MOBILE
Obama decries college costs
President links federal aid to restraint on tuition increases
January 28, 2012
ANN ARBOR, Mich. – President Barack Obama embraced the idea of federal action to restrain the rapidly increasing cost of higher education, giving a boost to a long-simmering policy idea that has gained steam amid growing frustration with rising tuition.
His proposal that colleges and universities cut costs or risk losing out on some federal aid was part of a larger package of “college affordability” ideas unveiled by the president Friday in a speech at the University of Michigan. Obama wants to increase funds for higher education, mostly through an expansion of federal loan programs. He also will require colleges and universities to give families standardized information to allow comparison shopping on financial aid packages, graduation rates and employment prospects for a college’s graduates.
Obama also called for Congress to act to prevent a doubling of the interest rate this summer for the government’s subsidized Stafford loan program, which covers more than 7 million students. The rate is scheduled to increase from 3.4 percent to 6.8 percent on July 1. White House officials believe a late-spring confrontation over the loan rate could put Republicans in a politically costly position much as the debate over the payroll tax cut did in December.
But creating federal incentives to cut costs was the proposal that caught education experts’ ears. Members of Congress, including some leading Republicans, have proposed similar ideas in the past, but college and university officials have opposed them, and the plans have gone nowhere. Obama’s speech marked the first time such a proposal has received a presidential endorsement.
Schools can’t just “jack up tuition every single year” and simply expect people to pay it, Obama said. “If you can’t stop tuition from going up,” he warned colleges, “the funding you get from taxpayers every year will go down.
“I am only standing here because scholarships and student loans gave me a shot at a decent education,” Obama told the crowd at the Ann Arbor campus, where students braved early-morning snow to stand in line to see him. “Your president and your first lady were in your shoes just a few years ago,” Obama said. “We didn’t come from wealthy families. The only reason we were able to achieve what we achieved was because of education.”
Tuition increases have outstripped inflation for years, and the rising cost of college, coupled with deep cuts in state funds for public university systems from California to New York, have caused a clamor for solutions that could make college more affordable.
Under the Obama plan, schools that raised tuition beyond what the government deems an acceptable level could lose some of the billions of dollars in campus-based financial aid awarded by the federal government each year. Schools that demonstrate improvement would have a leg up in the yearly competition for money.
The proposal drew a mixed response from higher-education officials and experts.
Adding accountability to the billions of dollars the government makes available for financial aid is a reasonable request, said William Tierney, director of the Center for Higher Education Policy Analysis at the University of Southern California.
“The reality is the federal government provides funding to these institutions through students, and all the federal government is trying to do is ensure that the money they’re spending on our behalf is being wisely spent,” he said.
University of California system President Mark G. Yudof said the main cause of the sharp tuition inflation at many state universities, including UC, has been a deep cut in the support the schools receive from state budgets.
“If the state subsidy is going through the floor, there are only so many places we can go to for funding,” Yudof said. UC has cut the cost of an average credit hour of courses by 15 percent in recent years through increasing class sizes and making systems more efficient, but tuition still had to be raised to make up for reductions in state support, he said.
Yudof and others also warned that any federal effort would need to take into account the amount of money schools set aside for financial aid. UC, for example, sets aside a third of its tuition to pay for financial aid for low- and middle-income students. One way to lower tuition would be to reduce that set-aside – the opposite of what Obama would like to achieve, he noted.
Obama’s plan would increase the government’s Perkins loan program from $1 billion to $8 billion. Perkins funding is allocated to schools that provide loans to their students. Because students repay Perkins loans with interest, the increase would not worsen the federal deficit, administration officials said.
Coming Sunday: Price of education
As postsecondary degrees become more expensive, smaller universities and community colleges are gaining favor among prospective students.
So you have schools that in some states are being forced to take illegal immigrants and give them a substantial chunk of grant/scholarship money from deserving applicants, you have Federal student loan programs that equate to taking out a luxury car loan that saddle students for 25 years after the fact as they attempt to pay them off, you have a higher student:teacher ratio to try to cut costs resulting in a poorer education experience, and lower teacher salaries that encourage the top rung teachers to find employment elsewhere.
