“Such” a mess

Wow. This morning was a doozy for ObamaCare, as two federal appellate courts issued opposite rulings on the validity of the law’s crucial insurance subsidies. Plaintiffs in each of these cases challenge whether the language of the Affordable Care Act gives the IRS authority to give subsidies to all Americans or to only those living in the 14 states that elected to create their own health exchanges. (I have previewed the D.C. Circuit iteration of this lawsuit previously: I, II, and III.)

How did the two courts reach different conclusions? After a quick read through of the two opinions, it looks like the divergence comes down to the meaning of the word “such.” Really.

First, consider the key statutory sections of the law at play:

  • Section 1311 of the law directs states to create health exchanges.
  • If states fail to do so, the law directs the federal government (through the Department of Health and Human Services) to “establish and operate such Exchange within the State.”
  • Section 36B gives subsidies to those who enroll in plans “through an Exchange established by the State under section 1311.”
  • But the law also defines the term “Exchange” as “an American Health Benefit Exchange established under [section 1311 of the ACA]” — the section that directs states to create exchanges.

How did the courts reconcile this mess? First, let’s start with the D.C. Circuit case, Halbig v. Burwell. The court there determined that the statute requires three elements to receive subsidies: “(1) an Exchange (2) established by the State (3) under section 1311.” “[F]ederal Exchanges satisfy only two: they are Exchanges established under section 1311. Nothing in section 1321 deems federally-established Exchanges to be ‘Exchange[s] established by the State.’”

It’s the court’s second element that dictates its resultant decision against the government and against broad subsidy availability. Does “such exchange” mean that an HHS-created exchange is (for statutory purposes) an “exchange established by the state”?

The Fourth Circuit Court of Appeals in King v. Burwell determined that it did. “Given that Congress defined ‘Exchange’ as an Exchange established by the state, it makes sense to read § 1321(c)’s directive that HHS establish ‘such Exchange’ to mean that the federal government acts on behalf of the state when it establishes its own Exchange.”

In other words, the Fourth Circuit thinks that the D.C. Circuit parsed the statute too finely. By authorizing HHS to create an exchange under Section 1311, the law lets the federal government fill in for the state. “Such” encompasses more than just a 1311 exchange — it means a 1311 exchange established by a state.

That’s the threshold disagreement here. And it’s a really, really important disagreement, for it determines whether health care reform will function in most of the country. I think the government has the better of the argument for reasons beyond the basic arguments over statutory text, which is frankly a mess to make sense of. But the consequences of that mess, to paraphrase Vice President Biden, are a big f***ing deal.

The submerged state common denominator

Sens. Kirsten Gillibrand (D-New York) and Rand Paul (R-Kentucky) have (improbably) teamed up to sponsor legislation that would expand the tax credit for child care. The bill would double the current child care tax credit from $3,000 to $6,000.

It’s a laudable legislative endeavor. As Gillibrand notes, the tax credit has only increased $600 since its 1981 inception, despite child care costs rising above the rate of inflation and consuming a growing share of working families’ incomes. The growing cost of childcare has not only strained family budgets, but may have begun nudging women out of the labor force.

The bill would take other worthy steps, like subsidizing employers to provide on-site childcare and aiding them in locating quality nearby childcare, along with encouraging more trained professionals to work in childcare. But the heart of the bill is the expanded tax credit. Importantly, this tax credit will be fully refundable, which provides full relief to low-income families who would already face minimal tax liability.

Paul’s support for the legislation is more than just a novelty, however. It is a convergence of the two parties on expanding what political scientist Suzanne Mettler calls the submerged state.

In her 2011 book of the same name, Mettler explains that the submerged state is the set of tax code subsidies that we’ve enacted to provide relief to working parents or to encourage home ownership. We’ve increasingly shifted our social welfare state toward a set of targeted carve-outs from tax liability, Mettler says, in ways that are often so subtle that beneficiaries don’t even realize they’ve received government aid.

Our polarized politics have spurred the proliferation of the submerged state. “In recent decades of conservative dominance and political polarization, the submerged state [. . .] became not a last resort but the template of choice for new policy initiatives,” Mettler writes. Targeted tax credits further conservative goals of reducing tax burdens generally. They also increasingly appealed to liberals as a way to provide relief to low-income and working-class Americans. During the ascendancy of conservatives during the Reagan era of the 1980s, liberals “increasingly acquiesced and supported policies such as tax expenditures because, to quote one member of Congress, they became ‘the only game in town,’” Mettler writes.

