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22–467 2016

RESTORING THE TRUST FOR FAMILIES 

AND WORKING-AGE AMERICANS 

HEARING 

BEFORE THE

COMMITTEE ON THE BUDGET 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

HEARING HELD IN WASHINGTON, DC, SEPTEMBER 21, 2016 

Serial No. 114–22 

Printed for the use of the Committee on the Budget 

( 

Available on the Internet: 

www.gpo.gov/fdsys/browse/committee.action?chamber=house&committee=budget 


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(II) 

COMMITTEE ON THE BUDGET 

TOM PRICE, M.D., Georgia, Chairman 

TODD ROKITA, Indiana 

SCOTT GARRETT, New Jersey 

MARIO DIAZ–BALART, Florida 

TOM COLE, Oklahoma 

TOM MCCLINTOCK, California 

DIANE BLACK, Tennessee 

ROB WOODALL, Georgia 

VICKY HARTZLER, Missouri 

MARLIN STUTZMAN, Indiana 

FRANK GUINTA, New Hampshire 

MARK SANFORD, South Carolina 

STEVE WOMACK, Arkansas 

DAVE BRAT, Virginia 

ROD BLUM, Iowa 

ALEX MOONEY, West Virginia 

GLENN GROTHMAN, Wisconsin 

GARY PALMER, Alabama 

JOHN MOOLENAAR, Michigan 

BRUCE WESTERMAN, Arkansas 

JIM RENACCI, Ohio 

BILL JOHNSON, Ohio 

CHRIS VAN HOLLEN, Maryland, 

Ranking Minority Member 

JOHN A. YARMUTH, Kentucky 

BILL PASCRELL, Jr., New Jersey 

TIM RYAN, Ohio 

GWEN MOORE, Wisconsin 

KATHY CASTOR, Florida 

JIM MCDERMOTT, Washington 

BARBARA LEE, California 

MARK POCAN, Wisconsin 

MICHELLE LUJAN GRISHAM, New Mexico 

DEBBIE DINGELL, Michigan 

TED LIEU, California 

DONALD NORCROSS, New Jersey 

SETH MOULTON, Massachusetts 

PROFESSIONAL STAFFF

RICHARD MAY, Staff Director 


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C O N T E N T S 

Page 

Hearing held in Washington, D.C., September 21, 2016 ...................................... 1 

Hon. Tom Price, M.D., Chairman, Committee on the Budget ...................... 1 

Prepared statement of ............................................................................... 4 

Hon. John A. Yarmuth, a Representative in Congress from the State 

of Kentucky ................................................................................................... 6 

Prepared statement of ............................................................................... 8 

Edward J. Pinto, J.D., Resident Fellow/Codirector, International Center 

on Housing Risk ............................................................................................ 10 

Prepared statement of ............................................................................... 12 

G. Keith Smith, M.D., Managing Partner/Co-Founder, Surgery Center 

of Oklahoma .................................................................................................. 24 

Prepared statement of ............................................................................... 26 

William Spriggs, Ph.D., Chief Economist, AFL CIO ..................................... 28 

Prepared statement of ............................................................................... 30 

Thomas Lindsay, Ph.D., Director of the Center for Higher Education, 

Texas Public Policy Foundation ................................................................... 37 

Prepared statement of ............................................................................... 39 

Submissions for the record ....................................................................... 47 

Hon. Tom Price, M.D., Chairman, Committee on the Budget, Submission 

for the record ................................................................................................. 106 


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(1) 

RESTORING THE TRUST FOR FAMILIES AND 

WORKING-AGE AMERICANS 

WEDNESDAY, SEPTEMBER 21, 2016 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE BUDGET, 

Washington, DC. 

The committee met, pursuant to call, at 10:00 a.m., in Room 210, 

Cannon House Office Building, Hon. Tom Price, [chairman of the 

committee] presiding. 

Present: Representatives Price, Rokita, Cole, Woodall, Sanford, 

Brat, Grothman, Yarmuth, Pascrell, Ryan, Moore, Castor, 

McDermott, Pocan, and Norcross. 

Chairman PRICE. This hearing will come to order. We want to 

welcome everybody to the Budget Committee and our hearing entitled Restoring the Trust for Families and Working-Age Americans. 

For over a year, the House Budget Committee has been engaged 

in an initiative called Restoring the Trust for All Generations. Today’s hearing is the fourth in this series of hearings this committee 

has held to advance this initiative. 

Restoring the Trust is an effort to raise awareness among both 

our colleagues in Congress and probably, most importantly, the 

American people that we represent about the serious fiscal and policy challenges facing our Nation’s health, retirement, and economic 

security programs. 

These are programs that are funded automatically without any 

annual appropriation or necessarily any congressional oversight. 

They are what is known in this town as ‘‘mandatory spending.’’ It 

means that the money continues to be spent and is increasing and 

will continue to increase until Congress and the President agree to 

reform the programs. 

The unchecked growth and spending in this area, whether it is 

Medicare or Medicaid, or Social Security, or numerous Federal 

housing, education, and safety net programs is eating up a larger 

and larger portion of the Federal budget. It is crowding out other 

government functions, other national priorities, and contributing 

substantially to the budgetary imbalance that has our national 

debt over $19 trillion and climbing. As we have discussed in this 

committee previously, in addition to the fiscal challenges, we know 

that these programs are not necessarily serving the beneficiaries 

all that well. 

At the same time, and perhaps less appreciated, is the fact that 

many of these programs create substantial distortions and foster 

perverse incentives in the private market in areas like education, 


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health care, and housing. Those distortions drive up the cost of 

goods and services for all Americans. 

For many working age Americans and their families, they may 

have no direct interaction with these automatic spending programs, 

but these programs and government policies generally are increasing demand for services while simultaneously limiting supply, and 

results in prices that are outpacing wages, and that hits the middle 

class particularly hard. 

In today’s housing market, affordability is the missing element. 

The fundamental problem is a supply/demand imbalance that 

works against families struggling to afford the mortgage or rent as 

home values appreciate faster than wages and inflation. The average family’s housing cost rose 63.3 percent between 1997 and 2015. 

According to the U.S. Census Bureau, home ownership rates are at 

their lowest level in 50 years and currently equal the same level 

of 62.9 percent that was achieved in 1965. 

In higher education, evidence points to Federal student aid distorting demand, and it has been linked to rapid rises and increases 

in tuition. A 2015 study conducted by the Federal Reserve Bank of 

New York reports a passthrough effect on college tuition from increased Federal student aid. For every additional dollar in subsidized loans, tuition increases by an estimated $0.65, and for 

every additional dollar in Pell Grants, tuition increases by $0.55. 

More generally, our current education system contributes to 

higher costs by stifling innovation; innovation that could offer flexible, customized, and more affordable education experiences catered 

to the lives of working students with families who are seeking to 

realize their full academic potential. 

Washington’s current approach to health care clearly has, under 

the assumption of knowing what is best for patients across America, has restricted them to health programs that are an 

unsustainable path while driving up costs. According to the Kaiser 

Family Foundation, the average premium in America has increased 

61 percent in the last decade. Similarly, deductibles have increased 

more than 250 percent, meaning increased out-of-pocket expenses 

for individuals and families. Thanks to heavy-handed governmental 

intervention in the Nation’s health care, costs for families continue 

to rise without gains in quality or value. 

Furthermore, competition and innovation are stifled, and providers spend nearly as twice as much time completing paperwork 

as they do caring for patients, lending itself to a paper-centered 

system as opposed to patient-centered healthcare delivery system. 

In short, the status quo is not working. However, positive solutions 

can be discovered in the private sector and successful government 

programs. We should work to advance free market policies that will 

foster competition. In order to have a well-functioning marketplace, 

it is necessary to allow entrepreneurs to meet the demands of consumers, creating better products for lower prices through innovation. In short, allowing America to work. 

To provide views on these issues of critical importance to so 

many Americans, we have a wonderful panel of witnesses with us 

today. We want to welcome each and every one of you. Edward 

Pinto, the resident fellow and co-director of the International Center on Housing Risk at the American Enterprise Institute; Dr. 


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Keith Smith, managing partner and co-founder of the Surgery Center of Oklahoma; Dr. William Spriggs, chief economist at the AFL– 

CIO; and Dr. Thomas Lindsay, co-director of the Center for Higher 

Education at the Texas Public Policy Foundation. 

I want to thank you all for being here and for being willing to 

share your insights and your firsthand knowledge about how our 

Nation’s automatic spending programs are impacting the lives and 

livelihoods of families and working age Americans. We look forward 

to your testimony, and I am pleased to recognize the gentleman 

from Kentucky, Mr. Yarmuth. 

[The statement of Chairman Price follows:] 


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Mr. Yarmuth. Thank you very much, Mr. Chairman. Good timing 

on your part. Welcome to all the witnesses. We look forward to 

hearing from you. Two weeks ago, we had a discussion on the future of Medicaid and Medicare. There was widespread agreement 

on the problem that we have to find long-term solutions to providing quality care while reducing unnecessary spending. We had 

very different views on how to solve that problem, but at least we 

started from the same place. 

Today, we start from very different places. This is not a hearing 

on improving the way the Federal Government helps most American families obtain quality housing, health care, and education for 

American families while reducing unnecessary spending. This is 

about a hearing about whether the Federal Government can have 

any productive role, or make any sound investment, in these areas. 

Some of the suggested solutions are extreme even for this Congress, and I would guess even too extreme for some of my colleagues on the other side of the aisle. We will have this debate 

today and discuss think tank theories about the economy and free 

market principles. As an exercise, that is fine, but we already know 

what works in the real world. We know the investments in housing, health care, and education help American families build better 

futures while spurring economic growth for our Nation. It is not 

academic theory. It is the reality of the last 7 years. Just look at 

the facts. 

President Obama inherited the weakest economy since the Great 

Depression. Hundreds of thousands of jobs were being lost each 

month, and millions of American families rightly feared for their 

economic future, but through swift action and smart investment, 

we have turned that around. We are now in the fourth longest economic expansion in American history, with 15 million new private 

sector jobs and an unemployment rate that has been cut in half. 

Last week, new Census Bureau data proved that we are still on 

the right path. In 2015, median real household incomes rose by the 

fastest rate on record with the highest growth for those lower on 

the income scale. The poverty rate dropped significantly and the 

percentage of Americans with healthcare coverage is now at its 

highest rate ever. This is great progress, but there is so much more 

work to be done. Our economy still largely benefits the wealthy few 

at the expense of the middle class and those struggling to get by. 

I would suggest that we attack these problems by building on the 

successes of the last 7 years and continue providing better opportunities to American families and workers. Let’s invest in infrastructure, education, and R&D to create good, high paying jobs and 

boost the productive capacity of American workers for years to 

come. Let’s give American families help now by raising the minimum wage, increasing access to affordable childcare, providing 

paid sick leave, and family and medical leave, and guaranteeing a 

secure retirement. 

Let’s make their worries our priorities. That is what the American people want. They do not expect us to agree on everything, but 

on minimum, they want us to try and find common ground on ways 

the Federal Government can make their lives better. History 

proves the Federal Government has an enormous potential to make 


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lives better. I hope going forward we can agree to start from there. 

Thank you, and I yield back. 

[The statement of Mr. Yarmuth follows:] 


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Chairman PRICE. Thank you, Mr. Yarmuth. We appreciate your 

opening statement. I want to, once again, welcome all of the witnesses. Mr. Pinto, Dr. Smith, Dr. Spriggs, and Dr. Lindsay, thank 

you for appearing before us today. The committee has received your 

written statements, and without objection they will be made a part 

of the formal hearing record. You each will have 5 minutes to deliver your oral remarks, and Mr. Pinto, you may begin when you 

are ready. 

STATEMENTS OF EDWARD J. PINTO, J.D., RESIDENT FELLOW/ 

CODIRECTOR, INTERNATIONAL CENTER ON HOUSING RISK, 

AMERICAN ENTERPRISE INSTITUTE; G. KEITH SMITH, M.D., 

MANAGING PARTNER/CO-FOUNDER, SURGERY CENTER OF 

OKLAHOMA; THOMAS LINDSAY, PH.D., DIRECTOR OF THE 

CENTER FOR HIGHER EDUCATION, TEXAS PUBLIC POLICY 

FOUNDATION; WILLIAM SPRIGGS, PH.D., CHIEF ECONOMIST, 

AFL–CIO. 

STATEMENT OF EDWARD J. PINTO 

Mr. PINTO. Thank you, Chairman Price and Ranking Member 

Yarmuth. Thank you for the opportunity to testify today. The committee’s goal of restoring trust for all generations is to be applauded; however, as the committee has observed, it is regrettable 

that government programs developed over 8 decades to meet worthy aims are now failing the very people they were intended to 

serve. 

My research has found that the same is to be true with respect 

to decades of ill-conceived housing programs. In most cases, these 

policies increase housing demand, but do little or nothing about 

supply. When supply is increased, it drives up prices, layers the 

subsidies that are used, and a host of unintended consequences result. 

First and foremost, it yields higher prices and higher rents particularly for low income or minority households, the very ones these 

programs were designed to assist. Today’s subsidy laden, government-centric, finance system is something I called an ‘‘economicsfree zone.’’ I call it that because it is indifferent to supply and demand. As a result, housing has become less, not more, affordable 

and less, not more, accessible. 

Turning to the home loan market, 60 years of affordable housing 

policies have failed to achieve its two primary goals: increasing 

home ownership and achieving wealth accumulation for low and 

middle income borrowers. The chairman has already noted that today’s home ownership rate of 62.9 percent is the precise same as 

1965, and not much higher than 1960 or 1957. 

Further, we have not been successful at building wealth for the 

very groups these policies were aimed to help. This is primarily due 

to excessive leverage, namely low down payments, 30-year mortgages that have a lot of debt leverage in terms of income. Home 

buyers have become addicted to debt very much like the Federal 

Government. 

Federal lending policies rely on higher level debt to finance home 

buying by households with limited financial means. The debt is 

used to finance a single asset, one that is highly illiquid and has 


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volatile prices and large transaction costs. This means they start 

with little equity and build more equity very slowly. 