And you are going to threaten schools to magically lower tuition rates while facing a problem that has been growing for decades, that you have done absolutely nothing to alleviate but run your mouth at it, or they are going to lose federal funding. More election year BS.
Quit subsidizing college education.
Quit bailing out bankers
Quit subsidizing farmers
ETC ETC ETC
Yes Orphan.
“Government get your paws off public education!” THIS IS OUR NEW BATTLECRY!!
HEAR OUR VOICE!!!
Article:
“President Barack Obama embraced the idea of federal action to restrain the rapidly increasing cost of higher education . . .”
Then,
“Obama wants to increase funds for higher education, mostly through an expansion of federal loan programs.”
The blindness is astounding. Mr Obama has no clue as to how economies work. He doesn’t understand that subsidies and 3rd-party payers create synthetic demand, which then force prices up.
“Tuition increases have outstripped inflation for years . . .”
Of course. Just as with health care, and for the very same reason.
Mr Obama wonders why it’s so durn hot, as he shovels more coal into the furnace.
Health care and education are the two major parts of the economy where price increases have outstripped inflation because those are the two industries that can’t be outsourced and that don’t benefit much (at least in terms of price) from new technology. Most of the money paid for health care and education goes to pay the wages of Americans, who want to be paid well.
Another way of looking at it is that low-cost foreign manufacturing has reduced the cost of consumer products, reducing the overall inflation rate. The inflation rate is an average, which means some products will increase in price faster than that average.
This applies to the cost of providing an education, no matter who pays for it. Obviously with state colleges, you also have the fact that the states are no longer subsidizing them the way they used to, so the tuition charged to the students has to go up even more. Given that state colleges, and many private ones, are not being run for a profit anyway, I don’t see how they can reduce their expenses even under the threat of losing federal money, without reducing the quality of education they provide.
gmorton…
You think he doesn’t understand how the hydraulics of tuition funding work because he doesn’t come out and say : We are going to eliminate all subsidized funding of higher ed?
We probably agree on the ultimate desired outcome, which for me would be to get the govt out of subsidizing anything but pure research and the like. Kill the GI Bill, Pells, etc. and make higher ed a consumer based, nimble, responsive market (employers being the consumers).
There’s only one problem with that scenario: It’s not gonna happen.
“Obama wants to increase funds for higher education, mostly through an expansion of federal loan programs.”
This president has a love affair with debt. More loans??? YGTBSM!! Reason #1 why this guy needs to hit the bricks.
“The reality is the federal government provides funding to these institutions through students, and all the federal government is trying to do is ensure that the money they’re spending on our behalf is being wisely spent,” he (Obama) said.
I thought I might be dreaming when I read the foregoing paragraph so to see whether or not I was awake, I copied it. I`m awake!! THE FEDERAL GOVERNMENT WANTS TAXPAYER MONEY TO BE SPENT WISELY?
If anyone believes the spend thrifts (both parties) in congress, more especially with Obama at the helm, and say they are spending our money wisely, makes me think of a field full of bulls spreading the digested food all over the place.
FOR SALE: The Washington monument. Half price. Offer closes next November.
RedCedar wrote,
“Health care and education are the two major parts of the economy where price increases have outstripped inflation because those are the two industries that can’t be outsourced and that don’t benefit much (at least in terms of price) from new technology.”
Oh, no. Wrong on both counts. Thousands of industries – nearly all service industries, as well as housing – cannot be outsourced. None of them have experienced the price spirals seen in education and health care (except housing, after the gummint began to increase its role in that industry in the 90s with its “affordable housing” nonsense).
And both health care and education have benefited from technology, especially healthcare. A CAT scanner enables a diagnosis to be made in minutes; a laboratory auto-analyzer can screen hundreds of blood samples for dozens of factors in an hour. Vaccines have prevented millions of hospital admissions, and antibiotics have greatly shortened hospital stays. Yet prices have soared at triple the inflation rate.