This interest convergence made submerged state tax credits something of a political least-common denominator in a polarized environment. It was a policy reform that conservatives and liberals could each support for ideological reasons, making them easier to muster through Congress.

We see this driving the Gillibrand-Paul alliance today. The traditional liberal ideal might be a universal childcare system of the type that Emily Badger described last month in the Washington Post: direct government provision of childcare centers across the country — a sort of public option for daycare — that we once had during World War II, nearly had again but for Richard Nixon, and would be unimaginable today.

But the pragmatic liberalism that developed during the 1980s (largely out of desperation) and has flourished during the Obama administration now embraces tax subsidies that allow Americans to better afford the services that the private market offers. This allows room for bipartisan agreement, particularly on relatively low-salience issues like childcare subsidies.

But joining conservatives in expanding the submerged state comes with distinct costs for liberals. Mettler describes how submerged state policymaking undermines democratic accountability, as taxpayers and subsidy beneficiaries barely realize that they’ve gained from public subsidies. This also poses asymmetric political harm for liberals, for when they propose bolder expansions of government assistance, few constituents realize that they have likely already benefited from tax subsidies. As Mettler notes, it’s the “keep your government hands off my Medicare” problem.

Expanding the subsidy we give to parents for childcare is a worthy policy goal. But liberals should nonetheless be wary of relying on submerged, low-visibility tax credits to provide relief to Americans in need. Admirable though the sentiment may be, subsidizing through tax credits undermines larger progressive goals of mobilizing government to alleviate the pressures on vulnerable Americans.

The inequality of our employer-provided welfare state

Over at The Week, I have an article on the unequal access to social insurance when we rely on employers to provide these programs as fringe benefits:

[L]eaving social insurance to the market . . . layers social insurance inequality on top of rising income inequality. Liberals want to alleviate this by giving all Americans access to the kinds of social insurance benefits that the highest earners enjoy now through their jobs. [. . .] In response to the liberal impulse to combat social insurance inequality, conservatives dwell on the potential disruptions to existing private contracts that might result from expanded access.

The proliferation of social insurance benefits among high earners and flush companies is telling. It’s a market signal that basic social insurance benefits like paid sick leave or paid maternity leave are life-improving benefits that workers are willing to pay for – whether through foregone salary or taxation.

Liberal policymakers ought to loosen the grip that employers have as exclusive providers of these social insurance programs just as they did during healthcare reform. A just society requires that these aspects of the good life be made available to all Americans regardless of earning power or employer clout.

Note that this does not require tearing up contracts or abolishing employer-provided fringe benefits. It only requires crafting public alternatives that supplement the employer-provided regime.

But the idea of an employer-provided welfare state and its corresponding inequities offers a powerful framing for liberal politicians and policy minds. Access-improving reforms to the welfare state immediately run into the conservative charge that they are socialist or would turn America into a coddled Nordic state. But liberals can point at the generous benefits offered by the Facebooks and Googles of the Fortune 500 and say, “Hey, the market has spoken. These benefits are goods that more people ought to have access to.” It’s not about giving low-income Americans what Sweden has. It’s about giving them what Google has.

The anatomy of a death spiral

We are still waiting for the D.C. Circuit Court of Appeals’ decision in the Obamacare subsidy case Halbig v. Sebelius. I’ve written before (here and here) on a significant glaring flaw in the challengers’ case. In short, their theory that Congress threatened states that refused to create exchanges with an inactive individual mandate (due to lost insurance subsidies) and an active ban on preexisting condition exclusions raises constitutional issues regarding improper coercion upon the states. This is because such a regulatory regime would plunge state insurance markets into adverse selection death spirals. Because the challengers’ theory raises constitutional problems, basic statutory interpretation principles will guide courts toward the government’s reading of the statute – a reading that permits subsidies to be offered on all exchanges. Therefore, the plaintiffs’ challenge to Obamacare will fail.