It gives them little protection against life’s vicissitudes and volatile home prices, and the debt-inflated prices themselves create 

price volatility, and we just went through a cycle of that—I would 

only point out that in 1954, interest rates and financing costs were 

about the same as today, 4.5 percent including the mortgage insurance premium, yet the size of homes have doubled, house prices 

have gone up much faster than incomes. The only way that happens is to increase leverage, and FHA has done that with a vengeance. 

The government policies create debt and fuel wealth, not wealth 

supported by real income growth. The result, we saw, was catastrophic, and it was due to these low down payment loans that are 

prone to default. Before this expansion leverage, FHA’s foreclosure 

rate just about rounded to zero, and yet the home ownership rate 

was, as I said, about the same as today. Over the period of 1975 

to 2013, this is after the leverage started getting added to the housing finance system, FHA borrowers would suffer 3.4 million foreclosures. 

There were 3.4 million claims to FHA. Before that, these numbers literally were very low. One in eight such buyers suffered that 

result, and it is even higher in low income and minority households. The entire market since 1975 has experienced eleven to 

twelve million foreclosures. As troubling, the reliance of government loan policy on excessive household debt crowds out the ability 

to save for one’s retirement and pay for one’s children’s post-secondary education. 

As I said, total debt to income ratios have risen. Today, 1 in 6 

FHA buyers have a total debt income ration, pre-tax, of 50 percent 

or more. We all know how this works. You are buying a home. You 

are told you can get approved for a loan of this amount based on 

your income. They are all calculated on a pre-tax basis. 

The focus is not on how much you need to put forward on retirement. Not what your children are going to need to go to post-secondary education 20 years from now. It is focused on what is the 

maximum amount of house you can buy today. No consideration is 

given to these other items, and I have two charts included that describe that. 

As you craft solutions, please keep these facts in mind. Wealth 

is the antidote for poverty. We have focused on redistribution, not 

wealth. Wealth equals one’s accumulated savings for 50 years. Government policies have ignored wealth, focusing on income transfers. 

The racial wealth gap is 3 times larger than the racial income gap, 

and middle income and working class families need a straight 

broad highway to wealth building. I have laid out alternatives in 

my written testimony, and I submit those to your consideration. 

Thank you. 

[The statement of Mr. Pinto follows:] 


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Chairman PRICE. Thank you very much. Dr. Smith, you are recognized for 5 minutes. 

Mr. SMITH. Thank you. Thanks for having me. While everyone 

agrees there is something terribly wrong with the healthcare delivery system—— 

Chairman PRICE. Do you want to turn on your mike, please? 

Mr. SMITH. Oh sorry. Is that better? 

Chairman PRICE. Perfect. 

STATEMENT OF G. KEITH SMITH 

Mr. SMITH. While everyone agrees there is something terribly 

wrong with the healthcare delivery system in this country, it is becoming increasingly clear the problem represents not the failure of 

the free market but the absence of the free market. This is highlighted not only by burdensome regulations, but also by the difficulty in obtaining pricing information prior to receiving a 

healthcare service. In contrast, the plastic surgery and Lasik markets, neither of which is distorted by third-party payment government or private, have traditionally displayed pricing and have 

shown lower prices and higher quality over time. 

It is my opinion, the focus on the lack of insurance coverage rather than the cost of care represents a significant distortion by governments at all levels and is a distraction from the powerful, but 

simple solutions to high cost, spot equality, and poor access that 

the free market can provide. I believe the transparent pricing of 

healthcare services will eliminate most of the distortion and fog attached to this industry, government-generated or otherwise. As Dr. 

Jane Orient has remarked, ‘‘It turns out that coverage is not care.’’ 

Indeed, the first patients to respond to our putting prices online at 

Surgery Center of Oklahoma were Canadians. 

Canadians have coverage after all, just poor to no access to the 

care that many of them require. The most common Canadian patient story we hear remains the woman tired of receiving blood 

transfusions, waiting interminably for a curative hysterectomy. It 

is instructive that one of the fastest growing parts of our business 

is the patient with an ACH exchange plan. Their plight is similar 

to the Canadians after all, for they have coverage, but they have 

poor access to care. Shockingly, they have a better out-of-pocket experience paying our full website fee than meeting their deductible 

and co-pay using their insurance. Like many Canadians, they have 

discovered the only single payer upon which they can truly rely is 

themselves. 

While the Surgery Center of Oklahoma was the first to publish 

online pricing for surgical care, we have been joined by many others, almost all of whom coordinate and share insights through the 

Free Market Medical Association, a group which seeks to connect 

buyers and sellers of healthcare services without the distorting influences typically involved. This price transparent, and therefore 

market-based approach, has led many otherwise price gougers to 

match our pricing rather than risk patients traveling, for instance, 

to Oklahoma City for their care and lose the business. Our price 

is typically 1⁄6 to 1⁄10 of what traditional hospitals charge represent 

what we believe it costs to render care without the fluff to build 

an empire and provide fat administrative salaries. 


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Patients from all over the country have saved tens of thousands 

of dollars by coming to the Surgery Center of Oklahoma and by not 

coming to the Surgery Center of Oklahoma, but leveraging a deal 

in their home town using our pricing. I have changed the pricing 

at the Surgery Center of Oklahoma twice in the 8 years that our 

prices have been posted online, and in both instances, have lowered 

the prices, both times as a result of the action of my competitors. 

This highlights my firm belief that market pricing cannot be the 

result of top-down, central planning but rather emerges from competitive activity. 

Our prices, it should be noted, are bundled, including all aspects 

of care, and are less than Medicaid currently pays the not-for-profit 

facilities in our area. Imposed, top-down pricing is always too high 

or low it seems, predictably leading to a surplus of unneeded services or shortages of needed services. Electronic medical records, 

coding and reporting mandates, combined with low, formulaic pricing have had an intense, and combined have had a distorting effect 

on healthcare markets and access to care in certain specialists. 

As you can imagine, our model has proven attractive to the poor, 

the uninsured, those with high deductibles, foreigners unable to access care, cost-sharing ministries and charities, who found that 

they can purchase 3 cochlear implant procedures at our facility for 

the price of one at the not-for-profit hospital across town and by 

the same surgeon, I would note. 

Our model has been widely popular with self-funded ERISA 

health plans who are seeing their actual yearly costs fall while 

achieving steerage to facilities like mine by waiving all employee 

out-of-pocket expense including travel expenses. The health plan of 

the employees of the State of Oklahoma is the latest ERISA plan 

to sign up and actuaries anticipate a $200-million savings for the 

State in its first full year of implementation. 

Keep in mind that without this arrangement, the deductibles and 

co-pays would have made access to these life-changing surgeries 

prohibitive for many of these families. In December, we often have 

the privilege of hearing patients say that they are going to have 

Christmas this year at the result of waiving their out-of-pocket expense. This arrangement has preserved the budget priorities of 

these families that would otherwise have been usurped by price 

gougers in the industry. 

Finally, I would like to comment about the relationship of price 

and quality. High healthcare prices are simply an indication of the 

absence of market competition where quality is likely stunted due 

to a lack of fear of competition. Lower and falling prices are an indication that newcomers are entering a healthcare marketplace. 

Additionally, attaching a reasonable price to surgical procedure 

indicates the caregivers at that facility have predictable results and 

know what they are doing. In the absence of a vibrant market, you 

get what you pay for simply does not apply. 

[The statement of Mr. Smith follows:] 


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Chairman PRICE. Thank you, Dr. Smith. 

Mr. SMITH. Thank you. 

Chairman PRICE. Dr. Spriggs, you are recognized for 5 minutes. 

STATEMENT OF DR. WILLIAM SPRIGGS 

Mr. SPRIGGS. Thank you, Chairman Price, and thank you, Ranking Member Yarmuth for this opportunity. To restore the trust of 

the American people, we must restore what the government does. 

From 1946 to 1979, the wages of Americans grew with their productivity. Income gains were roughly equally shared by each quintile of the income distribution. 

That was the result of deliberate Federal policies to invest in the 

American people, to invest in America, and to aim those policies at 

shared prosperity. The American people want you to invest in 

them. The best investment anyone can make is in the American 

people and in American children in particular. It will always, always pay to bet on American children. There are lots of key programs that the government put in place that made this happen. 

We invested in our GIs returning from WWII. We gave them opportunity for higher education and for home ownership. That transformed America. It gave us the middle class. We learned, when 

they were puny like my dad when he volunteered before WWII, 

they were underweight, young men, that we needed to invest in 

feeding our children, and the national student lunch program is a 

huge investment in making sure that our children are healthy. 

That changed everything. 

We invested in making sure that the labor market was fair by 

having hands-off and keeping the National Labor Relations Board 

apolitical so that our unions could grow and our workers could fairly bargain over the increase in productivity, and each administration up to 1979 fought to raise the minimum wage, and it was a 

bipartisan vote. The majority of Republicans and Democrats voted 

to raise the minimum wage. It was not a partisan issue. 

Under Republican President Dwight Eisenhower, in response to 

Sputnik, he got the Democratic Senate, in less than one year in response to Sputnik, to put in place the National Student Loan Program, and that launched not only the scientists who got us the 

Internet, got us personal computers, but it also meant that we had 

teachers to train those people, and President Eisenhower invested 

in America. 

He built the Interstate Highway System, which transformed 

America and gave us higher productivity. President Johnson added 

by adding Head Start, a program which pays for itself in the gains 

of the earnings of children who go through that program. Medicare 

and Medicaid. Young women who have had access to Medicaid 

when they were young have higher earnings, have more education, 

and the young people who have had access to it end up with higher 

earnings paying back and higher taxes, the way that we get to afford these programs. 

Now, what economists are finding out is that the reason these 

programs worked is that inequality hurts growth. Inequality hurts 

growth for a number of reasons, but one of them, the IMF found, 

was that if income growth goes to the top 20 percent, you really 

slow growth. In the United States the top 20 percent control over 


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half the income. They spend over, well over, a half of the money 

on education, well over a half of the money spent on housing. That 

distorts prices. In a free market, it is $1, one vote, not one person, 

one vote, and suppliers will always chase the dollars. That makes 

tuitions go up. That makes housing prices go up. Umbrellas do not 

cause rain. 

We have the government having to chase these price tilts in 

order to make sure that everyone can benefit from them. The one 

sure way we have learned from the OECD studies for why inequality hurts growth, is because it hurts human capital formation. At 

high levels of inequality, the bottom 40 percent simply do not get 

enough education. Invest in Americans. That is how you make the 

economy grow and get their trust back. 

[The statement of Mr. Spriggs follows:] 


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Chairman PRICE. Thank you, Dr. Spriggs. Dr. Lindsay, you are 

recognized for 5 minutes. 

STATEMENT OF DR. THOMAS LINDSAY 

Mr. LINDSAY. Thank you, Mr. Chairman, members of the committee. I appreciate your extending me the opportunity to present 

my research on the question of how we might increase opportunity 

for everyday Americans through higher education. I am encouraged 

by the growing bipartisan consensus on the need for higher education reform, and my research conducted on this question, points 

to the need to promote greater innovation and higher education delivery through fostering greater competition among higher education providers. 

This country embarked long ago on a very well-intentioned set of 

Federal policies aimed at increasing college access for which all are 

to be commended for their earnestness. Nevertheless, as with all 

policies, there have been unintended consequences. The work 

ahead of us must consist in no small part in moderating some of 

these policies in order to better align higher education demand 

with supply as well as to better balance student access with success. The need to improve our Federal policies is seen by the following facts. 

Over the past quarter century, average college tuition nationwide 

has jumped 440 percent, nearly 4 times the rate of the CPI over 

the same period. To attempt to pay for these historic increases, students and their parents have amassed historic debt. At roughly 

$1.3 trillion, student loan debt now exceeds even national credit 

card debt for the first time in our history, and this in a country 

fairly addicted to credit cards. The problem here is not a lack of 

government spending. The Federal Government has been very generous. In fact, the United States spends twice as much on higher 

education as the average OECD nation. This is not a money problem. Rather, when we look at the students today who graduate, 

and as I said, only half the students who enter college today graduate. 

Of those who do graduate, 36 percent we know from studies, 

show little to no increase in critical thinking and writing skills, 

those skills that a degree is meant to signify. Moreover, when it 

comes to student loan debt and defaults, 70 percent of student loan 

defaults come from those who do not finish college. Low graduation 

rates increase defaults. Even sadder today, a smaller percentage of 

recent college graduates comes from the bottom 25 percent of income distribution than was the case in 1970, when these generous 

Federal programs began. 

So, from these points, what we see is this, half the students who 

attend college never graduate. Of the half who do, only 64 percent 

attain any significant learning. What that means is that today, 

only 32 percent of students who enter college both graduate and do 

so with the learning that a college degree is meant to signify, 

meaning the odds are 2 to 1 that you will not get both. That is a 

scandal, but there is good news. There are solutions available to us. 

In Texas, in 2014, we launched the Affordable Baccalaureate Degree Program. It can cost half as much as a traditional degree. You 

can finish it sometimes twice as quickly even if you come into colVerDate Sep 11 2014 02:06 Nov 19, 2016 Jkt 022467 PO 00000 Frm 00041 Fmt 6633 Sfmt 6602 E:\HR\OC\A467.XXX A467

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lege with no credit. You can get a degree in 3 years for between 

$13,000 and $15,000. Clearly, you cannot do this with all degrees. 

You cannot do this with a biology degree or a philosophy degree or 

engineering, but you can do it with applied degrees, and that is 

what these programs aim at. And there is something that we all 

need to take account of. 

When we talk about college today and what we can do to help 

college students, we think of the four-year residential campus 

where students are attending full time. That is no longer the case. 

Only 1 in 5 college students fits that description. The new majority 

of students seeking some sort of education after high school, be it 

a two-year degree, a four-year degree, or a certificate, are non-traditional students, meaning they are over twenty-five, and/or working full time, and/or with families of their own to support. 