“Most of the money paid for health care and education goes to pay the wages of Americans, who want to be paid well.”
So does most of the money paid to hair stylists, carpet cleaners, plumbers, truck drivers, lawyers, veterinarians, and kids who mow lawns, none of which tasks can be outsourced.
“I don’t see how they can reduce their expenses even under the threat of losing federal money, without reducing the quality of education they provide.”
Simple. Ditch the licensing laws which cartelize those industries, stop subsidizing them, and compel those who desire those services to pay for them. That will open those markets to competition, restore the nexus between supply and demand, and bring prices back under control.
Scoutster wrote,
“You think he doesn’t understand how the hydraulics of tuition funding work because he doesn’t come out and say : We are going to eliminate all subsidized funding of higher ed?”
Yes – when in the same breath he complains about rising costs.
We don’t need no dam educasion, were smart enouff already. If you give a man a fish, then pertty soon, he’ll want and educasion too! And it will cost more. Because then everyone will want one. It’s that simpel. Crimoney.
JBlim wrote,
“And it will cost more. Because then everyone will want one.”
You actually nailed it there, JB, attempt at sarcasm notwithstanding.
Everyone will indeed want one, you will pay for it, either via taxes or spiraling prices, and half of those free-lunching students will not be able to spell “educashun” any better after they graduate than when they first walked in the door.
But no doubt their self-esteem will be raised.
Let’s see, we can go with the “gmorton plan” backed by no evidence and a work of fiction by Ayn Rand - embraced by about 0.5% of the voting public…or we can look at how other countries have successfully solved this problem. That’s right, just like health care other countries have figured this problem out. No great mystery here folks.
johnclarke, who’s ‘we?’ Everyone knows that’s code for socialism. Just like ‘public’ and ‘people.’
gmorton says: “You actually nailed it there, JB”
You are the master at reeding whatever you want from jiberish, witch you mus reed a lot of.
You know something is out of wack when a university president quits his job to become the head of the athletic department because it pays a lot more.
morton, yes there are other service industries. Most of them have increased in price by more than the average rate of inflation. Taken your car to a mechanic or a body shop lately? Hired a plumber or an electrician? As for technology in medicine, I agree that technology is being used. I don’t agree that it’s reduced costs, unlike the way technology has reduced costs in, say, telecommunications. Once a hospital buys an MRI machine or other expensive diagnostic device, they need to pay for it by having the doctors order tests that they never would have ordered in the past. Every kid with a bump on the head gets an MRI, and when it comes to blood tests, they usually order a full set of tests even though there are only a few numbers that will be relevant to the disease at hand.
Ultimately, however, cost is only part of the issue with quasi-public industries like hospitals and universities. The other part is deciding how socialist we want to be. Most of us support some degree of public education. We think it’s generally worthwhile to tax ourselves so that everyone can learn to read and write. Likewise, most of us support at least some amount of public health care so that poor people aren’t dying of easily treatable diseases. How far we take that is the big question. A pure socialist would argue that all education should be free for everyone, just as all health care should be.
What we’ve had for most of the 20th century was free primary education, with college being highly subsidized, but still enough tuition charged that a student or their family has to show some commitment in order to attend. The trouble now comes from at least two directions. The traditional sources of public funding (taxes, and timber sales for the land-grant colleges of the West) are drying up, while more and more jobs are requiring college degrees.
Here’s a radical idea that requires major social engineering. Eliminate all the irrelevant college degree requirements for jobs that don’t really require anything beyond high school literacy and math skills — the ones where the employers just use “has some college” as a way to winnow the stack of resumes. Downsize the colleges and universities to what the public can afford to subsidize, and then tailor the subsidies to that they favor students who are smart and are serious about studying hard, and those who are studying subjects that are likely to be good for our country (solid state physics rather than Renaissance literature, perhaps) .
Our colleges are bloated with kids who are never going to use what they’re learning for any job they’ll ever get, or who are just fooling around and killing time, looking for a spouse, partying, and what not. There’s nothing wrong with doing all that, but perhaps it’s time to reserve the tuition subsidies for the serious students who are studying useful things. Yes this smacks of big government central planning. It also smacks of the golden rule — he who has the gold makes the rules.