I’ve explained the contours of this argument, and I’ve justified why the government’s interpretation of the relevant Affordable Care Act provisions is reasonable. But I haven’t yet walked through the anatomy of an insurance market death spiral in much depth. Indeed, this is the linchpin of the theory of why the Halbig plaintiffs’ argument fails on its face.

An amicus brief filed by a group of health economists in Halbig provides a succinct outline of how a death spiral occurs:

Without premium subsidies, millions of people will be exempt from the mandate altogether or will choose to pay the tax penalty rather than purchase unaffordable insurance. Yet the sickest people will continue to sign up for insurance and insurers will have to cover them. The resulting higher premiums will threaten an adverse selection “death spiral”: as premiums increase, more and more healthy people will be exempt from the mandate or will choose to pay the tax penalty rather than buy insurance, leaving sicker people an ever greater portion of the risk pool, leading to escalating premiums, and even fewer enrollees.

The economists explain the death spirals of this kind have occurred in Massachusetts, New York, New Jersey, and the U.S. Virgin Islands.

Looking at two pertinent case studies is instructive. First, the individual insurance market in New York. New York experienced some of the sharpest post-Obamacare premium declines in the country. New Yorkers who were previously paying over $1,000 a month for individual insurance plans are now barely paying $300 – and that was even before Obamacare’s subsidies kicked in.

This rapid price decline was due to the fact that, prior to national health reform, New York had one of the most expensive and severely broken individual markets in the country. The reason, according to Sarah Kliff, was “a law passed in 1993, which required insurance plans to accept all applicants, regardless of how sick or healthy they were. That law did not, however, require everyone to sign up, as the Affordable Care Act does. [ ] New York has, for 20 years now, been a long-running experiment in what happens to universal coverage without an individual mandate.”

The result of the experiment was the highest health premiums in the nation. Insurers had to accept all comers, but there was no reciprocal obligation on all New Yorkers – both healthy and sick – to carry health coverage. This led to a sicker risk pool, leading to higher prices, leading healthier people to drop out of the risk pool in greater numbers, leading to a still sicker and more expensive risk pool. In short, a death spiral.

Second, consider the case of child-only insurance plans. In 2010, insurance companies started dropping child-only insurance plans. The reason? The Affordable Care Act was imposing a ban on preexisting conditions but no individual mandate (until 2014). A spokesman for America’s Health Insurance Plans explained the danger of this regulatory structure, fearing that it “provides a very powerful incentive for a parent to wait until their child becomes very sick before purchasing coverage.” Rather than face a market meltdown, many insurers simply stopped offering child-only policies under the new rules.

The meltdown in the child-only markets has not gone unnoticed, including by Halbig architect Michael Cannon. Importantly, Cannon concedes that the deliberate imposition of insurance market death spirals by Congress is on par with the coercive “gun to the head” threat of losing Medicaid funds in NFIB v. Sebelius:

Congress enacted even worse policy (community-rating price controls with zero protections against adverse selection) in both the CLASS Act and the markets for child-only health insurance, and enacted similarly bad policy (community rating with weak protections against adverse selection) in the non-Exchange individual market and in U.S. territories. Moreover, the potential adverse-selection effects amici describe are not out of character for a Congress that was trying to put “a gun to the head” of uncooperative states, which is what the Supreme Court found this Congress was trying to do.

Cannon fails to appreciate how this accusation of congressional coercion – the logical endpoint of the plaintiffs’ argument – undermines the anti-Obamacare case. If the plaintiffs’ theory depends on coercion by Congress, constitutional avoidance doctrine commands courts to adopt the government’s theory that the hastily-drafted Affordable Care Act sections at issue can be plausibly read to make subsidies available on all health exchanges.

The experiences of New York and the child-only insurance market shares the same characteristics as the Halbig plaintiffs’ understanding of congressional intent in Obamacare: the absence of an individual mandate, coupled with a requirement that insurers accept all customers regardless of their preexisting conditions. Under the Court’s coercion doctrine, Congress could not have constitutionally threatened states with becoming New York if they didn’t create health exchanges. It would have devastated their insurance markets.

So on the threshold question of how exactly we are to interpret the statute, and how Congress meant Obamacare’s subsidies to work, courts can’t buy what the plaintiffs are selling. In their quest to kill Obamacare and escape the individual mandate, the Halbig challengers prove too much by bringing on a death spiral.