The traditional models that have worked for us in the past simply cannot address their needs. There are other recommendations 

I would like to make, and I would be happy to offer them during 

Q&A. They are contained in my written statement. Thank you very 

much. 

[The statement of Mr. Lindsay follows:] 


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Chairman PRICE. Thank you, Dr. Lindsay, and thank you to all 

of you for your testimony. I think it was really helpful in framing 

the discussion, and let me put up the first slide, please. I want to 

talk very briefly about the goals that we have, because I think that 

one of my goals is to make certain that we recognize that we are 

all trying to push in the same direction. We all want housing that 

is appropriate and affordable for folks. We want health care that 

is of the highest quality and available for individuals who want 

education that allows each and every American to realize their 

dreams. 

So, the question is not what the goals are. The question is, are 

we doing, as a Federal Government, the right thing that allows 

those goals to be accomplished, and if you look at this slide. This 

is the last 30 years and the increases in family spending on housing and health care and education compared to inflation, so the average increase for those items ought to basically track inflation unless there is something else going on. 

Housing and health care and education obviously are increasing 

significantly greater than inflation, so there is something else going 

on, and that is what I would hope that we concentrate on, so let 

me drill down a little bit on this. 

Mr. Pinto, you talked about the area of housing right now, government-centric housing finance system that creates economic free 

zone, and you talked specifically about the challenges in the area 

of the home loan market, in the area of the rental market. Take 

a few minutes and expand on what the solutions that we could look 

at here to make it so that that kind of economic-free zone does not 

exist. 

Mr. PINTO. Okay. Thank you, Mr. Chairman, for that question. 

The problem is we have a debt-centric approach, so the income tax 

deduction subsidizes debt. The government, through all of the 

housing finance agencies and the guarantee agencies, subsidize 

debt, and this drives up the prices. Of the things you have up 

there, the thing they all have in common is an excess of government involvement, and in the case of housing and education, it is 

debt-driven, so the solution is to rely on less leverage, so you have 

to start with the income tax code and reduce the incentive to take 

out debt and have an interest deduction for that, and replace it 

with paying down the debt so that you are building equity in the 

home. You cannot rely on the price appreciation. We saw what happened there. 

The second thing would be for low-income individuals. What we 

have done is a whole host of programs that funnel the money 

through a lot of third parties, either private sector or adversary 

groups. That is where the money groups and various government 

entities. We need to have the money go, as a rifle shot, directly to 

the consumer, so one of the things that we have proposed is a 

wealth building home loan, which would replace the 30-year loan 

with a small down payment, which virtually everybody has today, 

with a 15- or 20-year loan with actually no down payment. 

Then, use that money that would have gone for the down payment to lower the interest rate along with other things to increase 

the buying power to be almost equivalent to what the 30-year loan 

is. And then for a low income person, for a household, you can add 


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what we call the LIFT home, low-income first time home buyer tax 

credit, so instead of having these tax deductions that run for 30 

years, and the more debt you take out, the more benefit that you 

get, and if you are low income, you do not actually get any benefit 

from that, you can target that to a low income individual and say, 

‘‘We will give you an amount. 3 percent. Say $6,000. It is one time. 

You have to take out a shorter term loan.’’ You now have the 

wealth building. You put them on a path to wealth building. 

The next house they buy 5 or 6 years down the road, they do not 

need any assistance, and if you couple that with savings for retirement, if you couple that with you pay off the loan by the time your 

children are 18 years old, all of a sudden, you have solved the education problem and other things. 

Chairman PRICE. Oh wow. Yeah. Exactly. I was really struck by 

your comment that the wealth gap is three times greater than the 

income gap. So Dr. Smith, let me switch. My pension is to talk 

about medical care and health care itself, but I want to talk about 

the finances, and you were so low key in your presentation, it was 

wonderfully stimulating and, I think, a very striking story. 

Let me read a couple of the sentences from your testimony, ‘‘Our 

prices. Your prices. Typically, 1⁄6 to 1⁄10 of what traditionally hospitals charge what we believe to be the cost to render care, and 

then once again, our prices, it should be noted, are bundled including all aspects of care and are less than Medicaid currently pays 

to not-for-profit facilities in your area.’’ How on earth can you do 

this? Where are your costs being saved? Where are you margins 

being cut? 

Mr. SMITH. Well, fortunately the question I am asked with less 

frequency is that question, how can we be so inexpensive? Increasingly, the question is being asked of the price gougers, you know, 

why can you claim to not make a profit and charge 10 times what 

those guys do across town? The answer is, the prices that we have 

online are what we believe that cost to take care of patients, and 

we are making money, so what is not included is, you know, buying 

expensive advertising. 

It is not buying billboards, buying out physician practices, buying 

out competitors, buying all of the practices of rural physicians so 

that the, you know, local/rural hospital can be brought to their 

knees and purchased cheaply by the big, corporate hospitals. We do 

not do any of that. We just take care of patients, and that is what 

we believe it costs to do that. 

Chairman PRICE. If you could put up the slide on healthcare inflation, please, because I think it is really striking. Here is the 

healthcare inflation since 1965 compared to regular inflation CPI: 

668 percent for regular, and 2100 for health care. What are the 

hurdles that are preventing the regular doc out there taking care 

of patients to do what you are doing? 

Mr. SMITH. You know, many of the hurdles are local and State 

hurdles at the government level. There are Federal hurdles in that 

there are so many strings attached to accepting Federal money, 

and the electronic medical record mandates. Those sort of things 

just drive up the cost of a practice to insane levels, but certificate 

of need laws are a real problem. The Federal Government, I think, 

has backed out of that, but some States keep these certificate of 


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need laws so that entrepreneurs and newcomers cannot enter the 

marketplace. 

There is also the Federal prohibition on physicians owning and 

controlling facilities like mine, and that has always been a problem 

that Washington has addressed with prohibiting physician ownership of facilities, but traditionally, physicians have a hard time participating in the bankruptcy of their patients with institutional 

charges from facilities they own, so there is an accountability there 

that is lost with the prohibition on physician ownership. I think 

that ought to be at least looked at. 

Chairman PRICE. Right. Remarkable story, and I would urge my 

colleagues to take a peek at it, because 1⁄6 to 1⁄10 of the prices that 

are being charged by competitors in your area with as high quality 

or higher quality. Great, great story. Thank you. 

Mr. SMITH. Thank you. 

Chairman PRICE. Dr. Lindsay, I have just a few minutes left, but 

I want to touch on your notation in the area of education. Talk 

about tuition hyperinflation and the burdensome student loan debt, 

and we have got a slide on the level of student loan debt that is 

now exceeding $1.2 trillion, higher than credit card debt in this 

country, higher than loans for automobiles. And you talked a lot 

about the problem, but I want to give you a couple of minutes— 

a minute and a half—to talk about what are the solutions to reverse that. 

Mr. LINDSAY. Sure. The problem has been, in part, a consequence 

of our very good intentions, and about 45 years ago, it became a 

part of a natural mantra that virtually all high school students 

should go to a four-year college. Now, we know that as today, as 

we have moved from an industrial economy to an information economy, that indeed, at least 60 percent of high school students are 

going to need to get some sort of education after high school, be it 

2 year, 4 year—— 

Chairman PRICE. Talk about the hyperinflation of tuition, because I am intrigued. 

Mr. LINDSAY. Yeah, well, you know, looking at your graph on 

healthcare costs. As bad as the healthcare cost increase, student 

loan debt and tuition have increased at twice the rate of healthcare 

costs during that same period. As you mentioned earlier, the Federal Reserve Bank has found that Federally subsidized student 

loans are a big part of the driver of tuition hyperinflation. Every 

time this body increases Pell Grants by $1, universities charge 

$0.55 in tuition. 

Every time this body increases Federally subsidized loans by $1, universities raise tuition $0.65. So, again, the problem is we have 

very good intentions, but we need to inject some economic reality 

into what we are doing, because while our intention has been to 

help students, in fact, and as I said, the odds today under the current system are two to one against a student both graduating and 

getting the learning that a degree is meant to signify. We can do 

better. 

Chairman PRICE. Yeah. Thank you. I appreciate that, and I 

would draw folks’ attention to your entire written testimony, because it really is remarkable. Mr. Yarmuth, you are recognized. Mr. 

McDermott, you are up. 


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Mr. MCDERMOTT. Thank you, Mr. Chairman, Mr. Yarmuth. Dr. 

Smith, I am fascinated by your testimony, as like Dr. Price, I am 

also a physician. How big an emergency room do you have at your 

surgical center? 

Mr. SMITH. We do not have one. 

Mr. MCDERMOTT. So everything is done electively? 

Mr. SMITH. For the most part. 

Mr. MCDERMOTT. I went online with your name. Keith Smith, 

and I looked for your prices. I was trying to see where the transparency was, and I could not find it. So explain to me, if I am a 

patient, and I am in Oklahoma City, and I need a gall bladder 

done, how do I find out what you charge for gall bladders? 

Mr. SMITH. All of our prices are at SurgeryCenterOK.com. 

Laparoscopic cholecystectomy is $5,865 for surgery, anesthesia, and 

facilities. All supplies. 

Mr. MCDERMOTT. I am just a plumber. I work for the school district, and I want to find out this. Where do I go when I get online? 

Mr. SMITH. On a search engine. 

Mr. MCDERMOTT. I am just an ordinary Joe. 

Mr. SMITH. I think some of the Google search. For instance, 

terms, affordable surgery, you know, upfront pricing for health 

care, those kinds of things. We treat patients from all 50 States. 

Except for Hawaii. 

Chairman PRICE. But you gave your website, did you not? 

Mr. SMITH. Yeah. SurgerycenterOK.com. 

Mr. MCDERMOTT. I got to go on Google, and I just say—— 

Mr. SMITH. Affordable surgery, yeah. 

Mr. MCDERMOTT. And I will find it? 

Mr. SMITH. Surgical pricing. That is how patients most of the 

time—they find us. Yes. The two States that send us more patients 

than any other States outside of Oklahoma are Alaska and Wisconsin. It is amazing just even the small procedure like a carpal 

tunnel release. Someone will come see us from Anchorage or Boise, 

Idaho and travel because their travel cost added to our price is still 

far less, multiples less, than they would have paid—— 

Mr. MCDERMOTT. But you are saying that is if everybody in the 

country would go to Affordablehealthcare.com and pick out their 

surgery, we could reduce all the problems in health care or most 

of the problems, or? 

Mr. SMITH. Yeah, it is increasing that one of the problems is 

there is not a consumer market, and the ACA has changed that in 

some ways because the deductibles are so high. As I said in my remarks, many of the procedures on our website are less than patient’s deductibles, so they can actually buy their surgery out-ofpocket for a better price than having used their benefit paying deductible. 

Mr. MCDERMOTT. Let me ask you a personal question. 

Mr. SMITH. Yes, sir. 

Mr. MCDERMOTT. You do not have to answer. Have you ever had 

an emergency surgery or had any emergency medical problems? 

Mr. SMITH. I have not. 

Mr. MCDERMOTT. You have not? So you are saying to somebody 

who has a kidney stone, they should go online when they have a 

kidney stone and ask, ‘‘Where is the affordable place? The best 


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place to get that done in Oklahoma City?’’ The answer that you 

provide or that you are presenting here—— 

Mr. SMITH. The plan that I am presenting is the beginning, and 

that is 90 percent of health care, which is purchased, which is elective, one of the most exciting developments is that a full-service 

hospital is now working with us to price exactly what you have described, and that is tiered visits in the emergency department. 

They also are pricing maternity care where almost any imaginable 

maternity visit and care can be priced. There are some that cannot, 

and for that uncertainty, that is why we have insurance. That is 

why we should have insurance, is for the uncertainty. 

Mr. MCDERMOTT. So you believe in insurance? 

Mr. SMITH. Not the way it is currently. Currently, it just represents pre-paid care. 

Mr. MCDERMOTT. I will give you a case. My son had a second 

child, and the child stopped moving around inside his mother, and 

so the doctor said, ‘‘Come on down to the emergency room, and we 

will take a look.’’ Now, they are driving down this highway in California. They are not going to be sitting on their computer figuring 

out which is the cheapest place to get a C-section or whatever is 

going to be necessary when they get to the emergency room. 

They do not know what is necessary. They are not doctors or 

anything, so they are just driving down there, because the doctor 

said, ‘‘Come on in.’’ How does this work for that kind of thing? 

What should my son have in your system? He is going to have all 

the prices on his computer for elective stuff, but what about the 

emergency stuff? How is he going to know that? 

Mr. SMITH. And, again, this is a new concept, and I really should 

not be here. All I do is say, ‘‘Here is what I do, and here is how 

much it is.’’ That is what every other industry in this country does, 

so it is new, and there are more and more full-service hospitals 

that are becoming intrigued and interested with the idea of telling 

people up front, you know, ‘‘Here is what I do, and here is how 

much it is.’’ 

For an example, an emergency C-section at a hospital that we 

work with in Oklahoma City, they have given me prices for that, 

and that includes the ER, that includes the C-section, that includes 

the pediatrician, and it is probably about $12,000, by the way. 

Mr. MCDERMOTT. So everybody would be able to—I mean, what 

you are talking about is a system where we are all online, and—— 

Chairman PRICE. Gentleman’s time has expired. Mr. Cole, you 

are recognized for 5 minutes. 

Mr. COLE. Thank you, Mr. Chairman. I want to thank you very 

much for the hearing. This is very fascinating stuff, and I want to 

thank our witnesses for their presentation. Dr. Smith, as a fellow 

Oklahoman, I am very impressed and very pleased with your business model. If I am correct, you do not take any Federal payment 

for any of the services. Is that correct? 

Mr. SMITH. Correct. We see Medicare patients, but we do not accept any money from the government. 

Mr. COLE. Can you quickly tell us what were the reasons that 

you came to that decision that it was really better from your standpoint not to be involved directly involved in something like Medicare? 


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Mr. SMITH. There are just too many strings attached going way 

back to how the stark laws affect physician-owned facilities, all of 

which have very unintended consequences and all of which would 

prevent this successful model like ours. I also am a firm believer 

in that rational pricing emerges from competitive activity, and the 

idea that prices can be dictated from on high is just wrong. 