I see the typical haters of education are out bright and early today trying to tell everyone how horrible educating this country is.
Man, such a horrible a-hole president trying to lower college education for students…..stupid socialist.
Perhaps the answer is to better prioritize internal funding levels with emphasis on those programs which a.) have high graduation rates and b.) are projected to produce graduates with low unemployment due to a demand for the skill?
As such, priorities listed in order from greatest to least:
1.) Physical science, Engineering, Mathematics
2.) Computer Science
All others, including English, humanities, art, ect. should be funded last, and tuition rates should never be raised to support their programs. Additionally, federal loans should be capped at a very low level for those who seek such “degrees”.
From the Inlander…http://www.inlander.com/spokane/article-17380-wild-ride-coming-up.html —a snapshot of how big our spending problem is:
U.S. tax revenue: $2,178,000,000,000
Federal budget: $3,820,000,000,000
New debt: $1,650,000,000,000
National debt: $14,171,000,000,000
Recent budget cuts: $38,500,000,000
Now, remove eight zeros from the figures above and pretend it’s a family budget:
Annual family income: $21,780
Money the family spent: $38,200
New debt on credit card: $16,500
Owed on credit card: $141,710
Total budget cuts: $385
Who cares about the future, I got mine!! Screw the next generations, they’re losers anyway.
RedCedar on January 28 at 9:56 a.m.
“A pure socialist would argue that all education should be free for everyone, just as all health care should be.”
Why does a concept that is proven to work many times over make someone a “pure socialist” ? How about pure “common sense”. There is no argument here.
JC, “common sense” is a political slogan, not an ideology, much less a specific set of policies. Socialism, however, is a pretty clear concept. Putting aside the recent American tendency to use it as a cuss-word, “socialism” is a spectrum of policies involving public ownership of various sector of the economy and more or less equitable sharing of the wealth amongst the citizens. By “pure socialist”, I mean one who allows no place for private enterprise, at least in important industries, and no tolerance of inequality of opportunity for the citizens. No modern European democratic-socialist country, despite having some state-owned industries, and fairly extensive social welfare programs, is purely socialist. All allow for some inequality and some private profit.
I would take issue with your characterization that making all education free for everyone has been “proven to work many times over”. Again, the devil is in the definition of “work”. I know of no country where all education is free for everyone. There are many where higher education is free, but only to students who pass rigorous entrance exams. Often the free education is also limited to prescribed subjects.
The problem isn’t that he’s “trying”. The problem is that, as with health care, he doesn’t understand the complexity of the problem, and instead he made a speech proposing a quick fix that has no chance to succeed. To paraphrase Yoda, the president’s job is to “do”, not to “try”.
With health care, he could at least rail against “greedy” insurance companies, some of which really are run for profit and really do return income to stockholders. Even though insurance company profits are a tiny sliver of the whole health care bill, they are at least a measurable fraction. With universities, though, where is the greed? They’re owned and run by state governments. They have no stockholders. If he thinks the greed is there, it would be more honest of him to elucidate it: Professors and college presidents being paid too much? Too much fancy new furniture in the administration building? Too much snazzy architecture in the new wing of the department of whatever? Wasting too much money on “green” projects to reduce energy and water use on campus? Should the music department not replace the practice pianos so often? Should the cafeteria buy cheaper hamburger? Should students be required to sweep up their own classrooms? Really, where is the greed and waste that he thinks they should cut?
For decades, America is ranked far down on the list as compared to other countries in the world i. e., for student knowledge and performance, etc. To read some of the bragging by our public servants you would think we were at the top of the list. Nope. As long as our public schools and colleges sport programs, appear to be the priority, we will continue to stay far below those top achieving countries who have earned the high ranking.. Sad.
RedCedar wrote,
“Taken your car to a mechanic or a body shop lately? Hired a plumber or an electrician?”
I have, actually. As far as I can tell, prices have pretty well tracked the inflation rate.
