpractice issues." So, there is some constraints there that has been sort of under the radar for a lot of people to talk about this issue.
Thank you. What's your solution to the preexisting condition exclusion for insurance coverage of [inaudible]?
So, in my Avik Roy runs the world plan. I don't actually change that element of the ACA. I think, and then you could keep the preexisting condition exclusion which has been--garnered enormous amount of ink and hype and discussion even here today is actually a fairly small part of the law. So, if you actually look, we can measure how many people actually suffer from this problem. That is to say of being denied coverage because of a preexisting condition. The percentage of Americans who suffer from this problem is vanishingly small, how do we know this? So, the ACA actually had a transitional program called the preexisting conditions insurance program that was meant to cover anyone in America who could demonstrate that they've gone without insurance for six months and had a preexisting condition. If you could prove those two things, then you would qualify for subsidized insurance under what's called the PCIP. From the time the law was enacted in 2010 to the time all the insurance regulations kicked in the beginning of this year. How many people signed up for that program? Was it 5 million, was it 50 million? No it's about 200,000. So, that's not the problem with our health care system, the problem with our health care system is not that insurers denied coverage to people because of preexisting conditions. Most of the time, you could get coverage. It's just that the premiums would be really high because the insurer knew that the cover you if you already had illness, they would have to spend a lot in medical claims. And if they were going to actually not go broke insuring you, they would have to make sure that those costs were contained within the premium of your plan. So, the problem was not preexisting conditions in terms of having access to coverage. It was more about the premium itself, the price of that coverage. And that's the matter that was also a lot of other things about the law that are relevant to talk about. So, I don't see that particular element of law is actually that important. And I think that its importance has been overstated by pretty much everybody.
Can I jump in on that one?
So, I would say two things. First of all, I think the problem is bigger. I think it does get exaggerated sometimes. But I think it's important to remember that we had an employer system that protected people who were taking out the Medicare population obviously. But the employer system provided coverage for people with preexisting conditions largely. But one reason we--the Affordable Care Act passed was a sense of that system was starting to fall apart and it was declining slowly. Maybe not--maybe it would take a long time but people were losing that protection. The numbers of people who signed up for the high risk polls, the temporary high risk polls, I think it's a pretty bad measure. I think because it was poorly advertised. You know, it was something they stuck in at the end. Very few people knew about it. There have been a lot of studies about the number of people who have preexisting conditions who--that would disqualify and people have tired to apply. And you're right, a lot of people who applied--and the problem wasn't they were turned down, it was given offers that they would never accept.
Well, let me disagree with your characterization of Republican approach so which is of course, I'm saying--what I'm saying in the Avik Roy plan is--
Right that was not you--
--keep--not repeal the ACA, keep it broaden the range of choices offered on the exchanges from the strict narrow choices that are available today. But keep this protection against issuance for a plan if you have a preexisting condition. What Republicans in Congress have proposed is somewhat different which is to your point, you can go to a new plan and have guaranteed issue. If you've maintained coverage up to that point but if you--if that doesn't apply to you, you would still be eligible for high-risk pools that would be funded by the federal government and by states and sponsor at the state level which would cover those individuals that would be funded at a much broader scale. So, the idea is not to leave those people uninsured, it's to fund them through high-risk pools rather than driving them into a pool that artificially that drives up the cost of health insurance for everybody else. So, that's a plausible approach. It's not the approach I'm, you know, I--that is the Avik Roy plan. But it does address the problem of preexisting conditions in a way that, you know, you won't necessarily find satisfactory but it doesn't leave them without coverage.
This is somewhat related point for either or both of you. Considering a chronic disease spending comprises most of our nation's health care expenditures, how do you believe the ACA will affect our approach to treating this in the future? For example, do you perceive that we'll see new drugs, new treatment facilities, increased emphasis on public health or primary care?
You know, I think this is one of the areas of the ACA where you hear a lot about that the ACA has a lot of micromanaging. There are a lot of regulations, a lot of payments reforms to tell hospitals, "We're going to pay you this much if you do X, and we're not going to pay you if you do--you know, we're going to pay you less if you do Y." And some of that, you know, like any bureaucracy, any set of regulations, you can look at them and say, "What are they doing?" One of the things I like about the Affordable Care Act is, you know, over the last 10 years, there's been a lot of conversation in medical field and the public health field about how can we maintain chronic disease? How can we do a better job with treating people? And the nice thing what the ACA that what I like is it kind of takes a kind of throw at the wall approach. It tries every possible approach. It's got a sort of serious hearing. And so, let's try this.
On the left.
I would disagree 'cause I would say, and this goes back to what we were discussing before, I think part of the approach is higher deductibles. I mean the minimum as far as I'm concerned, 6,000-dollar minimum deductible, the 12,000 per family. That's a high deductible by the standards of the American health insurance, right? I mean that's where HSAs used to be. I don't know like, they don't exist anymore but you know back in the day, you know, 10 years ago if I had said, "What's the conservative plan?" They would have said, "Well, we wanted, you know, we want high deductible insurance." I would have said, "What's high deductible insurance?" They would have said, "What do you have for an HAS?" I'd say, "What is that, 6,000 dollars for an individual plan, 12,000 out-of-pocket for a family plan." So, OK. Cool, there you go. You got it. That's, you know, that's high deductible insurance. To me, that is a conservative approach to controlling cost. And I would assume to be the most important. So, I feel like--and in addition, there's competition. I mean again, this gets to--again, I think sort of--somewhat when people like me get a little frustrated with the conversation, we look at the ACA and this was not as I said, you know, the single-pair plan which would have been, you know, the Jonathan Cohn world, right? You know, we would have the single-pair plan. No. This is a competition system and we're having people going out and shopping for insurance. You know, it's a regulated market and I understand if you think its way too regulated. But the fact of the matter is people are shopping for plans. I don't know how well this is going to work out. I've seen lot of data about Medicare Part D that says it doesn't work so well when they shop for plans but OK. They're shopping for plans. They have high deductible insurance, that's sounds like a conservative reform to me. Now maybe, the terms have shifted and maybe what counts as a conservative reform today is different from what was a conservative reform 10 years ago. But--
Let me stop you there 'cause you've made a lot of allegations about the conservative approach. So, as I mentioned before, the deductibles are not the issue. I agree that that range of deductibles is about where a lot of consumers would want a high deductible plan to be. The problem is all the other things that the ACA does to regulate the insurance market. So, there's stuff around the actuarial value of the plans. There's things around all the services that have to be covered at first dollar before the deductible kicks in. There's community rating, the fact that again young people have to pay a lot more for their coverage in that way that drives things up there all the taxes. So, there's a premium tax. Not the Cadillac tax, an excise tax on the premium itself. A sales tax effectively, there' also taxes and this gets to the question about medical devices and pharmaceuticals. Particularly, the medical device tax. These tax is one of the dumbest taxes in the law. Because all they do is drive up the cost of health insurance. So, when you do, when you have a sales tax on health insurance, what does that do? It drives up the cost of health insurance because the insurers passed on that cost to the consumer in the form of higher prices. When you have a tax on medical devices, what happens? The medical device manufacturers increase the price of their products to compensate for what they're losing in terms of the tax. And it's particularly a problem for smaller early stage device companies, because the taxes administered, and this gets into wonky finance things. The taxes administered above the line, meaning a lot of taxes, most taxes like your corporate income tax, like your income tax yourself is after you've calculated your cost. So, a typical company will have sales. And then you mark up, how much they spend on labor and their--the cost of their--of the supplies and things like that. And whatever is left is what's called their operating income, their revenues minus their cost. Their operating income then, they pay taxes on it. That's their incorporate income tax. And then, they have their net income which is whatever profits are left over after taxes. The way the medical device tax works and the pharma tax and the insurance tax is that they're administered above the line. Meaning, before you put in your costs, the tax is applied to your revenues. And what that does is it massively magnifies the degree or the impact of those taxes on companies that are not yet profitable. If you're a gigantic medical device company that has billions of dollars of profits, this doesn't affect you that much. But if you're a smaller company that has yet to break even 'cause you're just getting into the market, it's a huge driver that prevents you from actually becoming a profitable company. And why does that matter? It matters because investors are less likely to invest in your company if it takes them a couple extra years and that much more risk to get a return on their investment. So, what does that done? It shrunk the appetite from venture capitalist for early stage medical device companies. What does that done? That means less innovative technologies get funded and it's really medical innovation which as been driven so much by the innovation in this country that has done more for public health than anything we're talking about on the health insurance side. So, I think it's a big problem.
