The Real Health-Care Plan

There is something poetic about the Democrats’ plan to combine the health-care reconciliation bill with legislation that would make the government the “single payer” in the market for student loans. From subsidies to a “public option” to an outright government takeover, the history of American college-loan policy offers an instructive illustration of how the government can absorb an activity incrementally, claiming to cherish the benefits the private sector provides — until it becomes inconvenient. At that point, the private sector is cast as the enemy of sound reform. If the Democrats’ plan succeeds, then their health-care reconciliation bill will include a foreshadowing of its final act. And we can look to the case of student loans for a preview.

Democrats argue that the government should not be paying private lenders large subsidies to make low fixed-rate loans to college students when it could simply turn this activity over to the Department of Education, save itself billions of dollars, and redirect that money into other education projects. “The banking industry has had a free ride from taxpayers for too long,” declared Education Secretary Arne Duncan. But the bankers did not pull these subsidies out of thin air. The government provided them in exchange for a service: lending money to students at low fixed rates, so that more may attend college. It is similar, though not identical, to the way the Democrats’ health-care bill would succor the insurance industry by subsidizing its product while forcing people to buy it.

National Review