“As for technology in medicine, I agree that technology is being used. I don’t agree that it’s reduced costs, unlike the way technology has reduced costs in, say, telecommunications. Once a hospital buys an MRI machine or other expensive diagnostic device, they need to pay for it by having the doctors order tests that they never would have ordered in the past. ”
Absolutely correct. Why do they get away with it? Because the patient is not paying for it. Thus he doesn’t care what it costs, or whether the information obtained is worth the money.
“We think it’s generally worthwhile to tax ourselves so that everyone can learn to read and write.”
Yes, that’s the rationale. Yet before there was a single public school in the US 90% of the population could read and write. What “the public” understands most parents also understand.
“Eliminate all the irrelevant college degree requirements for jobs that don’t really require anything beyond high school literacy and math skills — the ones where the employers just use “has some college” as a way to winnow the stack of resumes.”
That’s approaching the problem backwards. Eliminate education subsidies and employers will be forced to do exactly that. Or establish scholarships to impart the skills they need. There is no reason for “the public” to be paying for training aerospace machinists, for example (a program at the community colleges touted recently in this newspaper). If Boeing needs machinists with specialized skills, let them pay for it.
Dick Adams, I agree. Our priorities for funding state run universities are way out of line and a drain on the taxpayer and the students who pay tuition. Take a look at the Washington State University football program for one example. It’s amazing how that school seems to come up with large sums of money to hire new coaches when the state has to find ways to axe more academic programs.
From the Spokesman, Nov. 30, 2011:
“That agreement, which Leach agreed to in principle, calls for a compensation package of $2.25 million and incentives per year for five years, with a three-year rollover triggered each year by Moos. If Leach wants to leave for another job, the buyout starts at $2 million but falls $400,000 each year”.
There is another $1.8 million earmarked for his assistants
And how much does the President of the University or the Professors make in comparison?
RedCedar on January 28 at 10:45 a.m.
No offense intended; you seem like a bright guy. However you are taking a long time to say things that are wrong on a couple points. Also, you are making huge assumptions about my views on this topic. (and others)
“I know of no country where all education is free for everyone. There are many where higher education is free, but only to students who pass rigorous entrance exams.”
Yes, obviously countries that provide free higher education require people to take entrance exams. That again is “common sense”. Like for example using a search engine.
“Often the free education is also limited to prescribed subjects.”
Yeah, that’s wrong. Easily researched.
“Even though insurance company profits are a tiny sliver of the whole health care bill”
Wrong. Easily researched.
“Really, where is the greed and waste that he thinks they should cut?”
Have you been to college? If not, you could do some simple research to see where European colleges spend money vs. where the money goes in the US. Sports spending has skyrocketed in the US.The majority of college sport programs lose money and lots of it. In 2009 like 14 NCAA athletic departments actually made money.
“The problem isn’t that he’s “trying”. The problem is that, as with health care, he doesn’t understand the complexity of the problem”
So let me get this - you understand but President Obama and his team does not? That’s rich. Sorry, I think they understand better than most.
“No modern European democratic-socialist country, despite having some state-owned industries, and fairly extensive social welfare programs, is purely socialist”
Yeah, we know. Maybe you should not toss around terms like that.
College and University presidents earn $300,000 … W?T?F?
http://www.therichest.org/misc/highest-paid-university-presidents/
johnclarke wrote,
“’Even though insurance company profits are a tiny sliver of the whole health care bill’ . . .
“Wrong. Easily researched.”
It sure is easily researched, and it plainly shows *you* are wrong.
* US health care costs (2007): $2.2 trillion.
Total insurance company profits (10 largest companies, 2007): $13 billion.
The latter is 0.6% of the former.
http://www.factcheck.org/2009/06/pushing-for-a-public-plan/
Insurance companies’ profits, averaging 6% of revenues, are comparable to those in all other segments of the economy, and lower than many.
http://www.breitbart.com/article.php?id=D9BIQPN01
pigrobin drags out the old household budget metaphor again.
