Warren and Sanders’ Democratic debate policy ideas are cheaper than we think

Warren and Sanders’ Democratic debate policy ideas are cheaper than we think

As 10 Democratic presidential hopefuls line up on stage for the third debate on Thursday night, Americans can expect to hear more about their progressive agendas. Candidates have already proposed policies around health care, income inequality, housing, climate and education. Each of these policies has drawn healthy skepticism, in large part due to each plan’s projected high costs.

For example, in a tense moment during the first debate on June 27, Bernie Sanders dodged a question from MSNBC moderator Savannah Guthrie on how expensive his “Medicare for all” plan would be for middle-class Americans. However, while each proposal is indeed expensive individually, there could be major cost-savings across programs if these policies are pursued in aggregate and the true return on investment is taken into account. A comprehensive progressive agenda can not only create drastic savings, but taking those savings into account may potentially render some proposals “free” over the long run.

Social policies are all connected, and when advanced simultaneously will provide a more efficient, effective and moral safety net. This is because each program actually supports and reinforces the benefits of the others. As such, the only effective way to account for the total expected costs and societal benefits of a wholly progressive agenda is to highlight the interdependence of each policy. Three proposals in particular regarding housing, early education and climate change clearly demonstrate this cost-saving potential.

Each candidate has proposed policies to address the affordable housing crisis, with varying degrees of specificity. Stable housing is one of the most important social determinants of health, and is associated with longer life expectancy and higher infant birthweight. Providing access to affordable housing could therefore lead to health care savings.

For example, Massachusetts’s Home and Healthy for Good Program provides housing for chronically homeless individuals. Prior to this program, the estimated cost for all state government services per person was $39,164 per year, which includes Medicaid, criminal justice and shelter expenses. However, one year into the program, the total costs to the state were reduced by $13,531 per person, largely due to the link between housing and health. By providing permanent shelter for individuals, government subsidized housing indirectly led to a general decrease in the health expenditures for those in the program. In other words, looking at the costs of state-subsidized housing alone, without taking into account consequent savings, vastly over-estimate the costs of housing programs.

Stable housing is one of the most important social determinants of health, and is associated with longer life expectancy and higher infant birthweight.

Another proposal, backed in various forms by virtually all Democratic hopefuls, is to provide universal pre-K for every child. James Heckman, the Nobel Prize winning economist, measured the wide-ranging benefits of access to high quality pre-K, and found that children who had access to pre-K had higher test scores, reduced high school drop-out rates and higher high school graduation rates. However, the benefits of universal pre-K are even more substantial once one considers its subsequent effects beyond education.

For example, low-income children who are enrolled in pre-K experience lower rates of drug use and smoking, according to Heckman, are less likely to be on welfare, and less likely to commit a crime than their peers. If one considers subsequent reductions in health care, criminal justice and welfare spending, for every dollar invested in pre-K, costs would be reduced by $4 to $12 across other government programs, for a net benefit of $3 to $11. The status quo is therefore more expensive to the government than providing pre-K, once all benefits are taken into account.

Finally, many of the Democratic candidates have proposed ambitious policies to combat climate change. While such policies are individually expensive, the net benefits could lead to significant savings overall, as environmental regulation efforts have in the past. For example, the Clean Air Act, which allows the federal government to set standards for multiple types of air pollution and which has been repeatedly attacked by the Trump administration, has had wide-ranging benefits beyond air quality, including to the health of the economy and individuals.

The EPA estimates that the 1990 amendments to the Clean Air Act alone generated benefits 30 times the cost, mostly in decreased mortality due to poor air quality, lower rates of asthma and fewer days of missed school and work. Despite this progress, disadvantaged communities across the United States are still exposed to high levels of pollution with severe health consequences. Transitioning to greener forms of energy and lowering pollution may therefore lead to similar long-term cost savings. Climate policy is not only about the environment, it is directly tied to health care and economic policy.

What these housing, education and environmental policy examples demonstrate is that these programs have positive impacts on the cost of other government services. A robust safety net that allows for collaboration and coordination across programs will have broad and positive spillover effects. An understanding of the true public return on investment of each of these programs is essential.

What does this mean for Thursday’s debate? First, these connections between different aspects of the safety net must be made explicit. Emphasizing the connections between different social programs can provide political impetus for more aggressive social policy. Second, new sources of funds to facilitate cross-cutting programs should be incorporated into social policy agendas. Right now, using Medicare and Medicaid funds for rent is illegal, though the Center for Medicare and Medicaid Innovation is experimenting with waivers for housing related costs. This is reasonable, as using currently scarce health care funds for other programs could simply lead to overall cuts. New cross-cutting funding streams should not come at the expense of current funds but should be complementary.

Passing an ambitious progressive agenda that works across policy areas will lead to programs that are more effective and less expensive, improving the quality of the social safety net and the lives of Americans. A weak social safety net is simply too expensive.

Cassandra Robertson

Cassandra Robertson, Ph.D., is a postdoctoral fellow at the Cornell Population Center at Cornell University, where she researches public policy and intergenerational economic mobility.

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