The Claremont Independent had the opportunity to interview Sean Flynn, a candidate for the California 31st Congressional District. Sean Flynn is a Republican and Scripps College professor running against the Democrat Pete Aguilar. The general election will be held this Tuesday on November 6, 2018. Flynn was kind enough to answer some questions I had for him about issues that are important to voters in California. The interview covered a variety of topics including higher education and student loans, our healthcare system, crime, and the partisan divide in the country. What follows are the questions posed to Flynn and his answers, edited for concision and clarity.
CI: Give me some background on yourself? How did you find yourself living in the 31st district?
SF: It’s kind of a long story. Going all the way back, My mom is Japanese and was born and raised in Japan while my dad worked for the government overseas. They met, fell in love, and then he was transferred to the Philippines. He was a teacher on military bases overseas. I was born at Clark air base in the Philippines as was my sister and we moved back to the United States in 1977 so mom could start medical school at UC Davis on a naval scholarship. Things were rough when we came back. My Dad was unemployed for a long time and my mom was a full time student. We were on food stamps when I was a kid and money was tight. She finished med school and then we moved to southern California so she could do her training in ophthalmology, at a Hollywood Presbyterian hospital. She was a lieutenant commander in the navy all through the eighties. Once I got into college at USC, my parents moved to the Claremont area and my first experience with the area was coming back to visit them on weekends. I continued my education and then found myself back in the area after I got a job as a Professor at Scripps College back around 2009. I lived in Upland for 8 years and just moved to Redlands last year.
CI: How has your education shaped your life?
SF: I went through the public schools and magnet schools in LA for junior high and high school. One thing that has stuck with me my whole life was the difference between the level and quality of education that the kids in magnet schools that were being bussed in received and the quality of the non-magnet classes for the kids that lived in the district. I got to see first hand just how badly run an urban school district can be. I ended up going to USC then spent 7 years at UC Berkeley for grad school. I then taught for 7 years at Vassar College in New York. While in New York I wrote the book Economics for Dummies. After that I came out here to Scripps College. What my childhood and experience has both taught and shown me is that education is the way up in America.
CI: Has your experience as a professor given you any special insight into higher education, and how has it affected the policies you would like to promote in Congress?
SF: There’s an old joke that Bismarck, the German chancellor would say: “There are two things in life you don’t want to see manufactured, sausages and political legislation.” As a professor I have had a chance to see how the “education sausage” is made. Most of it is not aimed at the betterment of students. So much of the money designated for education never makes it to the students, there is extreme administrative bloat. Just look at the Cal State system. From 1978 to now, the number of faculty at the campuses has risen 4 percent and the number of administration and staff has risen 232 percent and has passed the number of teachers. Behind the scenes there is a lot of money that can be better directed towards students in classrooms that is instead going to administration. And this is happening at every school in the nation. This also has the added effect of increasing the cost of education. Most people just see the cost rising and now the reasons why. They see that the cost skyrocketing up and up and it’s becoming hideously unaffordable. I’ve literally got dozens and dozens if not hundreds of former students that are at least six figures in student loan debt. So that’s very much at the top of my mind when I’m running for Congress here is fixing that problem.
CI: What are some problems facing tuition in higher education right now?
SF: Bernie Sanders suggested just for giving it [out for free]. I know some of the other Republicans saying that we should cut subsidies to schools in order to force them to put it down. But the key thing to understand here is that it’s actually the student loan program itself that’s been driving up the cost of tuition.
CI: So how did tuition increase so much?
SF: The tuition loan program didn’t get started in earnest until 1978. There’d been a teeny tiny one after Sputnik because we were afraid that the Russians were going to get ahead of us. So for some very specific engineering majors like aerospace, you could get student loans starting in the 1950s and 1960s. In 1978, it was opened up to everyone, vocational schools, and any major in college.
That [loan program] ended up being seen by the colleges as a gravy train. The colleges within a couple of years figured out there’s all this subsidized money coming in. So the loan money goes directly to schools. You don’t have to finish the semester, you don’t have to graduate, you don’t have to get a job later. The school gets paid up front and in advance instead of tuition cost falling a little bit every year, all the way through the late seventies, and starting the early eighties, they went to seven percent exponential growth.
CI: How do student loans increase tuition?