Running the family budget is not like running a country. Herbert Hoover tried it and it didn’t work then and it won’t work now.
OK JBlim, the Obama solution is more federal loans. How will that solution lower the cost of higher education? You don’t like to address the debt problem this nation is facing. You obviously don’t care. You seem to forget the destruction the expansion of mortgage lending did to our economy and somehow you believe expanding student loans will make things better. I fear for succeeding generations’ quality of life because of people like you.
gmorton on January 28 at 12:24 p.m.
johnclarke wrote,
“’Even though insurance company profits are a tiny sliver of the whole health care bill’ . . .
“Wrong. Easily researched.”
It sure is easily researched, and it plainly shows *you* are wrong.
Classic and often repeated RED HERRING. How many times do I have to educate you on this topic ? Health Insurance companies bury their profits in bloated salaries, cash reserves and other little balance sheet goodies like “earnings smoothing” and reinsurance. I can’t believe that anyone would continue to defend a blood sucking industry like health insurance. They provide no value and do nothing but extract profits while denying care.
pirobin says “You don’t like to address the debt problem”
I don’t??
Follow me here: If we cut federal spending, we will lower the GDP, contract the economy, reduce tax revenue and increase safety net costs. Get it? We can cut spending when the economy revs up and needs to cool off. Or would you prefer a depression and a long, drawn out, miserable recovery?
johnclarke wrote,
“Health Insurance companies bury their profits in bloated salaries, cash reserves and other little balance sheet goodies like ‘earnings smoothing’ and reinsurance.”
Oh, stop, John. Their profits, like those in all other industries, are computed per rules promulgated by the IRS. And they are an insignificant portion of your health care dollar, just as RedCedar said.
“They provide no value and do nothing but extract profits while denying care.”
Well, that problem is easily fixed – cancel your policy. Then they will extract no further profits from you.
If you want to understand why health care costs have tripled the rate of inflation since WWII, you’ll stop the ludicrous harping on insurance company profits. They are but a drop in an overflowing bucket.
JBlim wrote,
“Follow me here: If we cut federal spending, we will lower the GDP . . .”
That is nonsense. The gummint contributes nothing to GDP. Every dollar it spends is merely a dollar seized from someone who would have spent it on something else (usually something more valuable and productive).
gmorton says: “The gummint contributes nothing to GDP.”
Can you be any more misinformed, gmorton?
GDP = private consumption + gross investment + government spending + (exports − imports), or
GDP = C + I + G + (X - M)
What’s the ‘G’ in that equation, gmorton??? Good grief, man.
jblim, Mr.gmorton refuses education so you might as well be addressing a dog.
Fact, 31% of every health care dollar goes to the overhead known as “Health Insurance.” That does not even consider the amount of Doctors, support staff and patient’s time wasted by the bureaucratic mess created (on purpose) by these blood suckers. Oddly, in spite of working examples in this very country of how to efficiently run a health care system at 3-5% overhead- we still have people like gmorton. People that MUST be acting dense on purpose, because you could explain this to an 8 year old and they would get it the first time. Anyway, off topic.
JBlim wrote,
“What’s the ‘G’ in that equation, gmorton???”
G = (C’ - t), where
C’ = consumer income and t = portion thereof seized by government.
Without G, C’ replaces C and GDP remains the same.
johnclarke wrote,
“Fact, 31% of every health care dollar goes to the overhead known as ‘Health Insurance.’”
That’s close. But then, about 80% of that 31% is paid out in claims (depending on type of policy). It is not “overhead.”
http://www.gao.gov/new.items/d1290r.pdf
You began by making an absurd claim about health insurance *profits*. Now you’re trying to peddle nonsense about total health insurance *costs* as a fraction of all health insurance expenditures.
You’re shucking and jiving, John.
I do not hate education, LIRWL. I do however think that NO ONE should get a free post secondary education. We already give every citizen in America the opportunity to have a free K-12 education. And, within this K-12 education, we give free meals and free services to the poor kids.