I mean, the prices are either too high or too low. They are always 

wrong. If they are too low, then there is rationing. Either soft or 

hard rationing results. And if the prices are too high, then you 

wind up with a bunch of stuff going on that perhaps is unnecessary. 

So, to accept Federal money is to legitimize that pricing, and we 

just do not do that. I have talked to patients directly, eye to eye, 

and if they are having trouble that month, I do not charge them 

at all. It is just the way my great uncle practiced in Chickasha, 

Oklahoma. You just deal with people as individuals, and if they are 

able to pay our website fee or some portion of it, then we deal with 

them on an individual basis. 

Mr. COLE. Do you think that the model that you have would be 

transferable to something like primary care or other branches of 

medicine as opposed to just elective surgery? 

Mr. SMITH. Yeah. Primary care is probably the area where it applies most perfectly, and the direct primary care movement here in 

the United States is one of the most exciting parts of this free market movement led by Dr. Lee Gross from Sarasota, Florida and also 

by Dr. Josh Umbehr from Wichita, Kansas. His model is called 

Atlas MD, and it is the perfect solution for patients that have 

chronic disease management issues. Patients will pay a subscription price of $50 to $70 a month, and they have unlimited access 

to primary care, so for the diabetic, hypertensive with a foot ulcer 

that needs to be seen every 7 to 10 days, that is perfect for them. 

Mr. COLE. That is amazing. Do you find that the model that you 

have is being replicated other places? Do you get a lot of contact 

from other physicians or physician-owned facilities about what you 

do, and are you seeing this spread at all? 

Mr. SMITH. Yes. We have started an association, the Free Market 

Medical Association, because it has become so widely popular. People are interested in our model because it feels like the right thing 

to do, and then there are other people who are interested in the 

model because it scares them, and they have lost a lot of business 

to us in Oklahoma City. So, the Free Market Medical Association 

is a very vibrant and growing organization, and we had our last 

annual conference in Oklahoma City at the Historic Skirvin Hotel, 

and sold it out. I do not think we will be able to have it there 

again. It is a very vibrant movement. 

Mr. COLE. Well, I would love to contact you some time and just 

come by and see your facility. 

Mr. SMITH. I look forward to it. 

Mr. COLE. Very impressed. In the limited time I have left, Dr. 

Lindsay, if I could move to you. I actually chair the subcommittee 

where we do Pell Grants, so your testimony was wonderful to me, 

and let me ask you this. One of the things we see is a problem 

sometimes is that a lot of States really have pulled back in the degree to which they support students, and a lot of that cost has 


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shifted to the Federal Government. Does your experience suggest 

that is the case? 

Mr. LINDSAY. Yes, sir. When you look at the numbers as the role 

of the Federal Government is increased, the contribution that 

States can make is decreased not only because the Federal Government has taken it over, but also because the States have big items 

in their budgets such as Medicaid. So, here you have two Federal 

policies dueling with each other. 

Mr. YARMOUTH. Excuse me, member, but the causation runs the 

other way. It is the state—— 

Mr. COLE. Well, if I could ask my questions, I am about out of 

time here so I would prefer to choose the witnesses I would like 

to question. Thank you very much. I am out of time so I will yield 

back, but thank you, Mr. Chairman. 

Chairman PRICE. Gentleman yields back. Mr. Pascrell, you are 

recognized for 5 minutes. 

Mr. PASCRELL. Thank you, Mr. Chairman. We have heard our 

witnesses and some of our colleagues that government is the problem most of the time. That the solution to best aid working families 

is to tear it down. The government that is. Well, what happens 

when we leave private industries to set the rules of the road? Are 

they really better at investing in the economy and in the working 

men and women of our society? Do they, left to their own profitseeking motives, protect the vulnerable? And there are many 

vulnerables here. Not just people who are incapacitated. Vulnerable means a lot of things, a lot of groups. 

We used to have less regulated capitalism in the early part of the 

20th century and we saw children working in factories and men, 

women, and children alike losing limbs and lives in hazardous 

workplaces. And let me interrupt what I am saying here to say 

that the comments to me about higher education are something to 

be considered. And housing, something to be considered. All of you, 

I believe—I have read your documentation—all of you make good, 

good suggestions and some of them are debatable. That is what democracy is when we, you know, practice it. But you will have to 

admit that the progressive movement ushered in child labor laws. 

And somebody did not wake up one morning and say, ‘‘Let’s have 

child labor laws.’’ There was a reason for them and it built up, and 

it built up. And the best changes came when there was bipartisan 

support. The best changes. Labor unions advocated for an 8 hour 

workday. So, I do not know if it is a good idea if we leave everything to the private sector to decide what is good and what is bad. 

And this thing about regulations is the most mythical part of the 

center of destroying the American government. It is mythical when 

you look back at even the number of pages that are set aside for 

human regulation 20 years ago and this President of the United 

States who has been accused of everything but the plague. That is 

probably coming. We created government agencies like the FDA to 

regulate our food and meat production. Food safety is a major 

issue. When we talk about trade deals it is a big, big issue. 

Today, we have workplace safety laws and agencies like OSHA 

to inspect for hazards on the job. You do not have to go any further 

than look at the regulations that we have been—oh my god, at the 

banking industry. When the guy that is getting a bonus of $120 


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million is standing up and saying, ‘‘Well, we got rid of those 5200 

clerks in that bank and that is going to solve everything.’’ 

I put money into that bank. I got money in that bank. I am going 

to take it out. You want citizen advocacy, we will have it. I do not 

care what area you are talking about. Health care, financial, workplace. Prior to Medicare, about half of seniors did not have health 

insurance. In my district, now with Affordable Care Act we are 

down fairly low, 9 to 10 percent. I am sure it is the same with 

many people around here. 

So, the government has no part in anything. The government has 

no part in helping the police and fire. That is a local issue. Without 

social security, 44 percent of our seniors would be living in poverty. 

And yet, we want to now privatize. We want to distort what social 

security was all about. Thankfully, today because of that program 

only nine percent do live in poverty. Seniors. That is too many. 

Government—the people’s representatives did that. Not a corporation, not an economic theory, an honest to goodness government. 

Chairman PRICE. Gentleman’s time has expired. 

Mr. PASCRELL. And I hope we have a second round. 

Chairman PRICE. Mr. Blum, you are recognized for 5 minutes. 

Mr. BLUM. I would like to yield my time back to the chairman. 

Chairman PRICE. Mr. Brat, you are recognized for 5 minutes. 

Mr. BRAT. Yeah, I was a professor for the last 18 years before 

I got this new job and so I would just kind of like to go down the 

line. I was very interested in some of the education comments and 

what the kids are actually getting when they are done at the end 

of the road from everybody. There is a lot of talk on the money. 

Our chairman showed some of the inflation statistics, et cetera. We 

are investing $12,000, $13,000, $14,000 per kid for 13 years right 

now, currently. 

I was just in a jail 2 days ago with heroin addicts, 40, and they 

were all telling me what they want in terms of education and it 

was shocking. They want a moral component. They said, ‘‘No counselor ever spent any time with me as a person.’’ They said, ‘‘Everybody is talking about tests and isosceles triangles and whatever, 

and no one gave me any hope as a human being. What am I aiming 

at? What is my career? What is morally good? What is a good life?’’ 

And, so I am just curious on your comments. 

I follow—Deirdre McCloskey is one of my economists here. She 

has got a six-volume set that shows that modern economic growth 

began in about 1700. Why then, when all human history made 

$500 bucks a year? She said that, ‘‘That is when moral language 

changed such that we started calling the businessman and businesswoman morally good.’’ 

And so, I am just curious on if you have got any comments. Just 

real quickly going down at the end of K through 12, kids do not 

know what a business is, right? I mean, I taught freshman in college. They do not know what a revenue is from a cost from a price 

from a whatever. And a lot of them will not go to college and they 

are stuck. 

So, first of all, the business aspect, are we teaching is business 

morally good or morally bad? Are we aiming our kids at something 

they think is morally bad? And then the moral component. Any 


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comments you have? Just 30 seconds each or a minute each would 

be great. Yes, Dr. Pinto. 

Mr. PINTO. Thank you for that question. For me I have to bring 

it back to housing and you mentioned, Dr. Smith, Sarasota. There 

is a free market movement going on there in multifamily housing 

that has been going on for about 10 or 12 years. We have been 

studying it for about 6 months. We have a conference on it in about 

two weeks and it is called Economical Housing by Design. The subsidy programs are affordable housing buy subsidy. Spend $200,000 

a unit for a rental unit and then subsidize it for the next 15 to 20 

years. Incredibly expensive. 

The alternative is to put higher density, put lower cost housing, 

smaller units, that is what the people, our service workers, need. 

And then, the management runs it and you can have rents that 

they can afford and you put it near where they are working. That 

is going on in Sarasota. We want to make that a model for the rest 

of the country. People start out and then they can move from an 

efficiency to a one bedroom, two bedroom, and buy a house. We 

used to do that 50 years ago. We got away from it. We locked people away in subsidized housing and that is the end of it. 

Mr. BRAT. Good. Dr. Smith. 

Mr. SMITH. Yeah, the leader in teaching medical students about 

free enterprise, about mutually beneficial exchange without distorting third parties is the Benjamin Rush Institute, and they are 

almost heroic in their efforts to bring this message to medical students. The other leader, I would say, in education of physicians 

who many times have no business or economic training at all, is 

the Association of American Physicians and Surgeons. And they 

have been the leaders in that area for quite some time to preserving the sanctity of the relationship between the doctor and the 

patient, but also to hammer home the idea that an exchange between two individuals, if it is mutually beneficial, is moral by nature. 

Mr. BRAT. Right, and thank you. And doctor, 30 seconds and 30 

seconds. Sorry to be so quick. 

Mr. SPRIGGS. So, what happened is because States cut back on 

their support for education and turned it into a free market. Colleges of course will chase the dollars, as is the way you do it in the 

free market. That increased tuitions because I want students who 

will pay and they all have Harvard’s model. Harvard follows the 

top one percent. What happens to their incomes? Their incomes 

have been going up much faster than inflation, much faster than 

the average American. 

Mr. BRAT. Thank you. 

Mr. SPRIGGS. The Federal Government then has to catch up to 

help out the other students. 

Mr. BRAT. You believe in equity. Let’s do it. Here we do, doctor. 

Mr. LINDSAY. Sir, with regard to the moral component of education, it is sad. Over the last 50 years, universities have largely 

abdicated their prior responsibility for civic education. According to 

the U.S. Department of Education statistics today only one in three 

college students graduates having even taken one course in American government so they do not get a serious treatment of why 

equality? Why inalienable rights? Why government by consent? 


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Chairman PRICE. Gentleman’s time has expired. 

Mr. BRAT. Sorry for the 30 seconders. 

Chairman PRICE. Mr. Pocan, you are recognized for 5 minutes. 

Mr. POCAN. Sure, thank you, Mr. Chairman. So, I have some 

questions for Dr. Lindsay, but I have to admit I am going to go real 

quick first too, if I can, Dr. Smith. Your concept intrigued me and 

I did find your website right away, by the way. The prices, it took 

one simple search. So, let me go back to—Mr. McDermott was talking about examples. 

So, I worked at an auto parts manufacturer and my job got sent 

to Mexico. I have been out of work for a little while. I have got a 

torn rotator cuff. I call you guys up. But if I understand right from 

the other question, you do not take Medicaid or Medicare? So how 

does that individual access, if they do not have the savings to do 

that, how do they access your model? 

Mr. SMITH. The patients that come see us usually with the help 

of their family and friends can afford our prices because they are 

low and in some cases there have been surgeries financed at our 

facility by church bake sales, so. 

Mr. POCAN. Okay, so, I do not mean these words wrong, but kind 

of survival of the fittest as opposed to someone who might actually 

need the service. They are going to have to go to other models then 

at that point. How about the example of the school teacher that 

Mr. McDermott started talking about? If they come in, now they 

have got insurance and the one thing I did see also on your site 

is this little asterisk after every price and there is a disclaimer. It 

says, ‘‘Note if you are scheduled for surgery at our facility and we 

are filing insurance for you, the prices listed on this website do not 

apply to you.’’ So what does that mean? 

Mr. SMITH. That means we take a lot of risk dealing with the insurers who on the front end will say, ‘‘Yes, we will pay for this 

cochlear implant surgery.’’ And we will have all the documentation. 

We will do that surgery; buy a $25,000 implant and place in a 

child. And then the insurance company will say, ‘‘Sorry, we are not 

paying.’’ 

Mr. POCAN. What happens to the price for that individual? Because it says, ‘‘Those prices do not apply to you.’’ What do you do 

to the price? 

Mr. SMITH. The prices you see on our website are what we extend to anyone who is paying us. 

Mr. POCAN. So if you have insurance it says, ‘‘These prices do not 

apply to you,’’ what does that mean for that individual? 

Mr. SMITH. We do not file very many insurance claims. 

Mr. POCAN. Okay, I think that answers my question. Thank you 

very much. 

Mr. SMITH. I am sorry. 

Mr. POCAN. No, no problem. So, Dr. Lindsay, so one of the questions that came from Mr. Cole about the State support and I agree, 

I have seen that happen in Wisconsin and across the country, in 

2008 in the crash. There was an article in the New York Times a 

couple of years back. Most States have started putting some money 

in. States like Wisconsin have unfortunately not yet. But that has 

made tuition go up and that is one of the bigger drivers. 


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You said you thought it was financial aid, but I am looking at 

a report from the Institute for College Access and Success and they 

say specifically, if I could just read this, ‘‘A number of the Nation’s 

most respected experts in higher education public policy have reviewed the research and found no convincing causal relationship 

between Federal aid and college prices.’’ What are you referencing 

that is different? 

Mr. LINDSAY. Yes, sir. Thank you for the question. More than 30 

years ago, then Secretary of Education William Bennett said that 

growing subsidies would allow colleges, ‘‘Blithely to increase tuitions without fear of repercussions.’’ 