The next question comes through us from Twitter. This is directed at both of you. The ACA is a scheme to pay for each other's care. Why is my health care my neighbor's responsibility?
So, I--again, I'll advertise some of my previous writing on this topic. I wrote a piece. It's actually was a speech I gave to the Yale Political Union about a year ago called health care is an individual right--the health care is a right, an individual right. And I go into a number of these moral cases that we've talked about before. I think that we as a country would all agree most--nearly all of us would agree that if a kid is born with Down's Syndrome, we should marshal our resource to make sure that that kid can have adequate health care. I think this is particularly a message I give to Conservatives, "Hey, look, you know, 80 percent of fetuses that are identified as being positive for Down's Syndrome are aborted." So, if you're pro-life, wouldn't you want a health care system to make sure that those kids can be born without an undue economic burden to the families that are going to raise those children? Surely, that's something we can all agree on that we would do. And I think most Americans who believe in equality of opportunity would say, "Kids who are born with genetics disorders, people who truly fall ill through no fault of their own. We should do what we can as a community to come together to insure that those people will get adequate care." But that's not the same thing as saying, "I should pay for a guy's health care because he smoked his whole life and eventually gets chronic obstructive pulmonary disease. There's a degree to which again we can separate out the types of things that we should all get together for that again are part of being--a part of a community where we look out for each other when there truly has been misfortune without creating an environment where people have no incentive to keep themselves healthy because they know that if they sit in front of the TV and eat Doritos all day, their health insurance is going to cost the same as everybody else's.
This is a great question. I think it really does capture the lack right, divide on this perfectly. So, my one line answer to that question is you could be next. It's that simple. Every single person in this room is in accident, heart attack, some disease you don't know from having a catastrophic illness and you're--until the Affordable Care Act came along, you were a lost job or an income shock or some other catastrophe with not having a way to pay for it. And that's my starting touch. It's that simple and I will plead guilty to thinking that's not right.
But I agree with you.
And you agree with that.
That's not an area of disagreement between us.
So--well, and but no. I think there is some discrepancies [phonetic] that I also think and maybe not and maybe I misunderstood you. I often hear Conservatives talk about this as misfortunate charity and I don't think of it that way. I really honestly believe this is about you, every single--this is a self-interest thing. I really believe that. I really believe this is about recognizing that you're part of the community but that you could be the needy one. And I think that's an important distinction. And maybe I misunderstood you but and 'cause there were two other--the two things I wanted to say was there are complications to this. There are two problems when you do insurance, right? There is the problem that number one, we know that when we cover your health care cost, we've talked about this very ultimately. You don't have incentive to be smart, right? And why not get an extra test? Why not go to the most expensive health care provider? Why not sit on the couch and eat Doritos? And then there's a second problem which is, you know what? You know, you're--now, you're not only you sort of not shopping smartly, you're taking responsibility. Hey, but you brought up the example of smoking, now, I don't know how many Liberals agree with this 'cause this is a little controversial. I have no problem saying if you smoke, I don't have to pay for it. Here's the problem, if I make you pay more for your cardiopulmonary disease, I'm not only going to punish the smoker, I'm punishing the person with a genetic cheap predisposition to that disease. And I don't want to punish that person.
So, here's a good way to do it, ready what we could do? We could tell smokers they have to pay more for their insurance. Hey, there we go. If you buy insurance, you're going to have to pay a surcharge for a tobacco and guess what? The Affordable Care Act does that. It has a tobacco surcharge just like that. And it has high deductibles, that's the promise of those high deductibles say look we are not going to cover first dollar. We're going to cover first dollar on some things on preventative services. But, you know, in general you will be open to very high out-of-pocket and you're going to have to shop around. So again, we get back to what I consider--I think there's a totally reasonable debate that we had between those of us, you know, again, I'm sure my idea of comprehensive coverage is much more than yours and I see that but I feel like the Affordable Care Act, you know, is kind of in the middle zone there of where I think a lot of people would agree and might have agreed recently. So, you know, that is my question. That's how it is that I couldn't but I feel like people may feel, don't like the Affordable Care Act but is it really that far off from the--I mean, that's the kind of baffles me. So--
Yeah. So, you know, John knows better than to be baffled by why Conservatives object to the Affordable Care Act but I appreciate the opportunity--
That was [inaudible]
--to address the question. As I said, there's a number of problems. The first is what I talked about in the slides. And the biggest problem with the health insurance system and healthcare system in America is that it's too expensive. And the ACA does not make the healthcare system less expensive in America. It makes it more expensive. Now, there may be a social goal that you or John or someone else believes is worthwhile and it's OK for the health insurance system to be more expensive in order to achieve that goal of equity for everyone. And not actually everyone because there will still be a lot of people uninsured under this system. But that's--but that's, you know, we can--you can make that argument. But I would make the argument that the biggest problems the Conservatives would say, "What do we need to do?" The biggest problem in America is the fiscal crisis because we're spending too much on entitlements. What the ACA does is add on another layer of entitlement so that spends more money without bringing in efficiencies for everyone else. Now, would I agree that not all Republicans have been appropriate--appropriately forth right about the tradeoffs involved in those decisions? Absolutely. But the fundamental philosophical--conflict [phonetic] that unites Conservatives is that the ACA involves a much costlier system, a much more complex system and a system that involves unnecessarily broad government intrusion into choices that people are perfectly capable of making on their own. There is a way to cover everyone and do so with a system that's less expensive and less intrusive than the system in America post-ACA. And do I think that all the choices the ACA makes are terrible? No. I don't. As you know from my work and from this Avik Roy health plan that we've been talking about, I think there are plenty of things about the way the exchanges are designed that I agree with. And I've defended the exchanges from a lot of Republican attacks precisely on those grounds. So, when the fact that the exchanges have narrow networks or physicians, because they're trying--that's the only one of the few mechanisms they have to keep cost down. I've said that is what would happen in a free market if you had an exchange that was less regulated in a way that Conservatives would like better. That phenomenon of narrow networks or physicians would still happen and that's a good thing. It's totally appropriate for people to have the free choice to say, "I'm going to choose this plan that has a lower premium in exchange for having a narrow network or physicians." That's OK. So, you know, there are things about the way the ACA exchanges are designed that are fine. And in fact, because what the ACA had been was to take the ACA exchange model and apply that to Medicare and Medicaid. That is to say, to reform the old entitlements using the ACA as a model, you would have found a lot of agreement on the right. The Paul Ryan plan for Medicare reform is actually to the left of the ACA exchanges because what Paul Ryan plan for Medicare reform actually has a public option unlike the ACA exchanges. It has coverage for everyone who's over 65. Unlike the ACA exchanges which are means tested on the sliding scale. So, the thing is the conservative approach to entitlement reform of Medicare and Medicaid is not that different from where the exchanges are. The problem is that what Obamacare does is it leaves those old systems basically unreformed in terms of their structure and adds the exchanges on top. And to Conservatives, that was a net minus. If instead the ACA had been, let's take the exchange--let's build these exchanges and then gradually migrate the Medicare and Medicaid populations into those exchanges, I think that's something that would have been a lot more attractive to Conservatives. Now, I hear, you know, Democrats that will say, "Well, that wasn't on the table. Republicans didn't offer that in 2009, et cetera." And that's true and they should have and that's their mistake. And I've criticized them for that as well. But I think there are a lot of people in the left who say, "Well, these Republicans are just being insincere about what they advocated." That's not true. There's a reason why more than half the country thinks Obamacare is bad and why the poll is consistently show it's unpopular and why Conservatives are united on this and why I'm one of the very few people who advocate actually on the right saying, "Let's keep the law and make changes to it." Because those--it's not opportunitistic, it clears them. It does go to the heart of what Conservatives sincerely believe.
OK. We have a number of really great questions both from this audience and from Twitter that we don't have time for. This will be our last question. What are your recommendations to the folks running Congress?
[ Laughter ]
You want this one first?
