Monday, July 27, 2009

Look East for help on healthcare, housing

National policy battles over health care now may be more important to Wyoming residents than anything happening in the state these days.

Things have been grim in Wyoming. The House killed the expansion of the KidCare program in the last week of the session. The governor decided against investing any effort to continue the Wyoming Healthcare Commission, a group that veered across the spectrum of policy options as its membership changed over the years. Though few tears were shed at its death – speeded up when the governor terminated it in April rather than letting it run through the end of the fiscal year – it at least provided a forum for discussing Wyoming’s healthcare system.

Nationally, there is a gathering consensus that changes must be made to fix our system, which is the costliest in the world but fails to match the achievements of the systems in many other countries. The President was right when he said no one would choose the expected future of the existing system if it was advanced by some advocate. (See "Trends in the Absence of Reform.") But there’s little agreement beyond the assessment of the current system’s shortcomings.

The administration says it wants ideas from across the country. One effort to solicit those ideas is on Linked In, one of the Web’s networking sites. Linked In is featuring a Council of Economic Advisors request for comment from small business operations. Here’s the pitch:

The White House wants to know: What are the most important issues for small businesses when it comes to health care?

CEA Report: The Economic Effects of Health Care Reform on Small Businesses and Their Employees

The Council of Economic Advisers in the White House has just released a new report on the impact health insurance reform would have on small businesses. Download and look through the report, then give the White House your feedback, comments, questions, or objections. CEA Chair Christina Romer will answer some of the most penetrating responses, as chosen by LinkedIn, in a live video online discussion at on Wednesday, July 29th, at 3:00 PM EDT.

I want to know: “What are your experiences with health care as somebody involved in small business, and what are your thoughts and questions on the new CEA report in light of those experiences?”
Clarification added 2 days ago: The report can be downloaded at the link below:

Still looking for a soft landing

Also on the national front, the economic crisis threatens many homeowners facing foreclosure and eviction. The Center for Economic and Policy Research today released a study suggesting a Right to Rent program could keep people in their foreclosed homes by enabling them to rent them.

The Center for Economic and Policy Research study by Dean Baker and Hye Jin Rho notes that the different mortgage modification programs put forth by Presidents Bush and Obama did not benefit the large majority of people facing home foreclosures.

In contrast, Right to Rent legislation would “give homeowners facing foreclosure the option to remain in their homes as tenants paying the market rent for a substantial period of time (e.g. five to ten years).”

The study argues that the program would give homeowners facing foreclosure some security because they could not be thrown out of their homes and onto the streets.

“Right to Rent rules may also increase homeownership, since it will make foreclosure a less attractive option for lenders. If they knew that they could not foreclose and get a house free and clear, they may put more effort into arranging modifications that homeowners can afford,” Baker and Rho assert.

The idea benefits homeowners because the study shows that renting is cheaper than owning in many U.S. metropolitan areas.

“During ordinary years, homeowners would not gain much from having a right to rent, since the gap between ownership costs and rental costs is usually not very large. However, because of the run-up in house prices during the housing bubble years, ownership costs vastly exceeded rental costs in many bubble markets.”

That may not be true in Wyoming, at least not yet. (The study's appendix does not include Wyoming MSAs.) But the idea is definitely worth considering as national policy. I like the anti-blight effects of Right to Rent, since it holds the promise that in neighborhoods located in the most troubled areas, renters would continue to occupy homes that otherwise would be vacant.

Here’s the conclusion reached by Baker and Rho:

“Many of the homeowners currently facing foreclosure would likely be able to afford the market rent on their home. If, recognizing the extraordinary situation, Congress were to temporarily alter the foreclosure laws to allow foreclosed homeowners to remain in their homes as renters, it is likely that many would choose to take advantage of this opportunity. This path would offer savings for former homeowners, as well as help stabilize families and communities that are blighted by foreclosures. In addition, Right to Rent offers the advantage that it could immediately benefit all homeowners facing foreclosure without any bureaucracy and would require no taxpayer dollars.”