Research Briefing

Dems’ Government Takeover Of Student Loans Looks A Lot Like Obama’s Government-Run Health Care Experiment

“Obama Will Deliver A Speech On Education And The Economy At HVCC’s Troy [New York] Campus Monday.” (Larry Rulison, “Obama Likely To Cite HVCC Role,” The Albany Times Union, 9/17/09)

BUT DEMS’ EDUCATION TAKEOVER SOUNDS EERILY SIMILAR TO OBAMA’S PROPOSED TAKEOVER OF HEALTH CARE

Recently Passed “Education Reform” Bill From House Dems Will Cut Private Lenders Out Of Federal Higher Education Financing Programs. “House approval of an education-financing bill Thursday marks a first step toward sweeping changes in U.S. higher education that would cut out private lenders and leave the government as sole provider of student loans under federal programs … [T]he measure would eliminate private lenders from originating government-backed loans …” (Corey Boles and Robert Tomsho, “Bill Upends System For College Loans,” The Wall Street Journal,9/18/09)

• Just Like Obama’s Health Care Experiment Will Crowd Out Private Competitors From Health Insurance Market. “But the federal government isn’t competition … It sets low prices, to be sure, lower than many insurers are able to match … A new public option may start small. But it could easily crowd out private plans depending on how premiums, benefits and subsidies are structured.”  (Editorial, “Hope and Experience,” The Chicago Tribune, 6/16/09)

College Administrators Fear House Dems’ Takeover Of Student Loans Will Hurt Students. “The fear is that the bureaucrats will not be able to pull off a takeover in just eight months. ‘Any delay in getting funds to schools on behalf of students will result in our needing to find resources at a time when credit is difficult to obtain,’ warns the letter [from three dozen college administrators].” (Editorial, “The Quietest Trillion,” The Wall Street Journal, 9/12/09)

• Just Like Hospitals Fear Obama’s Health Care Experiment Hurting Patients. “[L]awmakers are on track to approve across-the-board federal payment reductions of $155 billion over 10 years for hospitals ... Mayo and similar health systems object to the sweeping cuts. ‘Across-the-board cuts will be harmful to everyone and we think it is particularly bad to penalize the high-value organizations,’ said Jeff Korsmo, executive director of the Mayo Clinic Health Policy Center. ‘We will have to violate our values in order to stay in business and reduce our access to government patients.’“ (Phil Galewitz, “‘Model’ Health Systems Press Case For Medicare Fix In Reform,” Kaiser Health News, 7/20/09)

House Dems’ Takeover In Education Could “Balloon” Costs For Government, Taxpayers. “In addition, there is a danger that taxpayers’ costs could balloon if the federal government proves less efficient in administering and collecting loans than current private-sector lenders, which have an incentive to administer and collect loans efficiently in order to maximize profits.” (Dan Lips, “Student Lending And College Affordability: Alternative Approaches To Reform,” The Heritage Foundation,WebMemo #2615, 9/15/09)

• Just Like Obama’s Health Care Experiment Will Do Nothing To Contain Rising Health Care Costs. “The rapidly rising cost of health care, President Obama has said, is ‘a threat to our economy’ and ‘a ticking time bomb for the federal budget.’ So a critical test of the health reform proposals lumbering through Congress is whether they defuse that bomb. The answer, so far, is no. That was the message, more tactfully delivered, of a letter budget director Peter Orszag sent to the chairs of three House committees that released a ‘discussion draft’ of legislation last month ... As Mr. Orszag put it, ‘Adopting a deficit-neutral hea lth reform that expands coverage . . . is not enough, because it would perpetuate a system in which best practices are far from universal and costs are too high.’“ (Editorial, “Health Care Savings,” The Washington Post, 7/13/09)

House Dems’ Takeover Of Student Loans Will Put Bureaucrats In Between Students And Financial Aid They Need For Higher Education. “The Obama plan calls for the U.S. Department of Education to move from its current 20% share of the student-loan origination market to 80% on July 1, 2010, when private lenders will be barred from making government-guaranteed loans. The remaining 20% of the market that is now completely private will likely shrink further as lenders try to comply with regulations Congress created last year … The news from Washington now is that rather than scaling back federal involvement, the pols want the U.S. Department of Education to be the exclusive banker to America's college students … parents will soon have no choice beyond a Washington bureaucracy to borrow money for their college-bound children.”(Editorial, “The Quietest Trillion,” The Wall Street Journal, 9/12/09)

• Just Like Obama’s Health Care Experiment Will Put Bureaucrats From “Independent Medicare Advisory Commission” In Between Patients And Their Doctors. “Not only would the council make recommendations on payment updates, it would also have the authority to propose other ‘Medicare reforms’ … What are ‘Medicare reforms’? From the write-up, it seems they could be just about anything. Changes in beneficiary cost-sharing. New rules for establishing qualified hospitals and doctors. Penalties for physicians who don’t follow government guidelines.” (Peter Orszag, OMB Director, “Sectional Analysis Of IMAC Draft Legislation,” Letter to House Speaker Nancy Pelosi, 7/17/09; James C. Capretta, “On-The-Fly Audacity,” The New Atlantis’s “Diagnosis” Blog,” 7/20/09)

House Dems’ Takeover In Education Will Create “Green Schools Czar” That Would Produce More Regulations On Colleges, Universities.  “The Secretary shall establish an advisory council to be known as the ‘Advisory Council on Green, High-Performing Public School Facilities’… which shall be composed of appropriate officials from the Department of Education; representatives of the academic, architectural, business, education, engineering, environmental, labor, and scientific communities; and such other representatives as the Secretary deems appropriate. ADVISORY DUTIES.—The Advisory Council  shall advise the Secretary on the impact of green, high-performing schools, on—teaching and learning; health; energy costs; environmental impact; and other areas that the Secretary and the Advisory Council deem appropriate.” (HR 3221, “Student Aid And Fiscal Responsibility Act of 2009,” Introduced 7/15/09)

• Just Like Obama’s Health Care Experiment Will Create Insurance Czar Dictating What Treatments Would Be Funded. “A qualified health benefits plan shall meet a medical loss ratio as defined by the Commissioner. For any plan year in which the qualified health benefits plan does not meet such medical loss ratio, QHBP offering entity shall provide in a manner specified by the Commissioner for rebates to enrollees of payment sufficient to meet such loss ratio ... Such methodology shall be set at the highest level medical loss ratio possible that is designed to ensure adequate participation by QHBP offering entities, competition in the health insurance market in and out of the Health Insurance Exchange, and value for consumers so that their premiums are used for services.” (H.R. 3200, “America’s Affordable Health Choices Act of 2009,” Introduced 7/14/09)