Well, I was cited in a Washington Post article today on this very topic which I will just not comment on, except to say that the thing that I've told--advise Republicans of is to focus on this issue of cost. I think the conservative critique of Obamacare has been ideological. That is to say it's been about the fact that it expands the scale and scope of government, particularly federal government that it increases spending, that it violates the constitution in various ways like the individual mandate which people have continued to be upset about. So, that's been the general critique of the ACA from the right. And I think what I've encouraged people on the right to do instead is say, "Look, if you actually poll the public and say what's the number one problem with the health care system in your mind?" If you ask them what the number one problem is, only 11 percent say that's the insured. 72 percent say that health insurance is too expensive. Most Americans are very concerned about the fact that the cost of health insurance keeps going up. This is a big problem for social mobility for economic mobility for equality of opportunity for the middle class, all those things that we all care about. That's the most important issue. And what I tell Republicans every time--every chance I get is to say, "You know, yeah, I understand that the conservative base is really upset about this ideology issues but for the broad middle, the country, if you want to expand the number of people who support you and vote Republican, I think that you have better ideas of what to do with the health care system." You think you're--the first and foremost thing that has to be in your mind is how to make health care less expensive in America. And that involves some of the things we've been talking about, involves some of the things that we haven't talked about, such as the fact that hospitals have enormous market power in America and exploit that power such as the University of Michigan by the way to raise prices and charge insurers a lot more than they need to. So, that's a big problem that we don't really talk about too much that I think there's a great opportunity for Republicans to talk. So, I say to Republicans, "Talk about cost. Talk about the solutions that you believe would make health insurance less expensive and be forth right about the tradeoffs that are involved in those policy opportunities."
You know, I would say since Avik gave advice to the Republicans, I'll give advice to the Democrats wherever they are.
Can I ask you before we're forced to shut up?
Yeah, yeah, yeah.
This will be my on question to you.
OK. Hey, you owe me a question so that's fair.
Why do you think that message hasn't come through? Why is it the law persistently is unpopular just by this advice which you've been giving Democrats for four years?
Well, they're not listening.
[ Laughter ]
No, I would say it's a combination of several things. I think part of it is in general and I think there's a lot of--I'm not a psychologist but I think here's a lot of evidence to back this up that people feel more strongly about what they've lost and what they've gained. I think a lot of it was the fact that this was not explainable for, it was not understood. It was a surprise and people were mad at the President. I think some of it is a little bit of a hangover over batched implementation. You know, what I would tell people like what the President [inaudible], I took a real beating because they screwed up the computers and I'm like, "You know what? They should. They did a bad job, right?" I mean, that's [inaudible]. You know, and I would kind of, you know, I think that's a little part of it, you know, there is that network. It's got three letters, ends with an X, starts with an F. And I think there is a media machine that has been ready to pounce and has magnified the influence of those stories and I don't blame it on. I think some democrats like oh, if it wasn't fox [phonetic] out there, I wouldn't rush [inaudible], you know, everything will be fine. No, I mean, this is a complicated law, real tradeoffs, but I think that's a big part of it. And, you know, that would be my answer at least.
OK. Well, on that note, thank you very much, John and Avik.
[ Applause ]
On behalf of the Ford School, I want to thank all of you for attending the event for instigating a very lively discussion. And for those of you whose questions weren't answered, I hope that you'll join us for the reception out in the Great Hall. And please join me again in offering our warm thanks to John and Avik.
[ Applause ]
Yeah. So, I think--
[ Inaudible Discussion ]
I'm Sue Dynarski. I'm Co-Director of the Education Policy Initiative at the Gerald R. Ford School of Public Policy. Nice to see you all here today. So, this policy talk lecture marks the opening of the conference on student loans which would not have been possible without the general support of our cosponsors. And I'd like to recognize the Upjohn Institute and the Spencer Foundation for their work and their funds in making this event happen. So, thank you so much. So, this conference is going to be bringing together some of the country's--I didn't write this, some of the country's top minds, on an issue that not only interest us but affects many of us in the room. So, today's speaker is President Obama's Special Assistant for Education Policy, Roberto Rodriguez. The most important thing to know about Roberto Rodriguez is that he's Wolverine. So, he's an alumnus of the University of Michigan. He also got a degree from Harvard in education, but that's OK. Since then, he's been at this Appointment. He was Chief Education Counsel to the late Senator Ted Kennedy, assisting in the development of education legislation. He contributed to the development of the No Child Left Behind Act, and he's worked on various reauthorizations of federal legislation including the Elementary and Secondary Education Act, the Individuals with Disabilities Education Act, Head Start, Child Care, Higher Education, and the America COMPETES Act. And he'll tell you what that acronym means. So, before I ask Roberto to the podium, I want to remind you that if you've got a question for him, write on one on of the cards that's getting passed out in the entrance or you can tweet it in using the #policytalks, one word. And Roberto, the floor is yours.
Thank you. Thanks, Sue.
[ Applause ]
Hi, good afternoon everyone. It's a real honor to be with you here today for this important conversation. I really want to begin by thanking Sue and Dean Collins, and the entire faculty here at the Ford School for inviting me to be here. And of course, special thanks to the Upjohn Institute and to the Spencer Foundation for their generous support of engaging in this really important topic. It's really great to be back home. It's really great to be back among my fellow Wolverines, and here at our University of Michigan community to have the conversation here today. I really want to begin by making the connection that's rather obvious to most of us that are gathered here today, but I think it's nevertheless central to the conference and to the arc of the papers and discussions that you'll explore in the coming two days. And this is really the simple reminder that perhaps more than at any other time in our nation's history, higher education is really the engine for our economy and the spark that is going to continue to ignite our democracy. There are countless examples from across the country of how earning a college degree really opens the doors of opportunity. For families, it places them on a greater pathway toward economic mobility and prosperity, and success. Examples of how the pursuit of a college degree helped young people find their place in their communities, in their worlds around them, and in their country. And that will certainly the case for me during my time here at the University of Michigan. In the mid '90s, as an undergraduate that will still feeling he's way about his academic path, eager to set forth and to change the world. And in today's economy, as President Obama reminds us, a college degree is the surest rung on the ladder of opportunity into the middle class. A new global economy brings new challenges, new demands, but it's very clear that gone is that economy of a quarter century ago where a worker with a high school credential could make at least half of what a college graduate would earn across their lifetime. So, we know that education is the strategy for our 21st century economy. Our children are competing with the rest of the world for jobs of the future, and our long-term economic security is directly tied to the quality of the public education that we can provide today. That's why this topic that we're exploring over the course of this conference is so important. You know, many of you here are esteemed in this field, in this academic discipline. You're familiar with the statistics. You know that our economy clearly rewards those with the higher education. We know that our college graduates have higher earnings that we know also that there's a real imperative here is 8 and 10, new jobs in the US will require some post-secondary education or training. And the 30 of the 30 fastest growing jobs in our economy today, over half of those require a four-year degree. But beyond this economic imperative, we also have to at the onset here of our conversations, remind ourselves of the moral imperative that we have, the moral responsibility we have. And that we're a nation that defines ourselves based on our ability to provide every individual the opportunity to rise as far as their hard work and their initiative will take them. And so, increasing access to higher education is fundamental to living up to that moral commitment. And it's one of the best things that we can do for our country. This is why we've organized our efforts in Washington around the goal that the president laid out when he first arrived at the White House. And this is a goal to lead the world with the highest proportion of college graduates by 2020. Our Secretary of Education, Arne Duncan, he calls this goal our North Star. And that's exactly what it is. It's a guide post and it's a reminder to us to strengthen education at every level and to deliver on this challenge. So, in order to reach this goal, we'll need to increase the share of college graduates that we produce in our nation by 50 percent over what produced in 2009. And by the numbers, this means 8 million more young adults will need to earn associates and bachelors degrees by the end of this decade. We'll have to outpace our current rate of degree attainment relative to our population growth which has this more or less producing about 3 million more college graduates by the end of the decade. So, we play such an emphasis on this 2020 goal because we know that higher education is such an important investment worth making. We know again the median earnings of bachelors degree recipients are markedly higher 21,000 dollars or more than high school graduates. And we know that it really does provide a true ladder into the middle class. Of adults who grow up in the middle class, 31 percent of those that have a college degree were operatively mobile into the top income quintile between 2000 and 2008. Now, this is compared with just about 12 percent of those that did not have a college degree. So, especially for students that are graduating into weak economies, it's frequently something and can often take time to find the path that ensures that going to college was really worth it. But those with more education tend to experience larger increases in their earnings as they age and we know that based on current earnings' patterns that if people with bachelors degrees work full-time over their work lives, they'll earn about two-thirds more on average than a high school graduates. So, we know we have this imperative that it's a backdrop to this 2020 goal. It's an ambitious goal, the pace of progress for our young Americans and college attainment is very ambitious under this charge. But one thing is really clear. We're not going to meet it unless we really embrace a spirit of change in our higher education system. And that is going to involve a shared responsibility that expands from leadership at our higher education institutions, to state legislators and governors, to public and private stakeholders, parents, and of course ultimately students, to be able to accelerate towards this 2020 challenge. And reaching the goal will require also a collective will on the part of policy makers and partners, higher education leaders, philanthropy, and others, to really ask the tough questions that are ultimately going to foster change in our higher education system. Are we doing right by our students? Do they have the reliable sources of aid and support that they need to be successful and as they pursue their degree? Do our colleges and universities have the proper capacity to harness innovation? And are we equipped with the right incentives to drive reform focused on improving the educational experience for students while they're on campus? Our federal and state policy is well-attuned with a mission, a vision, and a focus that promotes not only higher education access but college completion. Are we confronting the state of teaching and learning on our college campuses and aligning it with the needs and demands of 21st century learners?