Mr. POCAN. Okay, so I think I got it, this study versus a 30-yearold comment from Dr. Bennett. 

Mr. LINDSAY. For 30 years, academics did studies of that and 

said, ‘‘Oh no, no correlation.’’ Now I am an academic, we had an 

interest in saying no correlation. But nevertheless, the Federal Reserve Bank of New York, last summer really settled this issue. 

There should not be any more debate about this. Nor should there 

be this false charge out there which we hear every day. 

Mr. POCAN. So there is no academic organization or institution 

that has information that says there is a link to tuition and financial aid. Just a yes or no. 

Mr. LINDSAY. Sir, if you see the Federal—— 

Mr. POCAN. I have a few more questions. 

Mr. LINDSAY. Take a look at the Federal Reserve Bank. 

Mr. POCAN. I will take that as a no. So let me ask you a question 

again about the lack of support. So when you look at public versus 

private institutions, especially you have seen all the stuff we have 

had with some of these private colleges for profit that 90 percent 

of their money is coming from the Federal Government or more. Is 

there a difference in distinction you see in that model versus the 

public institution model and other private college models? 

Mr. LINDSAY. All of us are sad to see that some private for profits 

have engaged in fraudulent practices. Nevertheless, only 10 percent 

of students get postsecondary education from for profits. The real 

problem that we have to address if we are going to help the majority is to address public higher education. 

Mr. POCAN. Got it. In the last 42 seconds I think I have left, so 

one of the things that we have been looking at is trying to make 

it less expensive for students. They do not have to have so much 

in debt. You know, one of the things we have said is refinancing 

student loans. You know, you have these weird rates that are out 

there. But upfront, an idea that if you increase financial aid 

through work studies the average student might work 10 or 15 

hours a week relive the university of some of those costs of that 

work and then do the university, and then get that as the financial 

aid. So they essentially can leave with no debt out of a 4 year program. What is your quick opinion on that? 

Mr. LINDSAY. Certainly, I have no objections to that, but I think 

that is nibbling at the edges. There are netter solutions. 

Chairman PRICE. Gentleman yields back. Mr. Stanford, you are 

recognized for 5 minutes. 

Mr. STANFORD. Thank you, Chairman. Okay. I guess first question would be on housing so I am going to come to you. Andres 


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Duany is a land planner/architect. He has done some interesting 

thing in this movement called new urbanism, and its basic premise 

is, ‘‘Much of our zoning is based on the industrial age and revolution. We are going to put the factory over here and the houses over 

here and we separate everything.’’ And yet that is not how our 

country developed, right? If you look at places like Charleston or 

Savannah, it was all sort of thrown in there together and oftentimes you lived above where you worked. 

And why do we not go a bit more back to that? You had a granny 

flat in the back. Grandmom came to live in the back. When 

grandmom died you could rent the house, the little unit out. And 

this idea of mixed use. Are there two municipalities out there that 

from the standpoint of code, because much of it is driven by zoning, 

the government dictates in essence higher pricing on housing? Are 

there two municipalities that you would recommend for me to do 

further study on places that have got it right in your view? 

Mr. PINTO. Thank you for that question. So, new urbanism has 

now been replaced by sort of the founder of it, with lean urbanism. 

And that is because the founder of new urbanism said it became 

too over burdened with excessive regulations and driving the costs 

up. And so now it is lean urbanism. We have looked at it, so Bradenton, which is just north of Sarasota, this developer that I mentioned. 

After Bradenton heard about this in the newspaper, approached—it was actually Manatee County where Bradenton is located, approached the developer and said, ‘‘We have this Knight’s 

Inn that has 240 units and there is five acres or four acres next 

to it. Could you come in and do something?’’ And so within less 

than a year he purchased that building, it got rezoned, converted. 

He is in the process of converting 240 units to efficiencies. He 

has already converted 120 that rent for $625 furnished with utilities and then he is going to build about 130 units new, two bedrooms on the four acres. It is located downtown Bradenton close to 

service jobs and—— 

Mr. STANFORD. The bottom line is Bradenton is—— 

Mr. PINTO. Bradenton is one example. We are working with other 

localities. I did meet with a city in South Carolina. 

Mr. STANFORD. Okay. How about the micro homes? You know, it 

is an RV, it is a trailer, but no, it is a home. I love the concept. 

I love, you know, the idea of smaller is better. Is there a municipality that has it right with regard to micro homes and—— 

Mr. PINTO. I have looked a little bit at that. Again, the other answer, it is a little bit of nibbling around the edge. I think you are 

better off looking at efficiencies at 300 to 400 square feet and one 

bedrooms at 400 to 500. Those sound small today, but those were 

the norm back 56 years ago before the Federal Government 

pumped everything up. 

Mr. STANFORD. Okay. Going over to the world of education. When 

I wore a different hat in South Carolina, I dealt with the happy 

index extensively and the point, the phenomenon that you have 

pointed out, which is the proportionate raise in tuition based on the 

amount of new money we seem to put in at State level. Is there 

a State in your view that has it most right with regards to terms 


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trying to correlate inflation with the pricing of their higher education system? 

Mr. LINDSAY. Well, sir, I do not want to—just because I am from 

Texas, talk about Texas, but we have been trying to address this 

problem and I hope that what we are doing can be instructive. The 

problem is that we are expecting too many students to go to fouryear traditional colleges. That is not helping them. That is why you 

have two to one odds of failing today if you start college. We are 

looking at, and have begun to expand across the State, what we 

call the affordable baccalaureate program, which as I mentioned in 

my opening remarks, can cost half as much as a traditional degree 

and can be completed quicker. 

Now, these are not degrees in biology or philosophy as I mentioned, but we have to bear in mind the new majority of students 

out there today seeking our help are non-traditional students. And 

for them, these affordable baccalaureates which use online learning, competency-based criteria; that is their only ticket to the 

American dream. 

Mr. STANFORD. I see I have 6 seconds. I would love to ask a question but I do not think that is permitted. Thank you, Mr. Chairman. 

Chairman PRICE. Thank you, gentleman. Time is expired. Ms. 

Castor, you are recognized for 5 minutes. 

Ms. CASTOR. Well, thank you Mr. Chairman and thanks everyone 

for being here today to talk about how we lift the American workers and American families. I think it is important to reflect that 

this country has made it through a very remarkable time. We have 

bounced back from the worst recession in our lifetimes thanks to 

American workers and a lot of the recovery act policies that invested in American families and small businesses. Just think about 

this, it was less than 10 years ago that people were losing their 

homes. They were losing their jobs. 

The unemployment rate in Florida topped out at a little over 11 

percent. We are already down at 4.7 percent in our unemployment 

rate in Florida where we have a real boom and bust cycle. It hit 

us particularly hard, but here all across the country the unemployment rate is down to 4.9 percent. We have more than cut the unemployment rate in half. We have created over 15 million private 

sector jobs just since 2010. 

Then think about, did you ever think you would see gas prices 

at $2 a gallon for so long? I mean, in the Tampa Bay area I represent, we have been hovering at a little over $2 per gallon now 

for many months at the same time that we have been able to double our clean energy production. 

The Affordable Care Act has been a godsend for working families, and in Florida we have a very competitive marketplace now 

with healthcare.gov. 1.7 million Floridians now have access to the 

health insurance that they did not have before because for too long 

a time we allowed companies to discriminate against people who 

had preexisting conditions like asthma or diabetes or a cancer diagnosis; 1.7 million Floridians. So, the uninsured rate now, we know 

is at its lowest level in the history of the country. And most people 

still have private insurance through their employer. 


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In Florida, 60 percent do, and their premiums and co-pays and 

cost increases are now at the lowest level that they have been in 

many years so that is good news. And, if you have been fortunate 

enough to have money in the stock market over the past decade 

you have done very well. The stock market has practically tripled. 

But, we still have this problem with how we increase wages and 

income for families. The good news was the Census Bureau said 

last week real median household incomes grew by 5.2 percent over 

the last year. The number of people in poverty fell by 3.5 million. 

That was the largest one-year drop since 1968. But we have got to 

do so much more. We have got to build on this success. 

And Dr. Spriggs, I love it that you say we have got to invest in 

the American people. We have got to invest in this country. And 

there are a couple of things that just really stick out. We have got 

to improve our infrastructure in this country. And I wonder if you 

could comment on that, Dr. Spriggs. I look back at home we have 

so many needs in our roadways, our water systems, our waste 

water systems. Interest rates are low. Would not this be a good 

time to invest in our communities back home and create jobs? 

Mr. SPRIGGS. Absolutely, Congresswoman. Right now we are running a deficit in our infrastructure because it is deteriorating. So, 

if you look at it from a net perspective, you are running negative. 

We are leaving to our children the debt of repairing infrastructure 

that our parents and grandparents paid for. So, we are not leaving 

them the legacy that we were left with. We are leaving them the 

debt of trying to fix it. 

That is not right. And at the moment, there is a consensus 

among economists that the one thing missing from this recovery 

was further fiscal stimulus whether you look at the father of expectations or someone on the other side of economists like Krugman. 

Nobel laureates all agree that we need this stimulus. The IMF has 

been urging the United States at these low interest rates, invest. 

Make the investment in your infrastructure. The OECD is telling 

us, invest. And we are not responding. The Budget Committee has 

a responsibility for the full employment of Americans through the 

Humphrey Hawkins Act and that is a responsibility we should take 

seriously. 

Ms. CASTOR. Well, my neighbors back home see this and they see 

those low interest rates and they understand this would be a great 

time to invest in our communities. And then the other thing I hear 

is that people are clamoring for more modern workplace policies. 

Family Medical Leave has been very popular, and it has sustained 

a lot of folks. But we have got to do more on sick leave, paid family 

and medical leave, and good childcare. How would that improve 

our—— 

Chairman PRICE. Gentlelady’s time has expired. 

Ms. CASTOR. Well, maybe you can reply back to the committee 

on that topic for workforce. 

Chairman PRICE. There will be questions for the record that you 

are welcome to offer. Mr. Palmer, you are recognized for 5 minutes. 

Mr. PALMER. Thank you, Mr. Chairman. Got a couple of questions then I want to make some comments. It has been mentioned 

how well the economy has been doing. I would just like to point out 

that under this administration the economy will have averaged 


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1.55 percent growth through two terms and it will be the first administration, I believe, in the history of the United States which 

there was never even one quarter in which the economy grew at 

least three percent. One out of every six working age males are unemployed. And in terms of the unemployment rate, I do not think 

they count people who simply quit looking for work. And we could 

go on. Mr. Spriggs mentioned infrastructure. We passed an $860-something billion stimulus bill back early in the first term of this administration. And various reports have indicated just over 3 percent of that actually went to infrastructure when it was supposed 

to be shovel-ready jobs. So we had an opportunity to do something 

about infrastructure but chose to spend the money elsewhere. So, 

I take some exception to that. And then we were talking about 

Head Start. 

The government’s own studies indicated that Head Start, by the 

time kids reach the fourth grade show no impact. And regard overall to education, one of the issues, Dr. Lindsay, that I have with 

what is going on in higher education is the amount of money that 

States and parents and students are having to spend on remedial 

education. I think it is about 30 percent of the students who enter 

college today are having to take remedial courses and that is basically taking a high school course but paying for it at college cost. 

You want to comment on that? 

Mr. LINDSAY. Yes, sir. This is a consequence of our notion that 

virtually all high school students should attend a 4 year college 

and that is just not the case. We are not serving them. So it seems 

to me the question is not whether to invest in the American people. 

The question is, what policies by which we invest in them help 

them? 

And with the best of intentions over the last 40 years the growth 

of Federal involvement in higher education has now helped them. 

I mean, think about the fact that today a smaller percentage of college graduates come from the bottom 25 percent of income than in 

1970 when these programs started. So no one here is talking about 

whether we should invest or not invest in the American people. 

Let’s do it in a way that actually helps because when 68 percent 

of students either do not graduate or graduate not having attained 

the learning that a college degree is meant to signify that constitutes a scandal. 

Mr. PALMER. In my district we have a couple, two or three centers, technology-related, vocational related for high school students 

in Blount County in particular. You have got young people graduating from high school that know how to weld and their first jobs 

are earning $50,000 to $60,000 a year. And the thing that I have 

tried to emphasize is that those students can go into those jobs but 

they could still go to a 2 year college or they could go to college 

later. It gives them a chance to earn money and save up, pay for 

their education. Because, as I found out, the more mature you are 

the better student you become. But these are people that are starting businesses. 

Mr. LINDSAY. No, that is right. With the exception fields like law, 

medicine, engineering—— 

Mr. PALMER. Well, we need more lawyers. 


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Mr. LINDSAY. With the exception of those fields, most students— 

I mean, 4 years is much too long. Much of this can be done at the 

community college level. And we have been hearing things about 

free community college. Let me tell you, in 2014, the average Pell 

Grant was $3,300. The average community college cost was $3,300 

so we have got that already. As I said, the problem has not been 

a lack of generosity. Quite the contrary. We spend twice as much 

per student investing in their higher education than the average 

OECD nation. 

Mr. PALMER. Well, I am the first person in my family on either 

side to do to college. My dad was a logger. He had about an eighth 

grade education. That is what I spent my summers doing and it 

was a lot of motivation to go to college. Dr. Smith, quickly, opting 

out of government funding with health care has greatly improved 

your practice and pricing structure. You mentioned the electronic 

medical records coding, reporting mandates combined with low and 

formulistic pricing that had a distorting effect on healthcare markets and access to care and certain specialists. Can you speak to 

that? And I would like for you also to speak to ICD10 and the prospects of ICD11. 

Mr. SMITH. Well, any mandate where, you know, physicians have 

to spend money that they do not think they ought to spend is a 

problem. It increases the cost of practicing medicine. 

Chairman PRICE. Dr. Smith, I am going to have to have you answer that question for the record afterward. Mr. Yarmuth, you are 

recognized for 10 minutes. 

Mr. YARMUTH. Thank you, Mr. Chairman. It has been a very interesting conversation. I am not sure that we have figured out a 

way to restore the trust for families and working age Americans 

yet in the hearing. But maybe there is some ideas that can work. 