Beyond that, it should be paid by each individual, or their family. If one’s family cant afford to pay for 4 years of college, then the person should get a loan. Not a “great deal” loan, just a regular old loan that we all have access to. If one does not qualify for a loan because they are too big a risk, then they need to work, save, and then get a loan for a college education.
We the taxpayers should be 100% out of the college system. The government should only be involved for law reasons.
Affirmative action also needs to be eliminated. No citizen of the USA should get an education over another unless that reason is because they can pay their own way.
If college costs were anything Obama really cared about, he would have taken on this concept back when he had the majority in the house and senate. Instead, this is the first time we’ve heard from him about this issue. This is nothing more than campaign rhetoric.
I read a really god book the other day that in the first chapter alone, explains why we are where we are with our government today, and exactly where we are heading. If you read the first chapter with an open mind, you can see everything he (and many philosophers and learned men have been saying through out history) is talking about. It really is an eye opener. Might be a bit dry for those out there not fans of great people throughout history and their published papers.
The name of the book is “Ameritopia” by mark levin, available at Amazon and Barns and Noble.
Medicare administrative costs are not lower than private insurers. This is one of the better articles I’ve ever seen on this subject.
www.forbes.com/…/the-myth-of-medicares-low-administrative-costs/
“The whole people must take upon themselves the education of the whole people and be willing to bear the expenses of it. There should not be a district of one mile square, without a school in it, not founded by a charitable individual, but maintained at the public expense of the people themselves.”
— John Adams, U.S. President, 1785
pmbrown says “This is one of the better articles I’ve ever seen on this subject.”
Forbes is not a trustworthy source when it comes to public vs private. Just read their biased editorials. BTW, your link is not good. We don’t have to debate the matter, just read the comments following the Forbes article.
http://www.forbes.com/sites/aroy/2011/06/30/the-myth-of-medicares-low-administrative-costs/
(c-t)morton writes:
“G = (C’ - t), where
C’ = consumer income and t = portion thereof seized by government.
Without G, C’ replaces C and GDP remains the same.”
Consumer income? Huh? You don’t have a clue, do you, gmorton . . .
If you think the crank carnival barker Mark Levin (“The Great One”, says Hannaty) writes from an honest basis, I have an autographed Kindle copy of the book to sell you.
Freakin’ knaves.
http://www.politico.com/blogs/bensmith/0910/Hayes_on_Levin_Bizarre_and_disappointing.html
Why are you all talking healthcare? This is about education. Why would our government be involved in “for profit” colleges? Should they not be paying their own bills? What about all the money the big sports colleges make on said sports? Why would we give them a dime of taxpayer money, when they can support themselves through their sports stuff?
All those big dollar professors should be paid for by the colleges. If the colleges costs’ get too high, and enrollment plummets, then the colleges can make cuts in their system to entice enrollment, and still make a profit. Perhaps professor wages would become more realistic.
pmbrowne49,
Your link is bad. This one works.
http://www.forbes.com/sites/aroy/2011/06/30/the-myth-of-medicares-low-administrative-costs/
greenlibertarian wrote (quoting),
“The whole people must take upon themselves the education of the whole people and be willing to bear the expenses of it . . .”
Yes, Adams favored public support of education, as did Madison, Jefferson, and other Founders. The rationale was, that since the whole people, rather than a hereditary aristocracy as in Europe, were to be the ultimate governors of the country, they must be equipped for that responsibility. They must be literate, numerate, and have a good grasp of history, economics, the sciences, and political philosophy.
Note that this rationale did not rest on preparing citizens for careers or attaining other personal goals. Nor did any of the Founders believe education to fall within the purview of the federal government; it was a task for the States and local governments.
You should also note that none of those early advocates of public schools had any actual experience with them. They did not foresee the replacement of their own conception of the purpose of public education with Thomas Dewey’s collectivist conception, or the emergence of a monolithic, unionized, entrenched bureaucracy committed to its own enrichment and growth, or the exponential growth of the economic burden that bureaucracy would inflict on taxpayers.