Going Dutch, child subsidy style

Over at The Week, I have a piece arguing that the policy reasoning that leads Sen. Marco Rubio to endorse converting the Earned Income Tax Credit into a biweekly/monthly wage supplement also ought to support shifting the Child Tax Credit to a periodic child allowance:

[T]here’s no reason to stop at the EITC. We could likewise convert the Child Tax Credit into a series of periodic direct cash payments to families. This would ensure that the childcare subsidy syncs with family expenses throughout the year, rather than arriving as a lump sum.

A few qualifiers to this claim are in order, however. I made the argument near entirely based on conservative policy proposals mainly to highlight the room for bipartisan coalescence on this issue: that conservative desire for efficient and effective support for families and work converge with liberal preferences for direct government payments to promote income security.

But it’s not clear that conservative enthusiasm for expansions of the Child Tax Credit (like the increase to $3,500 per child that Sen. Mike Lee proposes) would entirely translate to equivalently valued direct subsidy payments. It’s not entirely clear why. As I detail, there are clear efficiency gains from shifting toward a periodic payment system. But conservatives nonetheless traditionally favor tax credits based on a distinction between government spending and tax benefits that is increasingly illusory.

I also probably stretch the limits of conservative policy preferences by suggesting that a child allowance might be means tested to provide greater support for low-income families. I’ll add, however, that such a program could mirror the phaseout scheme of the EITC, which conservative politicians like Rubio and wonks like Reihan Salam seem to largely support.

But conservatives often worry about bad incentives on work. Ross Douthat favors an inversely means-tested (liberals might call it regressive) child subsidy, arguing that when it comes to the subsidy’s impact on work, “a child benefit whose value actually increases as you move from the bottom income quartile to the second one might have a much more beneficial impact.”

Conservatives raise important concerns about unintended bad incentives by creating higher effective marginal tax rates. Winding down benefits like child subsidies theoretically erodes some of the value gained from rising up the income ladder, adversely effecting one’s willingness to put in the extra work.

But liberals tend to believe that these bad incentives are muted at the lowest quintiles of our income distribution. Low-income families are concerned primarily about simple economic survival. Every extra dollar counts, and any opportunity to rise up the economic ladder will be seized. The weaning of means-tested benefits, the thinking goes, will have less of an effect on these families’ work decisions than conservatives fear.

Moreover, a carefully designed phaseout of a means-tested child subsidy like that used for the EITC can further minimize any adverse work incentives. By gradually phasing out, the EITC avoids benefit cliffs that might legitimately counteract income gains by low-income workers.

So the compromise position – between the liberal preference for means-testing and the conservative preference for inverse means-testing – is a flat benefit for all families like that used in the Netherlands. But as I explain, even this requires increasing refundability of the child subsidy and (ideally) increasing the value of the subsidy itself. Sen. Lee has proposed something along these lines for the Child Tax Credit at least, suggesting we raise the value of the credit to $3,500 and make it more refundable by counting both payroll and income taxes.

But all of this raises the biggest question of all: how to pay for it. Lee’s proposal raises objections from the left because it is paid for significantly by low-income workers (the type of policy that Douthat endorsed). Raising the value of the child subsidy – through full refundability and total value increases – would likely need to be paid for by raising taxes somewhere. Liberals would default to raising taxes on high-income earners, perhaps justifiably so. But on this point, conservatives would almost certainly part ways.

All of these are tricky practical questions that need to be sorted out. But they are worth exploring and negotiating. The openness of the right’s reformers to wage supplements and child allowances is an encouraging sign that conservatives are re-entering the realm of constructive policy proposals. The instincts here are right, and there ought to be room for real bipartisan cooperation.

There is no deluge

Ross Douthat has a column at the New York Times arguing that Democratic presidential hopes hinge entirely on Hillary Clinton’s decision to run or not. Her potential candidacy, Douthat writes, “converges almost perfectly with the interests of her party, even if not every liberal quite realizes it yet. That’s because Clinton’s iconic status is, increasingly, the only clear advantage the Democratic Party has.”

