Now that they Republicans have completed their convention and chosen their presidential candidate, more than one columnist has asked, “What big ideas do the Democrats have to offer?”
There actually are some big reforms that are sensible and consistent with Democratic values—including a commitment to housing, health care, jobs and education. But unlike most of the Democrats’ current policy ideas, these suggestions involve less, not more, government regulation.
Free the housing market. One of the main reasons for homelessness in America is that low-income families have been priced out of the housing market. Economists from across the political spectrum agree that a major reason for that is excessive regulation—including laws that make it difficult to convert vacant office buildings into residences.
One of the least expensive forms of housing is the boarding house, which you see in old western movies. You can also find them on college campuses, where they are called “fraternity and sorority houses.” These structures typically have a single room for living, with common areas for restrooms and dining.
Unfortunately, this form of housing is highly regulated in most cities—if not outlawed altogether. Many cities also outlaw mobile homes and other less expensive housing options. This should change.
Let seniors go back to work. Most people begin collecting Social Security benefits before they reach the full retirement age. Yet if they decide to return to the labor market, even at a part-time job, they can only earn $22,320 a year without penalty. Beyond that sum, for every $2 they earn they lose $1 of Social Security benefits. That’s a 50 percent tax on top of income and payroll taxes, as well as the Social Security benefit tax. Indeed, average-income seniors can end up in a 90 percent tax bracket!
Abolishing this earning penalty would be a win-win for everybody, including the Treasury. As senior workers re-enter the labor market, they and their employers would pay additional income and payroll taxes—more than offsetting the restored benefit payments.
Liberate Medicaid. When people enroll in Medicaid, their visits to the emergency room increase, on average, by 40 percent. One reason is that Medicaid reimbursement rates are below the rates charged at walk-in clinics and urgent care centers. Even if the clinic accepts Medicaid’s payment (which some do), it is unlikely to be located in the areas of the city where Medicaid patients live. Many doctors won’t take any new Medicaid patients, and those that do also don’t locate in the areas of the city where Medicaid patients live.
The overuse of the ER is bad for everyone. The average wait time at Parkland Hospital (a safety net facility) in Dallas is almost 6 hours!
So why not let low-income families buy medical care the way they buy food? At the supermarket, they combine food stamps with out-of-pocket money and pay the same market prices everyone else pays. If they do that today with medical care, it’s a criminal act. Under the reform proposed here, they could still go to the emergency room and lose a day’s pay. Or they could save time and money at a MinuteClinic.
We should also give low-income families access to 24/7 primary care. Direct primary care (DPC) doctors give patients their cell phone numbers so that they can get medical advice at nights and on weekends instead of immediately going to the ER. At AtlasMD in Wichita, the cost is $50 a month for a mother and $10 for a child for all primary care.
Medicaid should deposit funds for primary care into Health Savings Accounts for low-income families, allowing them to purchase care directly or pay a monthly fee to a DPC doctor of their choice.
Let every school become a magnet school. It’s hard to find a Democratic politician these days who supports school choice. That’s because teachers’ unions hate the idea and they are large backers of Democratic candidates. But I am not aware of any teacher union complaint about the oldest and largest system of school choice we have: our magnet schools.
Initially, these were the creation of federal judges. Although some critics complain that school choice will lead to more segregation, magnet schools were created to promote integration by inducing white kids from the suburbs to return to inner city schools. To do that, the magnet schools had to compete with, and be better than, the suburban schools.
Currently, most public school teachers are teaching whoever happens to be living in the neighborhood. Most charter school teachers are teaching whoever happened to win a lottery. In both cases, teachers have to be all things to all students—regardless of their differences.
Magnet schools, by contrast, can specialize—for example in such programs as mathematics, natural sciences, fine arts or even technical/vocational/agricultural education. Importantly, magnet schools can choose which students to enroll—just like colleges.
Encourage independent contracting. The idea that people will work 40 hours a week at an employer’s place of business dominates an enormous amount of labor law. Even the minimum wage law is premised on the idea that people will work in continuous units called “hours.” But millions of people have decided that’s not the way they want to work. Public policy should accommodate their preferences.
Critics claim that Uber drivers are missing out on employee benefits they would get if they were employees. Have they forgotten about the Affordable Care Act? For a typical Uber driver, the premium for health insurance in the (Obamcare) exchange is zero. By contrast, the average cost of family coverage provided by employers these days is almost $24,000.
Virtually all economic studies of the matter find that employee benefits are dollar-for-dollar substitutes for money wages. So, if an Uber driver became an employee and had employer-provided health insurance, he would experience a huge reduction in money income.
There are, of course, other employee benefits and the correct public policy is to level the playing field. When it comes to retirement savings, for example, independent contractors should get the same tax advantages they would get if they were employees.
There are many other potential reforms for Democrats to discover so long as they remember: the greatest potential for impactful reform begins with the need to change bad government policies.