[ Applause ]
[ Pause ]
Thank you very much once again for coming to speak with us. We have a whole bunch of questions. I hope you are ready.
All right. Let's start with this one. This is from the audience. Should we be concerned that Lincoln College ratings to outcomes like graduation will provide incentives for schools to manipulate these measures? For example, by making classes easier or weakening college degree requirements?
Yes I think we have to be vigilant about that. You know--this is, as I mentioned is challenging endeavor to develop a new rating system and we have to be able to look at the interactive effect of the various variables that would be intergraded there. There is clearly opportunity if we were looking at graduation rates for instance alone to gain that system. And that's why we also need to be looking at new measures around quality and making sure that we're focus in attending to the rigor of teaching and learning at our institutions. And we have some measures that we can look toward now there. Particularly looking at gainful employment as one. But we need more, we actually, honestly need more innovation in that space, we need better measures of teaching and learning at the postsecondary level. We have not turned our attention as a country from an education prospective to developing better measures there unlike in our K-12 and early childhood sector where there a lot of measures around quality.
Roberto, my name is Mark Weatherspoon [assumed spelling], I am a doctoral student in the higher education program here at Michigan. This is kind of similar to the question that was just asked, but do you think that there would be any type of influence of this present score on the current accreditation system? And if there is not what do you think about the occurring accreditation system? And do you think there's any changes that we should be focusing on?
Well, you know--I thank you for the question. I do think we need to endeavor to improve the current accreditation system. And, you know, part of the President's message at the beginning of this year in the State of the Union was to take on this challenge of reforming accreditation. You know, I think at the institution level, you have state level as well as regional and discipline specific accreditors constantly coming and looking at whether that institution's accredited. Many of those institutions--many of those processes do not focus on outcomes as much as they should. Many of them focus too much on inputs. So we believe we need to have a new conversation about accreditation. We're hoping we can have that as part of the reauthorization that Congress might consider of the Higher Education Act. And we also believe we need more alternate systems of accreditation. Because we believe that there are new innovations that are that are taking shape today in our higher education landscape that are not either well suited or willing to go through the more traditional accreditation process. But that might be producing good outcomes for students. So we can't lose sight of that and we need an alternate process to be able to recognize that too.
Thank you. Sorry I neglected to introduce myself last time, I'm Danny Christman. I'm a staff here at the Ford School. Let me give you one last one about the measures. What are the defining parameters of what the administration considers "called high quality education?" For example, can you give us some more specifics, the factors that might go into the ratings?
Sure. Well, you know, we're looking at the rating system at measuring issues like access. You know how many--what is the share of low income eligible students for instance that the institution is enrolling. We're looking at issues around affordability, what is the change in net price for instance and how does that square with, you know, some of the other data that we have with respect to maybe--if it's a public institution how much the state is investing in that institution? And we're looking at factors around outcomes. We're looking default rates. And we want to look at some measure of gainful employments, some measure of future earnings as an important proxy there. You know, right now, through the [inaudible] process, the government collects data on about 15 different indicators across our higher education institutions. So we have quite a bit of data already out there. I think the challenge here for us is going to be how to distil that in a really thoughtful system that is fair to institutions that compares institutions in a fair manner, because our higher education sector is tremendously diverse. It's one of its strengths, right. We have great two-year colleges, great four-year colleges, public, private career colleges, more liberal arts institutions. So, we want to be able to have a system that's going to recognize the new ones there. And overtime, we'll be setting for the technical advisory group that will help our Department of Education navigate the development of this type of system.
[ Pause ]
I guess we're going to kind of switch gears a little bit here. This question is probably a three-hour, it needs a three-hour response, but five minutes will do. Let's talk about gainful employment.
OK, let's talk about it.
Yeah. Can you--just real quickly, where are at on the state of gainful employment? How big of a factor is this going to be in the higher education system? And do you think that such a policy will possible deter students from seeking out specific majors or philosophy?
That is another three-hour lecture.
We'll try to tackle it. You know, our administration had taken the first foray into regulating on the congressional requirement for gainful employment of Career College programs. These are programs that are vocational in nature that are preparing students to enter a particular field of employment. You know, we have promulgated a rule earlier in our administration that looked at debt to earnings ratios as an important measure of success, as well default rates in the context of calibrating a new system that looks at gainful employment and that whether individual programs, not whole schools, but individual programs offered within schools are delivering on this commitment and this requirement by statute. Many of those schools are actually--many of those programs are operated at community colleges. But many of them are also operated at for-profit institutions. And many of those for-profit institutions--some of them are wonderful actors. Others, unfortunately, are not delivering or they're--you know, students are graduating, unable to enter gainful employment or with very high levels of debt or default. So, the key to making sure that we are not curtailing, a necessarily options for students is to make sure that we have thoughtful system that's measured. I would point out that we're already beginning to collect data from the sector. And I think we're seeing a relatively low share, less than modest share of institutions that actually are not able to meet the proposed matrix that we're initially part of our administration's rule. But there are number of institutions out there that have programs that didn't measure up. We now are back at the negotiating table, that's where we are right now because there was a part of our rule that was stayed by the court, by the circuit court. And we are reconvening negotiators to look at redrafting a new rule around gainful employment. I can't talk too much about the particulars of that rule because those negotiations are actually ongoing into the next--into next month. And that regulation will continue to take shape. What I will say is we are going to continue to pursue this because we believe that it's an important function of our government to be good stewards of taxpayer dollars. We do not want taxpayer dollars going to programs that are saddling students with that and that are not resulting in a gainful employment and not enabling them to repay that debt. And we are going to take a close look at the concentration of programs that are failing those measures on the basis of the disciplines, right? Right now, I don't think we have data that suggests that there is a particular discipline that would be disproportionately impacted by the administration's original gainful employment rule. But we'll continue to look at that moving forward because we now have--we'll soon have two years worth of data to be able take a closer look at that question.
I majored in philosophy. I'm not sure how much I would recommend that. So here's one from the Twitter world. If you could make one change in the entire education system to improve equity, we had several questions about equity, what would that be?
Well that--it's a challenge because there's a whole lot we need to do in equity across the pipeline to create of their career. But I think the single most important change that can be made in terms of really tackling the impact of poverty on learning is to provide all of our children a high quality education before they reach kindergarten. And this--the contours of that plan is the President's proposed that is to provide preschool for all low and middle income four-year-olds in the country. And make sure that that preschool is high quality. We have had study upon study that had demonstrated the return on investment upwards to seven dollars for every dollar invested, there's individual benefits, there are broader community benefits, economic benefits. And it's, you know, we've seen this also tried in communities around the country both at the state level and at the local level. And we've seen tremendous impact here. I would turn folks to the recent study that was released by the Foundation on Child Development that Deborah Phillips, who was the author of one of the Neurons to Neighborhoods National Science Foundation Studies, helped compiled that shows the benefits of high quality pre-K. We believe that it's one of the key drivers for equity moving forward. And if we can do that, we have the opportunity to begin to remediate that achievement gap and that learning gap that already is manifesting itself at 60 points between low income children and their more affluent peers by the time they reach kindergarten.
This is another one from the Twitter--not Twitter, from Twitter. There is no empirical evidence on effective long counseling. So what is the Department of Ed doing to revise its services and why not fund research?