Should Clinton decide not to run, Douthat argues, the weakness of the Democratic coalition will be exposed. Well, of course. If a party’s strongest candidate steps aside, that party’s electoral outlook will always diminish.

Not only will liberal electoral weakness be exposed, Douthat writes, but its policy void will be too. Under his analysis, “[p]olitical skill builds majorities, but popular policy successes cement them — and that is what has consistently eluded Obama.”

Conservatives still maintain that Obamacare is a policy deadweight for Obama’s legacy, but there are signs that this conventional wisdom is ebbing. The law’s component parts have long polled much better than the vilified monolith “Obamacare” has. The deep well of disapproval against the law as a whole — driven by both flawed liberal communication and deliberate conservation misinformation — built up in the years before the law’s 2014 launch date. It’s telling that a conspicuous conservative quietude around Obamacare has set in precisely when the law is having very real and positive effects in the lives of millions of newly insured Americans.

The supposed absence of a cohesive liberal policy agenda is something of an emerging critique from conservative reformers. Douthat characterizes the liberal agenda as a stale discordant mishmash — “immigration reform, climate-change regulations, some jaw-jaw about inequality” — that “doesn’t really align with those unhappy voters’ immediate priorities.” Yuval Levin of the National Review similarly argues that “one of the most extraordinary features of this moment in our politics is that many serious liberals seem genuinely not to grasp the intellectual exhaustion of the left.”

An honest evaluation of the liberal policy agenda, however, shows a good deal more intellectual cohesion than these critics would have us believe. The liberal vision is socially progressive and economically egalitarian. It believes in robust public action to mitigate vulnerabilities to harm inflicted by both the market and sheer chance. It insures us against poor health and combats the inequitable threats of climate change.

The core liberal aspiration is a more just community in both senses: enhancing justice while expanding our sense of community and nationhood. As President Obama put it when advocating health reform to Congress in 2009, liberal reform is animated by a sense that “we are all in this together; that when fortune turns against one of us, others are there to lend a helping hand.”

Obamacare made our health insurance system fairer to more Americans, asking us to have a stake in the care of those denied access to decent insurance. Liberal climate change policy expands our sense of community obligation by asking us to do justice by a future set of Americans who would bear the dire brunt of present inaction.

Liberal leaders concede that these lofty goals can be a tough immediate electoral sell. President Obama told Thomas Friedman, “I don’t always lead with the climate change issue because if you right now are worried about whether you’ve got a job or if you can pay the bills, the first thing you want to hear is how do I meet the immediate problem? One of the hardest things in politics is getting a democracy to deal with something now where the payoff is long term or the price of inaction is decades away.”

So liberals often pitch community- and justice-building initiatives in more modest terms. That’s how the EPA power plant rule became a tool to lessen child asthma attacks and other pollutant-inflicted health risks. It’s also how healthcare reform became a law meant to “bend the cost curve” on what Americans pay for healthcare. By locating the benefits of liberal policy proposals in the center of our conception of community — present-day, middle-class Americans — liberals expect greater political support than more aspirational justifications might gain.

These present-day benefits are certainly worthy, pragmatic goals. But they are hardly the stuff that stirs liberal ambitions. Perhaps the most eloquent articulation of the community justice principles animating liberal thought is from Elizabeth Warren’s viral living room address during her Senate campaign. There, she forcefully argued that “nobody in this country who got rich on his own.” Factory owners depended on public roads, on protections of property, and on publicly educated workers. “[P]art of the underlying social contract,” she told us, “is you take a hunk of that and pay forward for the next kid who comes along.”

Warren makes the moral case for redistribution. And she grounds it in a social contract that is meant to preserve competitive markets and displace incumbents — a social contract that asks the successful to pay it forward. She opposes concentration in income and market power, urging that our policy clear the way for “the next kid who comes along” to own a good factory or start a new tech firm.

This moral case emphasizes our community ties — the interdependence of our lives and fortunes as Americans that we often hardly even notice. It rejects the social isolationism that we’ve heard from retrenching conservatives during the Obama years — the let-him-die heartlessness toward the uninsured, the toss-the-losers-to-the-street callousness toward struggling homeowners. A man is not an island, liberals tell us. In countless ways, we rise and fall together. This togetherness in turn yields the social obligations driving liberal policy.