You know, we debate all the time in this committee essentially 

what the priorities of government should be. That is basically what 

this committee is about. 

We debate it through a budgetary process and then we debate it 

in hearings such as this. And, over the last few years there has 

been a substantial difference in the attitudes of Republicans and 

Democrats as to what the thrust of our spending should be. And, 

as we have mentioned many times before—Dr. Spriggs, as you 

mentioned in your testimony, we Democrats are pushing for investment in infrastructure and investment in education, research and 

development and so forth. Things that traditionally have provided 

stimulus for the economy and I think have improved people’s lives. 

On the other hand, we have proposals from the Republican side, 

first, I guess, formulated when Paul Ryan was chairman of this 

committee and he proposed budgets that took a very different path. 

And now we have the better way. His plan as Speaker, which 

among other things would reduce the amount of non-discretionary 

spending in this country to its lowest level as a percentage of the 

economy and the budget in modern history. So, Dr. Spriggs, I ask 

you, I know a lot of the times we get the argument from the other 

side, that, ‘‘Yeah, we would like to do a lot of these things, but we 

have a lot of debt and we cannot afford it.’’ Would you discuss the 

downside of not investing in infrastructure and education and research and development? 


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Mr. SPRIGGS. Well, the growth of the United States was so phenomenal because we did make the investment in our people. So, 

you look at our public land grant colleges. One of the things we 

have left out in discussing what education does is that our education system included providing the research for our growth. 

Those land grant colleges insured that American farmers would be 

the most productive and when you look at the results they have 

continued to be the most productive because of the research that 

takes place. Unfunded research. And that is the difference between 

a high education and a low cost education. 

It is an investment that gave us Hewlett-Packard, that gave us 

Google. All of those things were possible because of the way we run 

in the United States our higher education. It is not a glorified high 

school. So, that investment pays off. Whether it is Medicare and 

what happens to extending the work life of seniors or Medicaid and 

giving young people the entry to have a healthy life and to have 

more education, to seek more education, to inspire them to be doctors. 

All of this plays a role and it has paid off. The research on Head 

Start has new findings against what the government initially found 

because we have done better research as economists. And that is 

what happens when you have researchers who get supported. 

So, our better research has indicated that Head Start, in fact, 

does have lasting effects because the earlier study did not consider 

that Head Start has spawned lots of preschool programs. And that 

earlier research looked at Head Start ignoring that people were 

also getting other program and support. So when you actually 

looked at it more carefully, we have found that Head Start pays off 

through the life of the person and most importantly when it comes 

to State costs, it reduces the criminal justice system costs because 

we know that Head Start and investments at a younger age does 

reduce criminal activity. So, all of this points to the success of 

these investments. 

Mr. YARMUTH. Thank you. I want to talk about the union situation in the country. You work for the AFL–CIO and it seems to me 

you can pretty much track the growth and income disparity in this 

country not necessarily by race or gender but just by income, rich 

and the poor, with a decline in union representation in the country. 

Could you discuss the impact of unionization and the declining 

unionization on kind of the general welfare and income levels of 

the country? 

Mr. SPRIGGS. Yes, and the International Monetary Fund, which 

is not union-supported at all or union friendly has looked at this 

in a comparative way, so we can see what has happened for countries that have seen declines in union density. And they found the 

most strong relationship between declining union density and 

growth and inequality particularly for people who are the top one 

percent. 

So, in other words, what happens is when you do not have workers at the table being able to negotiate with their boss about what 

happens to this productivity increase it goes to the boss. 

It does not get shared by the workers. When you look at it in the 

United States, as you mentioned, the graph just pops out. That is 

the way the graph looks—declining unionization, growth of income 


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at the top 1 percent. There is a perfect correlation. Non-union 

workers hurt because of that. The wages of non-union workers are 

seven dollars off from what they would be per hour depending upon 

their education level and even greater for those with less education. So, the wages of non-union workers are hurt when workers 

are not organized. So, it increases inequality and it hurts nonunion workers as well. So, it is very important that we maintain 

our commitment to Americans having the right to organize. 

Mr. YARMUTH. I thank you for your answer. A couple of things 

I wanted to follow up on the statements that have been made by 

the various witnesses. Dr. Lindsay, you compared twice what we 

spend in the United States to what is spent on higher education 

in OECD countries. Could you point to any one of the OECD countries that you would prefer be the system we use versus theirs? 

Mr. LINDSAY. Sir, my point in drawing out attention to that fact 

is this—this is not a money problem, right? And so I was not saying that—that was not an invidious comparison. My point is this— 

we are, the Federal Government has been very generous in investing in Americans’ education. My point is we can do it better because I do not think any of us—sir, I am sure you are not happy. 

When these Federal programs began in the early 70s, as I said, 

today fewer students graduate from the bottom 25 percent of income than in 1970 when these programs began. I do not question 

the intentions. 

Mr. YARMUTH. I understand that. Because in most of the OECD 

countries higher education is free, correct? 

Mr. LINDSAY. You know, I am glad you raised that point because 

we hear that all the time. We think, ‘‘My goodness, I want to move 

there.’’ But you know what? No more than 20 percent of those students go to college. In Europe they track. Meaning, at a very young 

age you are told, ‘‘You are not going to a liberal arts college. You 

are going into the trades.’’ So, when we say it is free it is not free 

for everybody. It is free for the 10 to 20 percent that qualify 

through the tests. So, thank you for giving me that opportunity. 

Mr. YARMUTH. You are welcome. No, I do not think it makes any 

point one way or the other, but glad that you cleared that up. Because I do not think there is much value in a comparison to OECD 

countries because they are very different systems. 

Mr. LINDSAY. No, the value of the comparison is this: We do not 

have a money problem. What we have is a priorities problem. 

Mr. YARMUTH. Thank you for that. Dr. Smith, just one question. 

I will be a little bit snarky here, but, you know, oftentimes we hear 

about the sanctity of the patient-doctor relationship and from what 

you are telling me is that the patient-doctor relationship is irrelevant to the patient getting care in your situation. They go online; 

they have no relationship with you. They decide basically on price 

to come to your service and they do not have any idea who you are, 

so I just want to throw that out there. But that is not the question 

that I want to ask. 

Just in terms of solutions to our healthcare challenges—and everybody agrees we have tons of them. And I actually have raised 

points before in hearings about the fact that you can get a 

colonoscopy for $600 or $700 in a freestanding clinic and the same 


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thing is $4,000 in a hospital and what sense does that make? It 

makes no sense. 

Particularly, if the government is paying for it. But, is it not true 

that the vast majority of costs in the system writ large are treating 

cancer, diabetes, heart disease, Alzheimer’s? These are hundreds of 

billions of dollars a year that the system is trying to deal with. And 

those are diagnoses that would have no relevance to the type of 

system you are talking about? 

Mr. SMITH. I am not an economist so I do not have any idea 

whether those figures are right or not. I do not know. 

Mr. YARMUTH. Yeah, well, generally speaking they are right. I 

will yield back, thank you. 

Chairman PRICE. Gentleman yields back. Mr. McClintock, you 

are recognized for 5 minutes. 

Mr. MCCLINTOCK. Thank you, Mr. Chairman. I thought Mr. Pascrell made the best point of the day in defense of the free market 

when he said, ‘‘I have got money in that bank. I am going to take 

it out.’’ I mean, is that not the ultimate consumer protection? The 

ability to say, ‘‘No, your prices are too high. No, your service is not 

adequate. No, I will take my business down the street to somebody 

who can provide me a better service at a lower cost.’’ 

Is that not how we punish bad actors in a free market? And is 

that not the ultimate punishment that they go out of business? And 

we reward good actors by giving them our business. Now, Dr. 

Smith, your patients choose you. They do not have to go to you for 

services, correct? 

Mr. SMITH. That is correct. 

Mr. MCCLINTOCK. Why do they choose you? 

Mr. SMITH. People that search online are many times initially attracted to the price because otherwise they find their care 

unaffordable in their local market. 

Mr. MCCLINTOCK. So, better service at a lower price they come 

to you. Is that not a good thing? 

Mr. SMITH. It is the market at work, we believe. 

Mr. MCCLINTOCK. Will and Ariel Durant in their history of civilization asked the question, ‘‘What makes Ford a good car?’’ Chevrolet. Competition. The fact that there is somebody down the street 

doing the same thing and is competing for people’s free choice for 

where to go. But, I saw that the Kaiser Foundation has just estimated that in some 30 percent of American counties, people will 

have no choice over their Obamacare policy. 

They have to choose only one plan. That is not a choice at all. 

In 60 percent of markets they will have a choice between two plans 

and that is all. That is not much of a choice at all and I wonder 

what will happen to quality if people cannot move their business 

from people who are doing lousy service to people who are doing 

good service. 

Mr. SMITH. And just as powerful as competition’s effect on the 

marketplace, which drives quality up and prices down in every industry—just as powerful is the lack of fear of competition. And that 

is—— 

Mr. MCCLINTOCK. Now, the price you cited to Mr. McDermott was around $5,000 for a procedure. His question is, ‘‘Well, what if 

you cannot afford that?’’ I am wondering what is the difference beVerDate Sep 11 2014 02:06 Nov 19, 2016 Jkt 022467 PO 00000 Frm 00096 Fmt 6633 Sfmt 6602 E:\HR\OC\A467.XXX A467

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tween paying you $5,000 for the procedure and having Obamacare 

policy with a $5,000 deductible? Aren’t I out of pocket $5,000 in either case? 

Mr. SMITH. Yeah, and many of the procedures on our website are 

less than the deductibles for many of the ACA exchange plans. So, 

people’s out of pocket experience is actually superior paying for the 

entire procedure at our place. 

Mr. MCCLINTOCK. And would it not also make more sense to put 

health care back within the financial reach of Americans? I mean, 

we give these huge tax breaks to companies so they will go out and 

make a choice for their employees that their employees are stuck 

with. Their employees lose if they lose their jobs. Why do we not 

give those same tax breaks to the employees themselves so they 

can afford to go out and make their own choices for the best services at the lowest price? Does that make more sense to you? 

Mr. SMITH. Yes. And a consumer market is full of people who actually care what things cost, but if they do not know what it costs 

then there is a lack of price transparency then they are at a real 

disadvantage. That is why I think that we need to focus more on 

what does this cost not does everyone have coverage. 

Mr. MCCLINTOCK. I want to go to Dr. Lindsay for a second. The 

two areas when the government has been helping people the most 

has been helping them to afford their health care and helping them 

to afford and education. And it strikes me those are the two areas 

of the economy where prices are growing much faster than inflation. 

Last time I checked, health care was growing at twice the rate 

of inflation. Tuition is growing at four times the rate of inflation. 

And from your testimony, I seem to take from this the fact that as 

we throw more money into the system the universities accept that 

by raising their tuitions. 

And the more they raise their tuitions, the more we have to help 

students try to afford those tuitions by doubling Pell Grants, by 

dangling all you can borrow loans in front of students. And the 

more we do that the higher the tuitions go and we are in a negative feedback loop. 

Mr. LINDSAY. Yes, sir. Exactly. It is just simply an economic fact. 

Mr. MCCLINTOCK. What is the biggest cost driver in education? 

Mr. LINDSAY. Federally subsidized student loans. 

Mr. MCCLINTOCK. Those student loans, and I think I have the 

distinction of having one of the highest parent plus loan balances 

in the entire Congress. This is a cause near and dear to me. Does 

this not make it virtually impossible for students to qualify for consumer loans or for mortgages? Is that why we are seeing young 

people start families later? No longer able to afford to buy. They 

are now renting. And consumer spending being extremely sluggish 

because they cannot qualify for consumer loans in an economy 

where two thirds of economic growth depends upon it. 

Mr. LINDSAY. Exactly. 

Chairman PRICE. Gentleman’s time as expired. We will take that 

as a statement instead of a question. 

Mr. MCCLINTOCK. One with which I agree. 

Chairman PRICE. Exactly. 

Mr. MCCLINTOCK. The answer was exactly. 


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Chairman PRICE. There you go. Mr. Norcross, you are recognized 

for 5 minutes. 

Mr. NORCROSS. Thank you, Mr. Chairman. I got to say, this is 

probably the most entertaining committee hearing I have been 

since sitting on Budget Committee. Sort of remarkable. And I 

would like to thank all of those testifying today. But I hear, live 

where you work. We are talking about Potterville here again. I 

think the only place you get to live where you work for free is in 

Congress when you live in your office. But that is a different story. 

I guess we will not go into that. 

I have to disagree with my colleague who we got sworn in together, Congressman Brat, when he says, ‘‘If you do not go to college you are stuck.’’ No you are not. 

You have choices. Those who go to serve our military, service to 

our country, is of great value. Those who go to the other four-year 

college called an apprenticeship, that is great value. You know, in 

this country versus Europe and many others it is somehow if you 

do not go to college you are less than. No they are not. They are 

great people living a great dream whether they were coal miners 

or truck drivers. That is exactly quality, accessible, affordable, 

flexible college. 

What I want to talk about what we are seeing here and hearing 

here today. It literally is a tale of two countries. I think the data 

speaks for itself. We can interpret it very differently and I agree 

with my colleagues on this side of the aisle that the facts are irrefutable and you are not changing those. You heard it mentioned 

where we were a half a dozen years ago and where we are today. 

There is a recovery. It is who is enjoying it or who can enjoy it? 

The disparity in wages has grown exponentially from those who are 

working with their hands and those who are running the companies. Fifteen million jobs, that is pretty good. But those are jobs 

that are much less than when they started, and that tends to be 

one of the concerns that I am dealing with middle class. 

So, when they make a choice to do to college can they afford to 

send their kids there or are they saddled with a quarter of a million dollars of debt? I think we get back to a much more flexible 

system that addresses the real core issues of what is going on is 

probably the most important thing that we can do. But, when it 

comes to the comments, Dr. Smith, it is an interesting model. I just 

wanted to ask one quick question. You post the prices. Do you have 

specials like twins today get half price off? Do you do things like 

that? 