Good idea. I think we should do more to fund more research on that front. You know, we do believe that we need to do a better job of reaching borrowers and providing them greater counseling. You know, we've definitely know that the tools that we're provided previously were not sufficient. So what we've done has gone back to the drawing board and created a new interface that all students can interact on at--it's at www.ed.gov. If you link on student aid, you can interact with the college counseling tool and loan counseling tool that, as I mentioned in the remarks, really reaches borrowers at every point in their college career from entrance through school and then, obviously, accept counseling. You know, information and transparency around data is one of the most important things that we can do in this sector, in terms of providing a greater focus on outcomes and on quality, in terms of making sure that families and students are well-equipped to make good decisions. And that's just something that we know to be true. I think we can probably fund research to better calibrate our loan counseling tools, but we don't, as approach see any harm in trying to provide students better and more targeted assistance and help in understanding the options available to them.
[ Pause ]
To meet the President's goal for degree attainment the higher education must engage more nontraditional adult and part time students.
The federal policy seems to be shifting towards tying federal aid to shorter times to degree completion. How can these two imperatives be reconciled at the national policy level?
That's a good question. You know, I think we have to acknowledge that, you know, four years is no longer a traditional trajectory for college attainment, right? I mean, I think we have that reality, you know, across our even traditional four-year public colleges and universities, that is certainly the case, if not more so at our community colleges where you have, you know--and increasingly at our public four years where we have more students that are working while they're pursuing their studies, more adults that are returning to pursue their studies and balancing work and family. And we know that we can't reach the President's charge to us around 2020, if we don't do more to help adult to be successful in the system. So, you know, we have to keep that in mind as we're shaping policies and moving things forward. One example is to think about what we can do to support perhaps some changes or modifications to the program particularly for adult students. Right, and I think we've seen some innovative research coming out of Louisiana, you know, looking at performance-based awards for degree attainment that aren't necessarily pegged to this specific timeframe but where awards are allocated based on the amount of credit that individual cruse almost as a reward or support as they pursue their studies increasing and focusing on persistence. You know, I also think there are other interventions, smaller learning communities and cohorts of students moving through together particularly for our adult students and our nontraditional students so to speak that we found to be--that research is found to be successful. So I think we near myriad strategies there to be able to support our adult students and certainly we don't want to have one size fits all policy when it comes to making sure that our students are successful, we have to take them into mind those populations.
This one is going to be--I think this might be from a professor.
[ Laughter ]
'Cause it deals with massive open online courses.
Did--kind of been viewed as a way to increase access at low cost. But how do we insure quality? And what does the administration's role or what is the administration think of the role of massive open online courses in higher education?
You know, we believe that technology can be a real driver for innovation in higher education. When it comes to massive online courses, massive open online courses or books we believe that we have to do more to scale the types of assessments that are needed to know whether they work. You know, we don't yet have the series of performance-based assessments that enable us to know that students are progressing through a particular online module or MOOC that they'll be successful. And so, I think those assessments are currently being developed by a number of the various providers. We hope that--and we believe we have a role at the federal level to help support greater assessment and greater tools that can be used as institutions of higher education and private individuals develop these MOOCs. So that we have a better sense of what's working in that space. I think we're still learning a great deal about what's working and what could work when it comes to online learning in higher education. Our National Science Foundation is doing some studies of that work as well. So we're going to continue to learn from that. I'll say the one thing that I think is most exciting in this space is that once we're able to understand what adapted platforms and what online innovations are most successful with our learners we can apply that to the Science of Learning on College Campuses. And if we can help support a new conversation with our faculty members about how to use technology and embed that in a blended way in their course work that has the potential to reach a far greater number students than--that are currently enrolled and currently pursuing their higher education than just relying on MOOCs as a substitute platform for higher ed.
OK. There are two questions on this, I'm going to amalgamate them here for you. I'm also going to paraphrase because, one, it needs paraphrasing. So in essence why create a rating system rather than just provide public information? The other one says, another know before you know campaign, why is this administration so strongly focused on consumer choice?
Well, you know, I'll take the last one first, which is that we believe that the pursuit of higher education for too many students is too opaque, honestly. We believe that, you know, we have not done enough to help support states in the process of, you know, defining standards and defining learning progressions that will help--that are very clear, that are easy to understand for the public and that help, particularly young people graduating from high school, understand what it will take for them to get their college degree, understand the various pathways they have, you know, to reach their--to reach a four-year degree for instance. That's not to say that we're not seeing innovation in that space, you know. We're starting to see, you know, states like Florida and other systems, you know, the Arizona system, for instance that's starting to look at defining learning outcomes and aligning that articulation between two-year and four-year colleges so that students are actually able to more seamlessly finish their associates degree, transfer to a four-year institution and finish that four-year degree in half the cost sometimes of students that might start out at that four-year institution. So, you know, that's just one example of a place where we don't have enough transparency for families and for students. We collect a bunch of data, as I mentioned. We collect 15 different indicators. We don't provide that data in a really easy to understand reliable format for parents or for families. So if you think about higher education as one of the most important investments you can make as a family, you're sitting around the college table or you're sitting around the kitchen table. And thinking about choosing a college, you want to be able to have that data just as you would if were buying a home and you'd be able to go on homes database and be able to print out a comparable format to at least know it's not going to tell you everything about those particular options but it at least provides a level of comparable data. We believe that's needed. And that's why we're so focused on providing consumers information. Now, you know, that's not all we need to do, right. That is not where this conversation needs to begin in that. We have a lot more to do to support affordability and innovation to actually make sure that that translates into opportunity for students. I forgot the first part of your question, I'm so sorry.
That's OK, I think that covered most of that--
--couple of [inaudible].
So, Australia, New Zealand and the United Kingdom have income-based loan repayment programs for all students. Yeah.
US limits these options to the lowest income borrowers, why not expand this option for everyone?
Well, I think it's a good question and a good issue for us to look at. You know, we are focused right now on our low income borrowers because we have only a fraction of--we believe we have captured only a fraction of the students who most need and could most benefit from income-based repayment. And that's why I mentioned we are starting to target some of our subsets of borrowers who we know might need the most help and could really benefit from IBR. But, ultimately, I think it's a good question, a good debate for us to have. And something good for Congress to consider in terms of whether we can expand IBR more actively to more students and ultimately tell the students across the country. You know, we're not there yet, that's an expensive proposition as well so it's something that we would really have to have the funding to be able to support. But, you know, it's something that we are--that we're eager to talk more about and to explore in Congress.
So here's a question from Twitter about loan repayment. It says, loan repayment is complex and do you anticipate a partnership between the Department of Education and Treasury so repayment can go to the tax system?
Yes, I mean, I do think we are going to try to do more to support this. We are, you know, we've been able to fortunately really forge a strong partnership on the income-based repayment front as well as on the passive front with our friends at Treasury to be able to import tax information in a more seamless way, so that individuals are better able to know whether they qualify for benefits. You know, we think we should try to do more of that and try to do more of that experimentation with respect to loan repayment as well. And you know, I think we're not quite there yet. But you know, I think we're beginning to have conversations that haven't been had before between our Department of Education and the Department of Treasury to explore the possibilities there.
This is from Twitter too. I think their first sentence is written into some sort of Twitter language. So if I read it--
Are there a lot hashtags?
Yeah. 21.18 percent cohort default rates and some for profit schools. I don't know if that's a question or--but, at what point do we shut them down or cut them out of federal aid?
Yes, I mean we believe we need to cut them out of some point of federal aid. You know, that is the whole premise behind again for employment regulation. And again, I can't speak to the details of that in terms of the thresholds. You know, we had a rule that we were very proud to promulgate as an administration on this. And you know, I think fortunately that rule would have not only had the effective of making sure that we were failing to provide the financial aid to the worse programs that clearly are bad actors of the sector. Because that level of default is just, you know, over 20 percent default rate. But--and also I think potentially it has the effect of the broader sector of Career College programs improving their performance. And again, you know, federal regulation sometimes has this impact of if it's crafted in a thoughtful way of raising the bar and helping to improve the performance of other actors that may not be subject to the sanction. But that--see that coming and know that there's a drive to get better and a need to do better. We believe that that's needed particularly in this sector for the very issue that I mentioned in my remarks so that the default rates are so high.
So I'm encouraging colleges to cut cost. So one way that colleges will cut cost is to increase the share of faculty or part time low paid adjuncts? And this seems likely to erode quality. How will the emphasis on affordability prevent colleges from cutting waiver cost at the potential? So will it--will this--encouraging them to maybe to hire more part time faculty possibly erode teaching quality and have an adverse effect from what you're going for?