The contrast of the liberal and conservative social visions is a reminder that, when those like Douthat warn of the fragility of the liberal coalition, we must compare it to the alternative. We will likely have to wait until the Republican presidential primaries to see how much headway well-meaning reformers of the right have made in taming the uglier impulses of the grassroots. Indeed, a too-narrow sense of community among conservatives that rejects bringing undocumented immigrants aboveground in our nation is one of the chief inhibitors of conservative electoral success.

So where does all this leave the Democratic coalition, and in particular, where does this leave Clinton? Any intellectual vision needs an effective spokesperson to command a strong coalition. Obama seized this role in 2008. Perhaps it will be Clinton’s time in 2016.

As Secretary of State, Clinton lofted above domestic politics during the Obama years, so we know little about where she now stands on these matters. But there are signs that Clinton foreign policy work has only ingrained the egalitarian community vision that we’ve heard from liberals like Obama and Warren. She too has recently warned of the concentration of wealth in the upper echelons of our income brackets, connecting it to her work abroad. “As Secretary of State,” she said, “I saw the way extreme inequality has corrupted other societies, hobbled growth and left entire generations alienated and unmoored.”

We don’t yet know what Clinton will run on (if she runs at all). But conservatives underestimate the depth of the liberal vision by dismissing the left’s policy proposals as a hodgepodge of interest group panders on immigration, climate change, and inequality. It would be easy to imagine Clinton centering her campaign on a significant social insurance scheme like paid family leave in the way that Obama made health insurance reform the center of his. Indeed, this would be a logical outgrowth of basic liberal principles.

Yes, Democrats hope Clinton runs in 2016. But Douthat’s (lack of) alternative is too harsh. He foresees a “deluge” without her, exposing a shallow liberal coalition and policy agenda. Color me skeptical. Liberals present a vision of the public sphere that believes we can come together as a community and ward off some of the hazards of modern life anything you life. Conservatives might call this misguided. But they write it off as intellectually empty at their own risk.

On Coates and neighborhood disadvantage

I have a new article over at The Week commenting on Ta-Nehisi Coates’s monumental essay “The Case for Reparations.” The idea behind my article is that by making such a compelling case for black reparations, Coates has the indirect effect of also shifting the Overton Window on other, tamer sorts of race-conscious policies. That is, by laying out the historical weight of disadvantage that might warrant reparation payments, Coates also strengthens the legitimacy of considering racial inequality when we craft new housing policy or education reform.

I just wanted to highlight one statistic that I reference in the piece. It comes from Coates’s essay, and is something that I’ve been trying to fully grasp because of how alarming it is. Coates cites research by the sociologist Patrick Sharkey that solidly black middle class families earning $100,000 per year live in the same kinds of neighborhoods as white families earning only $30,000.

Sharkey presented this research at an April conference hosted by the Economic Policy Institute on “Neighborhoods with Concentrated Poverty” (which Coates moderated). He first published it in a journal article called “Spatial Segmentation and the Black Middle Class.” The key insight lies in this graph (click to expand):

Screen Shot 2014-05-28 at 1.36.58 PM

This graph compares the average neighborhood and spatial disadvantage experienced by different racial income groups. Sharkey measures disadvantage based on certain neighborhood characteristics, such as welfare receipt, poverty, unemployment, number of female-headed households, and number of children under 18. (“Spatial disadvantage” is a measure of these same characteristics in surrounding neighborhoods.) A bar that lies above 0 means that that racial income group tends to live in neighborhoods that are more disadvantaged than the national average, while a bar that lies below 0 means that group tends to live in neighborhoods that are less disadvantaged than average.

Sharkey’s findings show that minority families at every income level tend to live in more disadvantaged neighborhoods than their white peers. Particularly noteworthy is the comparison between the highest earning black group (those earning above $100,000) and the lowest earning whites (those earning below $30,000). Whites earning below $30,000 nonetheless tend to live in neighborhoods with less disadvantage than average. Yet despite solidly middle class incomes, blacks earning at least $100,000 tend to live in neighborhoods with higher than average disadvantage. That is: on average, whites earning only $30,000 live in better neighborhoods than blacks earning $100,000.