And they would have been appalled at how poorly the resulting system would achieve the results they intended for it, i.e., preparing citizens to be responsible governors – a system in which over half of the “graduates” cannot cite a single provision of the Bill of Rights and cannot pass a basic citizenship test.
http://www.fff.org/freedom/fd0308d.asp
Had Adams, Jefferson, *et al* known what we know today, they’d surely recommend a different approach.
JBlim wrote,
“Consumer income? Huh? You don’t have a clue, do you, gmorton?”
Perhaps not. Perhaps you can clue me in.
gmorton says “Perhaps not. Perhaps you can clue me in.”
OK, government spending contributes to GDP, by definition.
gmorton on January 28 at 7:11 p.m.
johnclarke wrote,
“Fact, 31% of every health care dollar goes to the overhead known as ‘Health Insurance.’”
That’s close. But then, about 80% of that 31% is paid out in claims (depending on type of policy). It is not “overhead.”
Let’s just skip to the end, shall we? At the end of the day, no matter what report you produce the facts are the facts. This country spends enough on pure administrative costs to private health insurers to fund universal health care. Yes, that is “overhead”.
JBlim wrote,
“OK, government spending contributes to GDP, by definition.”
Heh.
Well, you clearly missed the point of my comments.
Of course government spending contributes to GDP. If a mugger relieves you of your wallet and spends the $100 in it, he contributes to GDP also.
Neither the mugger nor the government, however, *add* anything to GDP. They merely spend money earned by someone else, who would have also contributed it to GDP, usually with more productive results.
johnclarke wrote,
“This country spends enough on pure administrative costs to private health insurers to fund universal health care.”
You’re reaching further and further for nonsense, John. “Pure administrative costs” amount to about 7-8% of insurance premiums paid. All non-claim costs amount to about 20% of premiums, or about $40 billion annually. Universal health care would cost $2.3 *trillion* annually, based on 2009 costs.
http://www.census.gov/compendia/statab/2012/tables/12s0134.pdf
gmorton said: “The gummint contributes nothing to GDP.”
then gmorton said “Of course government spending contributes to GDP.”
Yes gmorton, you want us all to fend for ourselves, I get your point.
In Medicare, about 5% goes to overhead for administrative costs.
In private insurance, about 30% goes to overhead, which includes sales commissions, executive bonus checks and dividend payments to stockholders. None of which has anything to do with healthcare.
greyhound2 wrote,
“In private insurance, about 30% goes to overhead, which includes sales commissions, executive bonus checks and dividend payments to stockholders. None of which has anything to do with healthcare.”
It is about 20%, greyhound.
And yes, it does have something to do with health care. That 20% is what raises the private capital which finances your insurance. The gummint, of course, does not need to rely on voluntary investors and thus does not have to pay dividends. It can rely on force. It will seize your money to finance the insurance, and will pay you no dividends.
31%?
For those of you who love Obamacare, you would at least know the government has mandated Medical Loss Ratios (MLR) of 80% (small group) and 85% (large group). Those ratios are lower than Medicare when you account for other government agencies who provide services to “Medicare Administration”.
There seem to be two camps on insurance company profitability, one saying they are low and one saying they are high (compared to some set of industry standards). In truth, I think the “low” camp is using the legal definition of profit which is basically receipts minus costs (at its simplest level) while the “high” camp is using a measure of profitability (most likely ROE/ROI). They are two different things, communicating different perspectives on the financial health of a company. Both of you may be right or wrong depending on (1) for what point in time you are quoting numbers and (2) what the source is (does it consider all companies or for instance the top 10 or whatever). Regardless, in terms of profit, it appears that the average health insurance net profit margin is now somewhere around 8% (it has increased quite a bit over the past 3 years), though there is of course some variance depending on the source you quote and how inclusive it is. Compared to industry in general, this seems to be pretty average. In terms of ROE/ROI (measure of profitability), the number appears to be around 21% (unsure if its 3 year history). This also appears to be pretty average compared to industry in general. My main point is that it is pretty easy to go out and just latch on to a number from some point in time from some source site and then use it to support your opinion. Statistics never really lie but can often be used to support different “spins”.