Well, you know, I think this is similar to one of the earlier questions as well, which is that we need to keep our eye on quality here. And this can't be a tradeoff in the name of affordability that compromises the quality of instruction or education at our institutions. And it's a challenge. I mean it's really on a--I'll be honest, you know, I mean making sure that we are--we have the right measures to know that our students are receiving a high quality education. You know, we have our outcome data post graduation, that's the best and most reliable thing that we can look toward right now. But, you know, we know that there are tremendous benefits to a great higher education including the great liberal arts education that I received here. So, you know, we don't want to curtail that. And, you know, we need to keep an eye on making sure that we have good labor practices across our education sector, that's something that this President is very focused on and very supportive of.
I believe the percentage of low income students attending to college would and should be much higher than it currently is. However, how do you convince colleges from a business standpoint that creating programs to recruit these students is a good idea as low income students would be bringing in less money to the school? And they need more aid in the form of institutional grants and loans?
That's a great question. You know, it gets to the premise of shared responsibility here. And it's not just around recruitment, it's actually around enrollment and completion. You know, because we have actually some really good recruitment programs and practices across our institutions, particular in a number of our selective institutions including the University of Michigan does a fine job of recruiting our low income students. You know, we also need to collectively share our best practice around making sure that we're retaining all the students and that they are completing at our institutions of higher education. And that is another area where we want to really invest an innovation and bring forth what's working well at our colleges and universities. It helps scale those types of practices at our institutions. But, you know, ultimately we believe that we need to have real commitments here from our institutions of higher education to take those students, you know, when you have real honest conversation. And again, I'm not really advancing new policies in the space today in this conversation. But I do believe we need a national conversation around admissions, you know, we need national conversation around retention, we need a discussion around those types of tradeoffs around packaging aid. And, you know, we have right now a situation where if an institution is well and out and it has a real commitment to the diversity, it has the ability and the will to be able to make more pathways available for more low income students. Then others institutions sometimes do, you know. And then we have a question of public education for the public good. And public higher education for the public good, which is something that I think, and I hope we us a country have a conversation about in this higher education reauthorization because, the strength of our public colleges and universities is that it has to be able to serve all our individuals. And particularly be that pathway for our low income and first generation college course to be successful. So, you know, I don't have a perfect answer for that. But, you know, I think there is--it's a question of will, both political will of the institution of its board of regions of its leadership of the state. And then it also means to implement programs and practices, both recruitment and retention that are successful.
I think we have time for one more. How's the administration looking at the--into the quality of K-12 preparation in terms of college success?
So, you know, we have forged ambitious agenda to really improve the quality of our elementary and secondary education system over the course of the first terms. This is another lecture which could be another couple hours. But, you know, ultimately we've really launched a new national effort to helps support state in a new partnership around racing standards, so that they actually prepare students for college and career level work. I don't think the public fully appreciates where we were with respect to college and career readiness as a system. We had standards that, you know, were defined by 50 states and, you know, curriculum, obviously, that's define by, you know, over 15,000 school board. So, we have a very desperate system. But we need--if are to be successful in preparing our students for college, we need to begin with the expectation that they must graduate, each and everyone of them college ready. And that's college ready at a level of learning that prepares them for entrance into a four year college without the need for remediation. So, we had states that were setting standards, let's take seventh grade math for instance, at levels that were 70--of mastery, levels of mastery that were 70 points below neighboring states. All right, that's over two grade levels worth of learning in terms of what's expected first students to be successful, just illustrative in middle school math. We are not going to be competitive as a country if we are having that level of variation and that a student zip code determines the level of mastery, at which here she is expected to attain. So, we have launched a raise to the top and we've supported a new reform and redesign of the No Child Left Behind Act with new flexibility agreements with our states, to be able to recalibrate these systems--these state systems to college and career readiness. And I think once we're able to really raise those expectations for all of our students. So, that they are competing in earnest with student across the globe rather than learning at a level that--of mastery that is really substandard. Only then will we really be able to get were we need to go with respective preparing all of our students for college.
It's told we have time for one more.
So there's the last one here. In rating systems we'd like long run measure--we would like long run measures like earnings because we think that the short one measures might not accurately reflect the quality of the school. It doesn't look like we will have those in our rating system when it starts. How will the system get around something like that?
Well, you know, I think we're going to need to look at the measures that are at our avail. I don't want to predetermine what specific metrics will be in the system nor how they will interact because that is something that is still under development, careful development by our administration. And it is something that we're going to be seeking public comment on and advice some technical experts about--I will say that, you know, I think we need to look at as reliable data as we can find with respect to earnings and postgraduate outcomes. And we're hopeful that we will have some good long term data to be able to look at. I don't know whether it's going to be reliable and comparable across every institution. But we're going to keep our eye on that and, you know, we're going to look to the support and help of experts to grant how that might be calibrated into a broader system.
Thank you very much.
Thank you Roberto.
[ Applause ]
Paula Stephan, Irv Salmeen, Carl Simon: Too Many Scientists?
What's gone wrong in Washington, and why it doesn't have to be this way
U.S. foreign policy towards Israel and the Middle East
[ Applause ]
I will be introducing assistant secretary Bersin more fully in just a few moments. But first, I really wanted to share with you a little bit of background about the Rosenthal Lecture and why this event has particular importance to the Ford School. Josh Rosenthal was a 1979 graduate of the University of Michigan. He went on to earn a Masters Degree in Public Policy from Princeton University. He was passionate about world affairs and he worked in a field of international finance. He died in the attacks on September 11th on the World Trade Center. Josh mother, Marilyn Rosenthal was a long time Michigan faculty member and she very much wanted to shape in a positive way meaning from what happened on 9/11. And so to honor her son's optimism about the world and about how mutual understanding, dialogue and analysis can help to improve communities both within the United States and beyond our borders, she helped us to launch this lecture. Marilyn and others established the Josh Rosenthal education fund which enables the Ford School to bring leading public policy figures to in arbor [phonetic] every September. And I know that there are some members of the Rosenthal family who are here with us and I wanted to say thank you for joining us. We really appreciate your ongoing support and the inspiration that it brings to our community. Marilyn Rosenthal died in 2007 but I know she would have been really pleased by our speaker this year and she would have wanted to extend a very warm welcome to a distinguished public servant, Assistant Secretary Alan Bersin. Prior to a service with the current administration, President Clinton appointed Mr. Bersin to serve as the US Attorney for Southern District of California. He later served as superintendent of public education in San Diego under Governor Schwarzenegger. He's has a varied and very extensive public service career clearly. In 2009, he was appointed by President Obama as Assistant Secretary and Special Representative for Border Affairs in the Department Of Homeland Security. And in 2012, he was sworn in as the Department Assistant Secretary for International Affairs and Chief Diplomatic Officer. Mr. Bersin graduated by Beta Kappa from Harvard with the degree in government. He was a Rhodes Scholar and he holds a degree as well from Yale Law School and I understand that in addition to those academic accolades was an all star athletes and is a member of Harvard's Varsity Club Hall of Fame. So, many, many ways in which has contributed and has a--had a very, very background. Mr. Bersin has expressed his eagerness to take questions from the audience as part of this event. And so, at around 5 o'clock, Ford School staff will come down the aisles to pick up question cards and I hope all of you received cards or you can write questions on a piece of paper if you like. Professor Ann Lynn [assumed spelling] will help to select questions along with two Ford School students, Brian McMillan and Diana Won [assumed spelling]. And so, we look forward to that part of the program and again, do encourage you to contribute your questions as well. So, with that, we move on to the main part of our program. Please join me in welcoming Assistant Secretary Alan Bersin.