The reasons for this troubling finding are unclear, but are certainly bound up in our history of discriminatory housing policy that Coates recalls. Regardless, Sharkey’s findings have important policy implications.

For instance, some propose shifting away from school admissions policies that consider students’ race to a policies that look at socioeconomic indicators like household income. I myself have written favorably of K-12 school desegregation plans like Berkeley’s that do something similar, by using other proxies beside an individual student’s race.

But if we look solely at household income, such policies would not capture the full extent of the disadvantage experienced by even high-earning black families. “Children in black middle-class neighborhoods often are raised in close proximity to areas where violence is concentrated, where schools are of poor quality, where gang activity is common, and where economic opportunities are sparse,” Sharkey explains (at 908-09). Because of this, “advances in economic status made by middle-class black parents are precarious, and the risk for downward social or economic mobility is high.”

It’s essential, therefore, that we also keep in mind the broader characteristics of our neighborhoods — the context that children are raised in and the disadvantage they experience therein. After all, redlining wasn’t mapped out one house at a time; it was crudely grafted around certain neighborhoods. That’s the perverse housing legacy that remains with us today.

Charter schools, regulation, and discipline

Frederick Hess and Michael McShane of the American Enterprise Institute have a column at USA Today warning that the freedom and dynamism of charter schools is under threat from mounting regulation. Despite many charters’ success in educating children from disadvantaged backgrounds, “creeping bureaucratization and regulation are endangering the entire charter school movement,” according to Hess and McShane. “[I]f this regulatory impulse is left unchecked,” they warn, “it’s all too possible that the high achieving charter school of today could become the failing public school of tomorrow.”

For their evidence, Hess and McShane point to long charter applications and admissions lottery regulations in Washington, D.C., and to required teacher evaluation metrics in several states. But they also point to regulations controlling charter schools’ disciplinary systems in New Orleans.

The disciplinary environment in charter schools is one of the most controversial elements of the education reform movement. To proponents of “no excuses” charters, strict discipline is essential to create a structured and secure environment. It’s necessary to signal to kids coming from communities rife with dysfunction that the school takes learning seriously and will not tolerate disruption.

To skeptics, however, the disciplinary control of these schools can be excessive, bordering on militant. They suggest that charter schools get away with disciplining low-income minority kids in ways that would never be tolerated in white middle-class schools. The Guardian‘s Dana Goldstein argues that

it’s difficult to imagine large numbers of middle-class parents ever accepting the disciplinary strategies popular at “no excuses” schools like KIPP: students marching through the hallways in military silence, required to sit with their limbs arranged just-so and with their eyes constantly locked on the teacher; and, in one KIPP school, isolating misbehaving children in a padded, windowless chamber the size of a walk-in closet, for up to 20 minutes at a time.

The disciplinary issue became particularly incendiary in New Orleans. Last fall, a student-led backlash against charter schools centered in part around overly strict disciplinary policies. Two of the schools at the heart of the protest had suspended over 60 percent of their students at some point during the previous year. Parents complained of an environment in these schools akin to a “military boot camp.” Aggrieved students filed a written petition raising issue with “detentions or suspensions for not walking on the taped lines in the hallway, for slouching, for not raising our hands in a straight line.”

New Orleans clearly had a serious problem on its hands. Action needed to be taken, and I doubt many of us would lament the loss of charters’ freedom to impose these sorts of draconian reprimands. Many of us, apparently, except Hess and McShane.

Why does this matter? It’s about more than just disciplinary proceedings. Rather, it implicates the very purpose of charter schools in our education system.

Traditionally, charter schools were pitched as a way for reformers with new ideas to try out novel educational methods in a small setting to see if they were fit for broader adoption by the public school system. As a recent New York Times article said, “A primary rationale for the creation of charter schools . . . was to develop test kitchens for practices that could be exported into the traditional schools.”

If charters are playing by a completely different set of rules from the rest of the education system, then it is hard to see how they make for a valuable test kitchen for what we can import into the rest of our schools. If charter school disciplinary systems are too strict for the public school system as a whole, then this just clouds the question of whether these schools’ success can be replicated in traditional public schools.

Hess and McShane, however, conceive of charters in a different way. “Charters were conceived as an alternative to underperforming public schools,” they write. “This allowed educators and entrepreneurs space to create new schools and new teaching models.”