Mr. SMITH. Let me write that down. That is a—— 

Mr. NORCROSS. Okay, we would be interested in that. You do not 

have to answer that. Dr. Spriggs, minimum wage. There is a number of bills. I have one to increase that to $15 an hour by 2024, 

gradual increase and then to incentivize it with tax credits. My colleague Congressman Pocan, Senator Sanders joined together in a 

second bill called the Workplace Democracy giving the NLRB the 

ability to have essentially a check off, and certify those who are 

willing to come together to try to make it easier to form unions. 

There is a concern that the recovery is not felt by all. How do you 

think these two bills if they were to be enacted and signed into law 

would impact the economy? 


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Mr. SPRIGGS. Well, they would help to restore fairness to the 

economy to make sure that rises in productivity by workers show 

up in their paycheck. You know, the market is a wonderful way to 

allocate resources, but it only means something if you have the resources to respond to the market. Having lower health care does 

not mean anything if I cannot afford $5,000. Having affordable 

housing that is dictated by prices from the top does not mean anything if I cannot afford housing. 

So, we have to address what happens to the wages of workers. 

So, pushing wages up from the bottom to ensure that even those 

at the bottom enjoy productivity growth is necessary. That is one 

of the keys we learned from the period from 1946 to 1979. And 

then, making sure that those in the middle can negotiate fairly 

with their boss. 

I am more productive. Do I not get to share in this productivity? 

That makes all the difference in the path and study after study is 

pointing this out by economist. That the economy becomes more 

stable because higher minimum wages mean that those workers 

are more resilient and can respond to market pressures. And the 

ability to negotiate wages mean that wages can be more flexible so 

we can have a more efficient labor market. So, we see that as more 

efficient. 

Mr. NORCROSS. Thank you. I yield back. 

Chairman PRICE. Gentleman’s time is expired. Mr. Woodall, you 

are recognized for 5 minutes. 

Mr. WOODALL. Thank you, Mr. Chairman. Thank you for holding 

the hearing. Mr. Yarmuth mentioned in passing that he was not 

sure we reestablished any trust here today. I came in late, and so 

I may have missed a more cynical part of this panel. But I have 

got to tell you, when you, Dr. Lindsay, are focused on trying to get 

folks not just with access to education, but access to education that 

benefits them long term. When you, Dr. Spriggs are trying to tie 

workers’ wages to their productivity and life folks up out of poverty. 

When Dr. Smith has taken something that is impossible to understand and impossible to afford and trying to deal with both of 

those issues at the same time. And when Mr. Pinto is telling folks 

that maybe we have been complicit in turning something that was 

supposed to be a wonderful opportunity into a terrible burden, that 

is exactly what folks back home want us to be talking about and 

I cannot believe that there is not just a little bit of agreement here, 

but a lot of agreement. That is what I want to focus my question 

on. Dr. Lindsay, I agree with you about the Stafford loan program. 

My question is, who on the left would work with us? 

When I go into a high school today and say, ‘‘Who wants all the 

free money you can borrow and a degree in art history? Or who 

wants a co-op program, a work-study program, you want to graduate with employer experience and no debt?’’ Who on the left would 

work with us to redirect these Federal incentives to putting real 

people in real jobs? 

Mr. LINDSAY. Well, sir, I think there is a growing bipartisan consensus. I mean, you have seen candidates on the left and the right. 

President Obama, former Texas governor Rick Perry, could not be 

as different in politics, but they all agree that we have to reform 


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our policies to better serve college students. Meaning, to help them 

find gainful employment after their degree. 

And so; therefore, I think the time really could not be better than 

right now to start to go back and recognize that with the best of 

intentions we have produced some consequences that do not help 

the intended beneficiaries. I mean, there was an AEI study by 

Jorge Klor de Alva. He found that under the current system average working people pay more to support elite institutions of higher 

education than they do for the schools to which they are likely to 

send their own kids. I mean, the average school gets $2,000–$3000 

in support. The elite institutions get $12,000 to $13,000 per student. 

Again, in another well-intentioned income based repayment and 

loan forgiveness you probably saw the Washington Post report last 

year. They now counsel their students at Georgetown Law School 

on how to game the income based repayment and loan forgiveness 

plan so that, says the Post, ‘‘Tax payers are transferring $160,000.’’ 

Mr. WOODALL. I will not say that you are not dealing with reality. We are slipping back into cynicism. Because that is what 

folks worry is happening. The same thing is true with Mr. Pinto’s 

topic. I live in one of the densest Congressional districts in the 

State of Georgia. You cannot find an efficiency in my district. It is 

not for sale, and if I call my bank they are going to say, ‘‘Rob, we 

stopped doing loans for houses under 600 square feet. We do not 

do those any longer.’’ Who on the left, Mr. Pinto is going to help 

me? Instead of having, as I do in my district, a 2000 square foot 

house with 14 people living in it. A 3000 square foot efficiency with 

two people living in it? Who on the left will partner with me to 

make that happen? 

Mr. PINTO. I cannot name anyone offhand. But I can think about 

it but I cannot name anyone offhand. 

Mr. WOODALL. Because the whole discussion we are having is 

how do we love people? How do we support people? How do we advantage our neighbor? And I believe that is a unifying statement, 

and I struggle with that in the housing industry as much as anywhere. Dr. Smith, I love what you are doing. I love my medical savings account. My Obamacare plan keeps getting canceled, and I 

sign up for a new one and it get canceled, and I sign up for a new 

one, but I am trying to say in the medical savings account space, 

yes. 

Telling someone they have a card that gets them care with a 

$9,000 deductible is not valuable in my district and I know that we 

can bring costs down if we understood it more. What is going to 

drive more of your peers to adopt that model? How do we get more 

folks to do what you are doing, which is to give me access to information as a consumer? 

Mr. SMITH. What is driving more people to do it now is losing patients to facilities like mine that are not price gouging. In answer 

to your other question, there was not a single vote in the Oklahoma 

legislature, Democrat or Republican against this initiative with 

this new no out of pocket for the teachers and State employees in 

Oklahoma plan. So, there is bipartisan support and there should be 

for cheaper and better. 


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Mr. WOODALL. There is a lot here today for us to work on, Mr. 

Chairman, thank you for holding the hearing. 

Chairman PRICE. I thank the gentleman. His time is expired. Mr. 

Ryan, you are recognized for 5 minutes. 

Mr. RYAN. Thank you, Mr. Chairman. Several of the issues you 

talked about I would be happy to work with you on. I think that 

would be great and I will even come to your district and spend time 

with you because I am sure that would benefit you politically as 

well for you to be with me in your district. Mr. Smith, before we 

get into the deep policy, as a member from Ohio and an Ohio State 

football fan, I want to say I am sorry about your loss on Saturday. 

I am sorry Mr. Cole is not here to share with him the Ohio StateOklahoma game. 

Several questions I have because I really think that there are 

some issues here that we should be able to hammer out. I think 

that every member—and when I was not here I was watching in 

the back—has made some really good points on college costs, making sure the Pell grants that we send down to the schools actually 

hit home and actually reverberate in the household and increase or 

lessen the dependence that families are spending on some of these 

programs. The student loan issue is a huge one. And I think there 

does need to be some controls on our colleges with us just sending 

them money and tuition keeps going up, and I will say it as a Democrat, the bureaucracy of the universities growing in a way that is 

not as focused. 

And maybe we do need to look at how schools in States can focus 

on specialties. I want to give Dr. Spriggs a minute to talk about 

the higher education costs because I know that it has been brought 

up and I want to give you a minute to just kind of express your 

opinion about what has been stated with the panel so far. 

Mr. SPRIGGS. So, previously our model was that we wanted as 

much education as possible and our States made heavy investments to make that possible, and make it affordable. So not only 

did we get affordable, but high-quality colleges. One of the big 

trade surpluses for the United States comes from our universities 

because of the research that takes place there that we have all benefited from, and given us the innovation that has led our Nation. 

We have de-invested, we have taken them from being public to 

private, and that market competition, more than anything else, has 

lowered the access to low income students because, if I am the university, and you are going to tell me, ‘‘I am not supporting you anymore,’’ we had a drop from 1975 of 63 percent State support to 

today where it is under 33 percent. 

I am going to want students who can pay. I am going to want 

out-of-state students. I am going to want foreign students. I am 

going to want to teach classes with teaching assistants. I am going 

to want to have as many classes as I can, done in some inexpensive 

way. I am going to have adjunct professors everywhere, right? I 

will lower my cost, and I will cut access because I do not want low 

income students, and I will raise the price because I am chasing 

dollars, and those in the top 20 percent spend much more on education than everybody else. 

So that distorts the market. That is the distortion that we have 

allowed to take place. We went from a public commitment to, ‘‘It 


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is free-market, and that means I am a business now. I am not into 

caring about whether or not——’’ 

Mr. RYAN. Right, and I appreciate that and I think that is a 

great point, Mr. Chairman. This is a great hearing, and I think 

that is a great point. So we need to sit down and figure out how, 

because only 20 percent of the people are using it. It is the high 

20 percent end. People have got some money—is distorting the 

market, and we send money that is distorting in its own way. We 

are trying to help kids, but it is not getting to exactly where we 

want it to get. So I appreciate that and I agree with you with 1,000 

percent. 

Because I only have 40 seconds left, I think this model in Europe 

is a good one. I think what Germany does is great. I think we need 

to get kids on a track, starting as early as possible, and that means 

stem education. That means home economics 2.0. That means 

workshop 2.0 in our high schools that are gone, to get kids on a 

track to go into the trades; to get a skill, so when they are 18 years 

old, they are not living in our basements because they do not know 

what to do or they end up, worst-case scenario, like you said, Dr. 

Lindsay, both in debt, and not with a college degree. 

But that is going to take us sitting down. They are doing it in 

South Carolina because they have so many German companies that 

have moved into South Carolina. They are starting to implement 

this model. This is something that is not heavy lifting for us to create some incentives, Mr. Chairman. 

Chairman PRICE. I appreciate that. 

Mr. RYAN. And I hope, because I know you are an open-minded 

guy. 

Chairman PRICE. I appreciate you coming. Thank you. 

Mr. RYAN. Let’s do this. 

Chairman PRICE. Gentleman, your time has expired. 

Mr. RYAN. Let’s do this, even though I am complimenting you, 

I cannot get more time? No? 

Chairman PRICE. I have tried that and that would set a bad 

precedent. 

Mr. RYAN. I want a change of the rules here. 

Chairman PRICE. Mr. Grothman, you are recognized for 5 minutes. 

Mr. GROTHMAN. Okay, first, Dr. Smith, before I got here, you apparently said the two States that flow into your clinic from other 

places are Alaska and Wisconsin. I was just wondering why Wisconsin? What do you attribute that to? 

Mr. SMITH. There is a large group of farmers there, I understand, 

who do not believe in insurance or participating in insurance 

schemes is moral, and, for whatever reason, they found us and I 

believe the market there has some of the highest prices in the 

country. 

Mr. GROTHMAN. Okay, so that is what you are getting. You asked 

these people what they were doing before you and they said, ‘‘I do 

not have any insurance or I am part of this—’’ I know there are 

some Christian groups out there that have their own kind of pools 

that they go. That is where you are getting people from, okay, interesting. 


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Next question I have: with regard to making it more difficult to 

realize the American dream, part of that is unquestionably education costs. We have gone out of control and, by the way, Dr. 

Spriggs, I will say: when I tour the places where they have apprentices or pretty much the construction trades, I would talk that up 

more. 

I mean, a lot of the people in the trades in Wisconsin are making 

a lot more money than these people who are going to college, and 

I would not emphasize college as much. We need more people in 

the trades so I think they are, quite frankly, more productive in 

our society, and doing better than a lot of these people who went 

to college. It just seems to me obvious: We have too many people 

going to college. 

But I am going to ask you guys a question on two things that 

I think is, in part, contributing to the stagnation in wages. In 

America, first of all, we have embarked on a policy of discouraging 

work. The most recent policy there was Obamacare, in which, talking to a CPA a couple of weeks ago, in which we have these steps 

at which you lose your Obamacare subsidy as you work harder, 

and, you know, the CPA tells me nothing surprising. 

Obviously, the people who voted for Obamacare want to discourage people from making more money. Okay, they wanted to stunt 

their economic growth because when you get to these steps, maybe 

you lose a $5,000 subsidy and, of course, who wants to go above 

that, and I do not know if that was intentional. It seems so obvious. I would think it was intentional, but it is true that other income transfer payments, earned income tax credit, food stamps, 

low income housing: all were designed by people who want to discourage people from working. I would like some of you guys to comment on that in the degree to which, to a certain extent, are lower 

incomes because we are discouraging people from getting past first 

base by setting up—— 

Mr. SPRIGGS. Well, Congressman, no, and in a short answer. 

What workers are confronting is, in the trades as you mentioned, 

that Congress is quite willing to have H2B visas for skilled workers 

to come into this country, and undercut the wages of skilled Americans who need the jobs. So we have H1B visa workers who will 

come and undercut Americans who borrowed money to get degrees 

in stem. So if Congress wants to be on the side of American workers, let’s be on the side of making investment and letting the price 

of work go up. 

It is not the workers who do not want higher wages or the workers who do not want to work up to the higher wages. It is these 

kind of policies that put wage caps in the competition that Americans face, and you are right. Apprenticeship programs work. 

Unionized apprenticeship programs are the best, and we are the, 

the AFL–CIO, the largest producer and provider of job training in 

the United States, other than the United States Army. So you are 

absolutely right. That is a path that Americans can take. But we 

have to protect them by not having H2B visas—— 

Mr. GROTHMAN. Well, I will agree with you there. That was my 

question, Dr. Spriggs, but I will agree with you that when we decide who we are going to vote for the next election, we should make 


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sure we do not have another President who goes overboard in allowing too many people in the country. 