[ Pause ]
Thank you Dean for that gracious introduction and I am honored to be here for the Josh Rosenthal Lecture. And I understand my obligation and then reciprocally yours is to consistent with the desires of the professor Rosenthal of this school to make some positive meeting from what happened on 9/11. And yesterday, as we commemorated the 12th anniversary of that faithful day, I was out at the Federal Law Enforcement Training Center in Cheltenham, Maryland, in Clinton, Maryland, the town of Cheltenham, and met with federal law enforcement officers to actually take note of the day. And the pain had not diminished. But in fact, as we move in time a way we begin, we to see more clearly what we could not see that morning. So, we observed that seven--at 8:43, a moment of silence to commemorate the striking of the North Tower by that first plane. I was a school superintendent now in California with 6:43 in a social study's teacher called me and said, "Mr. Bersin turn on the television set, a plane has struck the World Trade Center." And the first reaction that I had and many of us had was it was an accident that someone there have been a pilot area [phonetic] of monumental portions. And then, of course 20 minutes later and yesterday we observed the striking the South Tower. And with that, we realized that the world had changed perhaps forever. Although, we were not certain at that point exactly what those changes might be. What I'd like to do today is consistent with the purpose of the lecture is to examine a changes in a way we see the world particularly with regard to the movement of people and goods. The theme of the talk is "Managing Global Borders and Defensive Big Data". It's timely given the Edward Snowden disclosers recently to understand the role of Big Data in managing border flows and while I will not in the context of the address or the remarks discuss a Section 702 of the FISA Act, the Foreign Intelligence Surveillance Act has I learned from reading several of the transcripts. This is not a shy crowd. And in the context of questions and answers would be delighted to respond as best I can to your inquiries. But the point dealt is Big Data. We know we lived in Big Data. This is a not question that saying "Somehow we could wish a way Big Data." Big Data controls much of what we now do in the area of scientific research. The progress that we've made in genetics and in mapping the genomes a lot of that is the massive power of computations that's now available in the crunching of data, much of what took place in the 2012 Election was a function of the use of Big Data in analyzing electrical trends, and electrical constituencies. So, when we looked at and as I discussed with you the notion of Big Data in managing the movement of passengers and cargo, we will start there but must understand that it's part of a much larger phenomenon in today's world. So, 50 years ago, and a book that I command that I'm very spare and the books that I command. Thomas Kuhn wrote a book called "The Structure of Scientific Revolutions". It's the book that gave rise to determine paradigm often now a hackly term but one that is useful and describing a way of seeing of the world, the way of taking a data and actually organizing into pattern so that you can begin to explain phenomenon around you. And he applied that in the history of science to, for example, he used the Ptolemaic age which was the age in which human beings believed that the earth was the center of the universe. And it was in that age that somehow the Egyptians three to 4,000 years ago built the pyramids, a very arrogant statement of the human--of the human condition particularly at that early point in history. And then Kuhn goes into point out that when the Copernican Revolution pointed out that in fact the sun is the center of the Solar System, there was a reduction in the self conception of man.
[ Pause ]
The old model of information sharing in data exchange was that I take my data, I put it in to a dump truck, I backed it up into your database, and give the data to you, and then you run and mind that data without any knowledge on my part of what you are doing with that data.
[ Pause ]
Managing global borders the defense of Big Data. I've offered that to you and think probably there are some challenging questions. But let me take a quick look at the--of the text to see if there's anything else I want to put on the table before you come at me.
[ Laughter ]
[ Pause ]
No. I think the propositions have been stated and they now need to be challenged. Thank you very much for this opportunity. I deeply appreciate it.
[ Applause ]
[ Pause ]
So, the first question is do you believe our borders are secure, why? And how can we further improve our national security?
At least three contexts we can take that up and in the context of the current Comprehensive Immigration debate which I am deeply involved and not as deeply as a very dear Michigan related person, Cecilia Munoz but I'm honored to work her office. The border security issue on the land border, I'll take up at last which is the one that's been the focus in the immigration debate. The air borders, I believe that the systems that we have elaborated and that I've discussed that somewhat today with you is secure. Like aviation security is not always a threat because Al-Qaeda continues to remain preoccupied with blowing up airplanes. So, we need to be vigilant but I believed we've put in play systems. But the problem always in the security challenges that you always are preparing for the last incident and you've got to get ahead of it and look to the next incident. It's a little bit like the generals who prepare for the last war when they should be looking ahead to the next military challenge. Sea--the seaports through the operation of the United States Coast Guard with help as necessary from the United States Navy and state local authorities that are charged with protecting the river ports such as the Detroit River, with Windsor, or the littoral sections of the country, I believe of the defense is satisfactory. The one that is given rise to debate in the immigration context is what--what is the state of the US-Mexican Border? Even more so, considerably more so than the condition of the US-Canada Border. The answer there is in here. I've actually lived this. I wish for each of you the opportunity to start something in public life and have the stamina to actually see not only the beginning but the end. And with the enactment of Comprehensive Immigration Reform, which we believe will occur, we will see a change in the nature of the border. But in every metric, by every metric that you could use, the border is more secure than it has ever been. And I've seen this. I lived the last 20 years and worked in--on the US-Mexican Border in Tijuana, San Diego. In 1993, when I became the United States attorney in the so-called borders are in the Clinton Administration, we arrested 565,000 people, Mexicans trying to enter the United States illegally. The high point on the whole US-Mexican Border was the year 2000 when 1.6 million of Mexican migrants were arrested for crossing into the United States illegally. The difference is that in 1993, and now, last year, the numbers bound to 350,000, and many of those are repeat [phonetic]. The difference is that in 1993, every one of those 565,000 people who are arrested actually ultimately made it into the United States by trying again. Last year, by any measure, the fee charge by smugglers, the reports from the migrants themselves, it is not so easy to enter the United States illegally. And the decrease in the number shows that. The crime rates in border regions are the lowest they've been in 30 years. Four of the 10 safest cities in the United States are on the border, El Paso, San Diego, Austin and Phoenix, Arizona. So, is the border secure? The problem of law enforcement metrics is that you never know how many trees have fallen in the forest when no one is there to hear them or see them. But the number of people coming into the United States illegally is down and will remain down. And I would say that the greatest bipartisan achievement, which needs the party, seems willing to take credit for in the bipartisan way. The greatest bipartisan achievement over the last generation is the securing and the restoration of the rule of law for the US-Mexican Border. Done in the Clinton Administration, the Bush Administration, and done decisively so in the Obama Administration. We have spent 18 billion dollars a year on border law enforcement. That is more than we spent on the rest of federal law enforcement combined. So, is the border sealed? No. Is it secure? I believed--I believed so.
Good afternoon Secretary Bersin. My name is Brian McMillan. I'm a first year here at the Ford School Public Policy. And I decide to ask this question because I think it speaks to a situation a lot us have been through at one point or another, specifically our airports and working with TSA.
Well, first I would argue with the proposition that they're entirely subjective because the whole point of law enforcement rules and regulations is that they give guidance and set frameworks for officers who are supposed to be exercising discretion within those frameworks and they are designed rules. Now, I probably should--TSA is one of the agencies, obviously, that was part of DHS when it was established. They typically would not confiscate food or beef jerky. Ordinarily, I should say, it take responsibility rather than jump on TSA, which seems to be a popular past time. I should probably own up as a former Commissioner of Customs and Border Protection than it was probably accustomed as a Border Protection Officer that confiscated your beef jerky. So, first, we look--the--but here is the rationale for it. So, when DHS was established, and for the first time, we created a Joint Border Management Agency, we took the immigration authorities from justice and the customs authorities that were in the Department of Treasury and combined them with the Agricultural Inspection Services from the Department of Agriculture so that every CBP officer now exercises agriculture authorities, customs authorities, and immigration authorities. And the rule is that, coming from abroad, you cannot bring food into the United States. Now, the argument, which I think is probably a good one, and I don't know the specifics on it, is that beef jerky is not likely to be carrying harmful insects or the kinds of contaminants that would represent a threat to our crop lands, which is the purpose for the agricultural inspection. But assuming for a moment that beef jerky is on the list, that's why it would've been confiscated by CBP. But I think--let's assume for a moment, just for argument's sake, that it wasn't on the list and that a judgment was being made by officers on the street or on, at the port, is that an entirely subjective exercise of discretion? And, you know, ladies and gentlemen, the fact of the matter is every time a law enforcement officer in whatever sphere exercises her or his authority. They're making a judgment, a discretionary judgment. So, that arrests, is there a probably cause of the stop and frisk issue on Reasonable Suspicion raises that. So yes, there is a concern but I would not go so far as to say these are entirely subjective and that every officer is making up his or her rulebook as he--or as they proceed. I'm going to find out where the beef jerky is on the list.
[ Laughter ]
Sorry for not properly introducing myself earlier. My name is Diana Won and I'm also a first year MPP student here at the Ford School. Assistant Secretary Bersin, an international student would like to know how the US Government can be trusted by other countries if it spies not only its enemies but also its allies and friends. How can the U.S. Government build trust and positive relationships with its neighbors and friends if it tapes the conversations of presidents, heads of state, including those that are the close friends of the US as in Mexico and Brazil specifically, and not only the presidents but also the presidential candidates?