This is undoubtedly true — charters are indeed an element of pluralist school choice to give parents more options. And they are meant to cater to fresh ideas and innovative models. But this is only part of the story. Hess and McShane leave out the part where charters are meant not just as alternatives to public schools, but to be testing ideas that can be scaled to the rest of the public school system. They are meant to be seeds that can spread, not just island alternatives.

According to the Times, the hope for an exchange of ideas across charters and district schools has, for the most part, proven elusive. A sense of competition between the two breeds of schooling has steadily heightened in the volatile education politics in New York. Many traditional public schools see a charter model that’s dependent on nonunionized teachers, extended school days and years, and strict discipline as having little in the way of workable solutions for the school system as a whole.

Yes, the mission for charters is to experiment with public education with the aid of relaxed regulation. But we must also identify what types of regulations we are willing to sacrifice and which ones we hold dear in order to give charters a worthwhile laboratory to operate in.

Discipline strikes me as a policy worth standardizing across schools. Sure, some charters might elect to have somewhat tougher disciplinary policies to approximate the rigor of a prep academy or a private school. But within reason, and within bounds set by public agencies. Discipline beyond the bounds of what we’d implement in our broader school communities weakens the value of charter schools. It skews their academic results by allowing for subtle or blatant push out of difficult students. But it also infects the integrity of the experiment, limiting our ability to bring the success of charters to scale.

Employer mandate madness

I’ve got a new post at The Week on the burgeoning case for repealing Obamacare’s employer mandate:

What Burwell and Sebelius failed to acknowledge is that the employer mandate is extraneous to ObamaCare’s insurance market reforms, while the individual mandate is essential to ensure the system doesn’t collapse under the weight of new enrollees who are sicker and older. The administration’s dirty little secret, in other words, is that the employer mandate just isn’t that important.

And opponents of the mandate got some new ammunition last week, in the form of a paper from researchers at the Urban Institute. The left-leaning policy organization said that the employer mandate shouldn’t merely be delayed — it should be killed altogether.

Read the rest here.

Two additional points piggy-backing off this piece:

1. Even if we wanted to retain a health insurance system, it’s not necessarily the case that the employer mandate will effectively encourage employers to provide insurance. In fact, the opposite might turn out to be true. Employers might treat the mandate penalty as a fee rather than a fine. Moral philosopher Michael Sandel illustrates the distinction between fines and fees through a daycare center that wanted to discourage parents from picking up their children late. The center began charging parents a penalty if they were late for pickup. Surprisingly, the daycare center saw late pickups actually increase. This is because the parents treated the penalty as if it were a fee—they could now pay for the right to pick up their children late.

If employers likewise treat the mandate penalty as a way to pay their fair share in order to avoid offering health insurance, then we might see more firms grow comfortable doing so—particularly if health insurance costs outpace the value of the penalty.

2. Even though the employer mandate is bad policy, repeal ultimately depends on (gasp) congressional action. Our legislative system, however, is severely broken around the issue of health care. Since 2009, Republicans have been committed to repealing Obamacare in totality, refusing to do anything that might improve the law for fear of weakening their case. Democrats steadfastly reject repeal. This all-or-nothing political dynamic has frozen the state of our health care regulatory regime, leaving administrative agencies to go it alone in tweaking the law within the bounds of reasonable statutory interpretation.

The Obama administration has had to rely on legally questionable administrative delays to avoid implementing the employer mandate. If the volatile politics around health care eventually subside (perhaps after the 2014 midterms), one would hope that the parties could build a legislative solution to the employer mandate, rather than defaulting to an executive one.

The Week: “Divide and conquer” and the deserving poor

Over at The Week, I have a piece on Republican candidate for the North Carolina Senate seat Thom Tillis’s “divide and conquer” comments and the lineage of our thinking about who deserves public assistance:

Last week, as Tillis was wrapping up the Republican primary, footage was discovered of remarks he made in 2011 about wanting to “divide and conquer the people who are on assistance.” [. . .] Some have compared this video to Mitt Romney’s infamous “47 percent” blunder in 2012. But where Romney exploited fault lines between the supposed makers and takers, Tillis stoked a different social division: the deserving versus the non-deserving poor.

Check out the rest here.