Mr. PINTO. So, to specifically answer your question, a colleague 

of mine, Maura Corrigan, who was the head of the Department of 

Social Services in Michigan for 4 years, up until a couple of years 

ago, added up all the means tested programs, and I think there 

were 80 something of them, and only two or three have a work requirement. One of them she got added for the Department of Agriculture food stamps with the help of a Democratic senator from 

Michigan, and so that is really at the base of this; is that you have 

all of these programs that are not means—— 

Mr. GROTHMAN. I am not just saying a work requirement. I 

mean, there is a work requirement: The more you work, the more 

you lose. 

Mr. PINTO. They are not even required to work in order to get 

the means tested assistance. 

Mr. GROTHMAN. Okay, I guess we are out of time. 

Chairman PRICE. The gentleman yields back. Thank you. Ms. 

Moore, you are recognized for 5 minutes. 

Ms. MOORE. Thank you so much Mr. Chairman. Now just let me 

say upfront that I really regret that other responsibilities took me 

away from attending the entire meeting, and so I do ask the distinguished panel to forgive me if my questions or comments seem to 

be a little off base from just the lack of opportunity to have heard 

you all the way through. I just want to be clear. I do not have my 

bifocals on, so it is hard to see, but you are Attorney Pinto, right? 

Mr. PINTO. I have a J.D., yes. 

Ms. MOORE. J.D., okay, and so that is M.D. Dr. Smith, Dr. 

Spriggs, and Dr.—— 

Mr. LINDSAY. Lindsay. 

Ms. MOORE. Dr. Lindsay, right. So, okay, I want to get into the 

whole thing about educational opportunity. 

We often hear about how only 5 percent of the world’s population 

lives in the United States; 95 percent live out in the world, so we 

have lost a lot of the manufacturing; the kinds of jobs that 

uneducated, low income people can do. And even when we talk 

about technical manufacturing in my district, these are very highend, new kinds of technologies that require education. So I am a 

little bit confused about this. What I have heard since I have been 

sitting here; this sort of, you know, denigration of higher education. 

I am one of those people, you know, the eighth of nine children, 

born poor, on the welfare. I had a baby out of wedlock, who benefited from getting a bachelor’s degree, and so I guess I am just a 

little curious to ask the panel, so when you start talking about how 

the country will not benefit by increasing educational opportunity, 

that is confusing for me, since it seems to me that we are going 

to retain hegemony in the world by producing the, you know, the 

Apples and the Googles and the kinds of technologies that require 

higher education. We will start with you, Dr. Spriggs. 

Mr. SPRIGGS. Well, yes. 

Ms. MOORE. I see none of you guys chose to go to technical college but, anyway, go on. 

Mr. SPRIGGS. Well—— 

Ms. MOORE. And none of you people over here either. 


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Mr. SPRIGGS. When the United States was building up this 

record on productivity increase, we were number one for college 

education, for a college educated workforce. We have slipped to 

number 17, and that risks our position. That risks our ability to 

make the innovations, and the investment we made in those universities provided the innovation, not only from the students, but 

the innovation from the professors. 

So my alma mater, my graduate alma mater Wisconsin, your 

State, has made huge contributions because of the investment in 

that kind of research and so, yes, it pays off—— 

Ms. MOORE. Okay, thank you, Dr. Spriggs. I do not have much 

time, Dr. Lindsay. Would you just please just give me a 20 second 

rebuttal why—especially when you say, you know, like I know 

black people would not get to go to college if we had to rely on tests 

and so forth. Give me your 20 second rebuttal to why we do not 

need people to go to college. 

Mr. LINDSAY. I know less than you how to increase educational 

opportunity. My point is that most of the jobs today do not require 

a 4 year traditional degree. 

Ms. MOORE. Okay, even though most of those jobs are in the 

emerging world. Let me ask you just a little bit about infrastructure. Dr. Lindsay, we are talking about housing. I think in your 

testimony you said that, basically, it was kind of poor people wanting housing and that is sort of the reason we had the housing crisis. Do you see where appraisers, credit agencies, subprime lenders, 

the toxic loan packaging; where these basically criminal and immoral activities had more to do with it than, say, the GSCs or people wanting housing, people who exploited poor people? 

Mr. LINDSAY. Representative, I know you addressed me, but I do 

not think you intended to about housing. 

Ms. MOORE. Who did I intend? Oh, Dr. Pinto. That is right. 

Mr. PINTO. Okay. 

Ms. MOORE. I mean, J.D. Pinto. 

Mr. PINTO. Yes, thank you. 

Mr. PINTO. So in my view, and I have researched this extensively, is the housing crisis was formed and created and resulted 

from housing policies promoted and implemented by the Federal 

Government, led—— 

Ms. MOORE. But not by appraisers and subprime lenders? 

Mr. PINTO. Let me just finish, and led by HUD, FHA, national 

home ownership strategy, Fannie Mae, Freddie Mac, and the private sector followed along, and the appraisal process, I will say, in 

the United States is completely broken, but that is also part of 

Fannie Mae/Freddie Mac—— 

Chairman PRICE. Your time has expired. Mr. Rokita, you are recognized for 5 minutes. 

Mr. ROKITA. I thank the Chairman. Mr. Pinto, would you like to 

continue on? Anything else you want to add to that response? 

Mr. PINTO. Thank you. And this all started in the latest cycle, 

in the early 1990s when Congress passed the so-called Safety and 

Soundness Act for Fannie Mae and Freddie Mac. We know how 

that turned out, and included in that was the affordable housing 

requirements, and that built up over about a 12- or 13-year period, 

including the private sector, which was brought into this by HUD. 


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All of that is well-documented, and we ended up increasing that leverage, as I described in my testimony, and the result was 

8,000,000 foreclosures. It was the result of errant housing policies. 

Mr. ROKITA. Thank you, Mr. Pinto. I appreciate that. I apologize, 

as well, for not being here for the entire hearing. I was at an education—helping chair an education subcommittee hearing. So I 

have that on my mind, so I am going to switch over to Dr. Lindsay 

here for a little bit. 

It seems, I know. Federal policy over the last several decades is 

such that it focused on enrolling students in college and what is 

the result, and what is your reaction to that? 

Mr. LINDSAY. The result is that half of the students who start 

college today fail, and of those who do graduate only 64 percent of 

them show this substantial increase in learning that a college degree is meant to signify, which means that the odds are two to one 

against you if you start college today, that you will get both a college degree and the learning it is meant to signify. That is not 

what all of these programs intended to do. 

It is one of the sad, unintended consequences of Federal involvement, and the worst consequence of all, we all want to see those 

at the lowest income levels be able to rise. That, through education, 

that is the American dream, but almost 50 years later fewer college 

graduates are coming from the bottom 25 percent of income than 

in 1970 when these large programs began. 

Mr. ROKITA. Say that one more time, please. 

Mr. LINDSAY. Today, fewer college graduates are coming from the 

lowest 25 percent of income distribution than was the case in 1970 

when these large, Federal programs began. 

Mr. ROKITA. That is amazing. I do not think that I have spent 

a good deal of my day in education policy. I do not know that I 

have heard it stated like that. 

Mr. LINDSAY. Yeah. 

Mr. ROKITA. I appreciate that very much. I am going to put up 

a slide here, hopefully soon. Yes, thank you guys very much. Student loans themselves, $1.6 trillion, if you aggregate all that 

stuff. That is how much of the household debt student loans consume. It is my contention that these same policies, Dr. Lindsay, 

that you are talking about that have put ‘‘more money on the education street,’’ for example, have done nothing really but increase 

college and university budgets, perhaps professor salaries and the 

like, and that is what is really driving our debt. More access to the 

cash means budgets and everything go up. You know, that is just 

the layman’s interpretation of what I see on that committee on almost a weekly basis. Do you agree or disagree? 

Mr. LINDSAY. Yes, sir, I think you are correct. Government funds 

have increased the demand, but there has not been a comparable 

increase in the supply because of strangling government regulations that limit the innovations that are out there that are the good 

news, and that can make higher education more affordable. 

Mr. ROKITA. So as a result, some have come up with some what 

others would call radical proposals for, not necessarily getting the 

government out, all of that would be the effect of it, but making 

the government loaning of money in this space unneeded. They are 

not going to work for every student or every discipline, but one in 


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particular I subscribe to; there are others, is called ISAs or income 

sharing agreements and, again, some say that is pretty controversial. Honestly, it is not a setup question. I just want your opinion 

on concepts like that, and you can describe the concept or I can. 

Mr. LINDSAY. Yes, income sharing agreements are contracts between future employers and students who get their education subsidized by the employer. It costs taxpayers zero dollars. I also think 

that, in addition to that, I mean, right now under our Federal program, the people on the hook are the students and their parents 

and the taxpayers, right? Let’s put the universities in that mix. 

Mr. ROKITA. Right, exactly, some skin in the game. 

Mr. LINDSAY. Some skin in the game, and, you know, these ideas 

are getting growing bipartisan support; that for each student who 

defaults, that the universities pay a certain percentage for each 

student default in their college every year. That would give them 

that skin in the game to be more careful with students and also, 

perhaps, to focus more on teaching. Because we know from every 

study that universities trying to become Harvard always try to 

offer lower teaching loads to full-time faculty. I was a faculty member for 20 years. 

Chairman PRICE. The gentleman’s time has expired. Time for 

questions is complete, and I want to ask Mr. Yarmuth if he has 

any closing remarks? 

Mr. YARMUTH. Thank you, Mr. Chairman. I want to thank the 

witnesses. I agree with many of the comments my colleagues have 

made about how interesting this hearing has been, and while I 

joked a little bit about not restoring trust through this hearing, I 

think I did not really mean that there are not ideas here that I 

think could, if implemented, or if pursued to some kind of a finality 

at the Federal level, might not help restore trust. So when Mr. 

Woodall, for instance, asked who on the left, I assume he would 

consider me on the left, as Mr. Ryan. 

I think the idea for coming up with policies that would 

incentivize development of smaller apartments that are available to 

lower income people: I think it is a great idea. All of these things, 

I think, would work; many of the things that Dr. Lindsay talked 

about. Yeah, you know, I speak a lot about the fact that Harvard 

Business School, at least last time I checked, did not have an accounting professor on their faculty because they decided the best 

accounting professor in the country was at Brigham Young University and they use his work through digital means. 

So I think each one of these areas, whether it is housing or education or, well, we have talked a lot about health care in the last 

6 years, and the investments that Dr. Spriggs talked about are all 

things that deserve a lot more conversation, and I think that if we 

do that and can act in a bipartisan way to make sense of some— 

,just one final comment. 

When I talked about the colonoscopy disparity in price between 

freestanding clinics and hospitals, this was in a Ways and Means 

Committee hearing years ago, the answer I got was, ‘‘Well, if you 

take that income stream away from the hospital, then they are 

going to have to find ways to charge more for other things.’’ Well, 

I said, ‘‘That is not a reason. That is just evidence of a broken system.’’ 


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So I think when we go through all of these areas we can see Federal policies that are not performing in the way they were originally intended. We are not creating the right incentives and I think 

we ought to spend a lot more time, as a body, working on those 

things and, if we did, I think we would find opportunities for bipartisan cooperation. And that would be a wonderful thing. So, thank 

you, Mr. Chairman for the hearing, and I yield back. 

Chairman PRICE. I thank the gentleman, and I just want to 

thank the witnesses. I was a little curious that some of the comments took a turn toward unions, and I would be remiss if I did 

not mention the Employee Rights Act that we have offered. I was 

stunned to learn that only 6 percent of union members currently 

have ever voted to be in a union. So we talk with folks back home. 

None of us are opposed to unions. We just think that workers need 

to have consent to be in the union. So we think it is important to 

have elections. We think it is important to have secret ballot elections for union formation and an appropriate time to notice all 

those things. So I just wanted to mention that, as our friends on 

the other side talked about unions. 

I also wanted to just highlight a particular article that I noted 

from last April from the Guardian and I, without objection, I will 

insert in the record. It is titled ‘‘L.A. Unions Call for Exemption 

from $15 Minimum Wage That They Fought for,’’ and I was curious 

to read this. This is an article that highlights the battle that folks 

are having for a $15 minimum wage, but then members of the 

AFL–CIO union in L.A. are fighting to exempt their union from the 

$15 minimum wage so that they can undercut the folks who are 

going to be required by the State to have a $15 minimum wage. 

I found that curious. 

But I want to get back to this slide that I started with and, hopefully, the common ground. The inflation that the American people 

have seen over the last 30 years has been 128 percent increase over 

that period of time. But the three things that have outpaced inflation—housing and health care and education—are the things that 

all Americans have to deal with, and I would think that there 

ought to be commonality in trying to answer the question why? 

Why is that the case, and so I am somewhat curious for my 

friends on the other side who seem to scoff at some of the evidence 

that I think has been put before us on why that is the case. I would 

think that we ought to be listening and saying, ‘‘Okay, cannot we 

make it so that the American people have a greater opportunity to 

use their disposable income in a more responsible way by making 

certain these costs are held down;’’ that we are not gaming the system from the Federal Government’s standpoint if, in fact, that the 

Federal Government involvement in this is pumping up prices for 

folks on things that they have to spend money on. Why would we 

continue to allow that from a public policy standpoint? 

So I think the testimony that we have heard here today has been 

extremely enlightening. I want to thank each and every one of you 

for coming today. I think you have helped us have a conversation 

and, hopefully, initiate a bipartisan conversation and more bipartisan activity so that we can come to some policy agreements on 

how to move forward and make it so that the American people are 

able to utilize their finite resources that they have in a much more 


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responsible way, without the influence of the Federal Government 

in a way that distorts how much money they are going to have to 

spend for these three particular items. 

So with that, we have completed this hearing. I want to thank 

you all again; Mr. Pinto, Dr. Smith, Dr. Spriggs, and Dr. Lindsay 

for your time today. The committee has received your statements, 

and we will allow each member to notice that they may submit 

written questions to be answered later in writing. Those questions 

and your answers will be made part of the formal hearing record, 

and any member who wishes to submit those questions or extraneous material, for the record, may do so within 7 days. Thank you 

all so much. This hearing stands adjourned. 

[Whereupon, at 12:19 p.m., the committee adjourned subject to 

the call of the chair.] 


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