[ Pause ]
So, in the film--in the film Casablanca, Humphrey Bogart--in fact that some of my younger colleagues, I have never seen Casablanca. I recommend that along with Thomas Cook [assumed spelling]. In the movie, Humphrey Bogart plays an American who runs a restaurant in North Africa. And the Nazis have taken over North Africa. And of course it's one place in town where you can do things that are not acceptable in a polite society or under the law. And in one part of the movie, the French police, the Vichy police operating with the cooperation of the Gestapo raids Rick's [assumed spelling] restaurant or his place of business. And then confronted with what they've found, and Rick says, "Gambling? Gambling taking place here? I'm shocked." And of course, he was running the largest gambling operation in North Africa. So, here is the--here's the problem. I'm not--I understand that the slogan [phonetic] disclosures have created a real issue in terms of not just the big data. Although, I hope I've at least started the debate in your minds if you had question about big data operates in the security realm. But this idea of spying on one another, espionage against countries is actually more of the rules than the exception. And we're not the only ones who have done that, or would do that. Hypocrisy is the homage that vice pays to virtue.
[ Pause ]
But in fact, of I believe that this series of disclosures will lead to discussions and already have about ground rules and if my points earlier today about globalization and the collision of the Westphalian system with the globalize world, it seems to me that those discussions need to be hand. There are countries in which there are understandings about limits. I think those discussions could be had more broadly and probably will.
Our next question has to do with the security of big data. And if the government is going to use big data, how can it protect technology from being--the technology from being hacked or cracked. And then the follow up question would be, does the US shares its data with other countries, and if so, how can we ensure its security?
So, limiting my answer to the area that I know and I know as unclassified. On commercial data, we do have arrangements in which data relating to passengers and cargo will be shared with those countries with whom we had agreements providing for that kind of exchange. On the security issue, there is a obligation with regard to all of the travel data and all of the cargo data that's maintained by DHS are their two obligations. One is that we maintain it in confidence and the second is that we use it only for the purpose for which it was collected. And that in the context of DHS has been maintained in part because of the privacy protection is built in and the discussions that those who collect the data, analyze it, and disseminate it must do it in concert with the privacy office and the privacy impact statements that are required. The technological security is a constant concern and particularly up now, considerable effort is being made to build in security against hacking. And to date, that data has not been--has not been--data security system has not been breached.
[ Pause ]
In line with this question is also about big data. So, why isn't the US using CCTV moderating--monitoring like the UK to increase security?
In certain areas in the United States, that kind of monitoring of street life and traffic patterns is being done. New York City increasingly relies on CCTV monitoring. Most industrial sites and business sites now involve the monitoring. The discovery of the Tsarnaev brothers in the--in that 7-eleven store in Boston was a function of CCTV monitoring. The issue that is in the back of all minds is where are the limits? And I suggest that when it comes to participation in the modern world. Whether in the business or social capacity that we have court cases that are quite well-established that define through the 4th amendment what the limits on law enforcement are with regard to the monitoring act of activities. And those cases provide a rich tapestry of rules that I think protect us. The more difficult issues are the ones involving cyber and internet that we see now with regard to commercial firms that monitor our communications and actually look at the substance and then send us advertisements, ads that are based on insights picked up from monitoring communications in the commercial sense. So that if I'm interested in buying a piece of furniture and I mentioned that in an email to my wife. I suddenly end up with ads for furniture in my inbox. I'm prepared to argue that is an invasion, speaking personally that I would like to say something about. So, these are the issues though, that why the Ford School of Public Policy is in such an interesting place along with other think tanks and universities around the world. These are issues that are not going away and as I hope I persuaded you in the course of the lecture that the historic American reconciliation of them needs to be looked at. We may yet go back to them, but we certainly need to review them.
Our next question once again touches on security and protection at airports. With everything being done in regards to clearing airport security before boarding, is it possible to complete this process reaching the airport? And pre-clear customs before boarding similar to what they're currently do in Canada.
So there are two kinds of screening, right, that we're talking about. One is screening against known threats, that is to say when you indicate you're flying to London or flying to Beijing with a car, your name is run against a series of watch lists that on which did place people who were known or suspected to be affiliated with terrorist activities or transnational criminal organizations. That's one form of screening. And that, for the most part is done before you arrive at the airport. Because when you've come to the airport if you are on this so called, "No Fly List", the airline representative will not permit you to actually board the plane or obtain a boarding pass. So that happens before you arrive at the airport. The other screening is a physical screening. The screening that's done by the Transportation Security Administration that looks to see whether or not there are metallic or non-metallic substances and that cannot be done until you actually get to the airport. And your carry ons as your luggage and your person is inspected in as non-intrusively manner as possible.
On that note talking about privacy and security, someone had a comment that says, "Instead of the tradeoff between privacy and security maybe we have a tradeoff now between privacy and freedom. Now we have the freedom to travel on airplanes, trains and other public transformation without being killed but we have lost our privacy as a result. Can you speak to this idea?"
[ Pause ]
That's this, you know, I talked about the clash between the Westphalian system and globalization. Modern life, the instantaneous dimensions of modern life, the digitization of modern communications, the effective--the [inaudible] presence of others, electronically or personally certainly to Benjamin Franklin would definitely feel as though liberty had eroded. But Benjamin Franklin also is the one who discovered electricity. And he would have appreciated--he would have appreciated the advances that technology have brought. He would have appreciated the fact that in the modern world unlike the world that I was going up in in the late 1950's and the early 60's in which three percent of the world's population was middleclass. Today, 40 percent of the world has the opportunities that didn't past. We can find and restricted to 1/10 that number. And the trend line--the trend line is up. One need only looked at the transformation of East Asia or the Indian subcontinent. And now, again, one could understand what's happening in the Middle East, in the Arab world, the Lavon [phonetic], the Milgram [phonetic], the Arabian Peninsula to understand that is being a expansion of possibility. So, yeah, I think in certain ways of freedom has been restricted. But I think for every way in which our freedom is been restricted, it is been expanded in multiple ways. Think about the access provided by an iPhone. Think about the possibilities inherent in the jet engine. Freedom--Freedom is actually not in my--so if you ask, and if you push me hard enough, I don't think--I feel is there possibilities exist and freedom is expanded in my personal context and for my family recognizing that there are certain ways in which we need to safeguard liberties that are critical to us, and it could be threatened if we don't pay attention to them. And I think about Benjamin Franklin in words or substance [phonetic], he said something like the following, "That those who permit the sacrifice of basic elements of liberty for little bit of safety will end up losing both their safety and their liberty." So I'm aware of that tension, too and I appreciate the questioner's concern. It's one--it's a question we should not stop asking ourselves. But on balance, I think I've rather alive in the 21st century than the 14th.
[ Laughter ]
Our last question today should be a little bit easier for you to answer. What kind of advice would you give policy students were interested in pursuing career in Homeland Security?
Yeah. So, I was talking to the Dean earlier today about exactly that. The Homeland Security, I started out public service in the Justice Department.
Just kind of as an ending note. This is more fun than policy related. But who do you cheer for Harvard or Yale?
[ Laughter ]
And which sports did you play?
So, this is interesting Ford. The dean mentioned and usually I don't talk about it. But 40 years ago and 55 pounds heavier, I was pretty good football player, not Michigan style.
[ Laughter ]
Although, I did have my moments, but when went to law school--
[ Laughter ]
When I went to law school, I actually played--I coached the Yale team and it was one that permitted graduates assumes to play. And so I'm probably the only person--I'm probably the only person and this will--some Martian graduate student will find a little footnote is that I'm probably the only person who played for Harvard, and beat Yale, and played for Yale, and beat Harvard.
[ Laughter ]
And my loyalty is--I think I'll leave it there.
[ Laughter ]
Thank you very much. It's been a pleasure.
[ Applause ]
Well, I like to thank Alan Bersin for his very thoughtful perspective for sharing his views on a very timely challenging and important topic. I'd also like to thank all of you for some very interesting and thoughtful questions as well. Thank you for joining us this afternoon. I hope that you will visit our website and continue to come to future policy talks at the Ford School. A week from today, next Thursday, we are pleased to host former Senator Olympia Snowe and I invite you to come and join for that. We can continue this conversation outside of the auditorium in the Great Hall. We have a reception and I hoped that you will stay. And with that, before I ask for a final thank you for our speaker, I do have to note a commonality with President Ford who of course helped to coach the Yale Football Team as well. And so, part of our extended community, a special thank you from that regard. So please join me in a final thank you to Alan Bersin.
Thank you. I appreciate. Thank you.
[ Applause ]
[ Silence ]
Funding local government in Michigan: A broken system?
Using evidence to guide education policy and practice