SF: Well they started raising tuition on average about six, seven percent a year. It’s tapered off a little bit. Going up seven percent a year is frightening—we’ve seen what three percent increases in salary for the past 40 years does. And it is also very disappointing because after World War II, real costs had actually been going down every year in nearly every year. And the reason for that was there was a lot of government money, but it was all going on the supply side [the colleges].
CI: What other factors increase tuition?
SF:So the money is not going into the classroom and most school budgets, if you go look at the Pomona College annual report, total faculty compensation including benefits and health care for the faculty is usually about 11 or 12 percent. So the vast majority of the money is not going into education. And that’s also true at the community colleges and the Cal States and UC’s.
So we went from a world where the government was subsidizing supply, right? Build more classrooms, time, more teachers to subsidize the demand. And if you subsidize demand, if you increased demand without increasing supply—which is what happens when money doesn’t actually go into education—the price goes up.
And so we now have awesome rock climbing walls all over the country’s colleges. Every facility is just unbelievably nice—there’s a sushi bar and you can just go on and on. The dorms are all fancy and air conditioned now and some of the schools have maid service.
And the only way to do that is to take away the student loan money that the schools could be using on education but are currently using for sushi bars, administrative bloat and everything. But again, the details of this [loan issue] would be a huge negotiation in Congress of exactly how to do that [restructuring loan program]. Of course the colleges are going to want to keep the money flowing in and it would be a huge, huge political fight, but we caused this.
CI: What are some of your solutions to fix the student loan issue?
SF:Now we’ve got an overwhelming series of articles, overwhelming evidence that the loan program did nothing to increase access and only drove up costs. That is to say that had the loan program not existed, the exact same students that are college students today would have gone to school anyway, but the price would have been way lower. And how much lower? The ballpark figure you should have in your head is 75 percent. And that’s according to Claudia Goldin, an education economist at Harvard.
Goldin published a paper and she got data from one of the large for-profit college chains and it was anonymous, so we don’t know if it was like University of Phoenix or ITT Technical Institute, but all their campuses across the country were identical. It’s usually an office building by freeway exits so people can get there easily. The books are the same all over the country. The classes, the structures, how many classes you need to take to get your MBA or whatever other degree are the same. The only difference that mattered here was that every year some of the campuses for bureaucratic reasons cannot participate in the federal student loan program usually because when someone at the school file documents, they make a mistake. That means that the students who go to these campuses can’t borrow loan money for schooling. So those campuses, they have to charge what the market dictates.
CI: So what exactly do we do to use these market forces?
SF: Another way to do it totally different would be to tell every young kid in America you were being given, and I’m just gonna make up a number here. The federal government will invest $100,000 future vouchers. You can spend any or all of that hundred thousand dollars on college tuition or vocational training tuition, or don’t spend any for that. You can save for later down payment or to help start a business or small business administration this is your nest egg for the future. This is our investment in you. You’re 18, you’re out of high school, and then that caps everything and then you’d have a market mechanism for deciding whether or not they wanted to go to college and if they’re going to college, maybe they go to the more expensive one or the less expensive one and that would be another way of course in the colleges to figure it out.There would probably be a few elite colleges like here in Claremont, the Ivies, Stanford etc that could still charge what they do today. But then the rest of the colleges would have to compete for all that money. And the best way to get any of it would be to offer a high quality and affordable education. And so then we’d have some mechanism there to actually resolve the problem.
CI: What about Bernie Sander’s European-style free tuition program?
SF: Well, in various European countries where if you get into university, you’re on a full government ride scholarship. So Germany is pretty much like this, France the way I understand it is like that, England to a lesser extent because they started charging tuition and also started student loan debt about five years ago. That was a colossal error. If you go to these schools, there’s not a lot of pressure for them to actually get kids out and so the average age and you can double check this figure—this figure is about five years old—but the average age of a bachelor’s degree recipient in Germany is 29 because you’re going to a college that is under no financial pressure to get you out and in Germany you get a monthly stipend for being a student, enough to pay your room, board, and tuition.So when I see Bernie Sanders saying, let’s just give everyone free tuition, I see it as creating a world of really lousy incentives, both of the schools and for the students not to take education seriously. Get it done fast and make it really good is what we want. But if you just make everything 100 percent free, everyone in the system will get totally lackadaisical to a degree that would be almost unfathomable to us right now.
CI: You said that student loan debt was one of the national issues you had great experience with and were running to fix, what was the second?
SF: Our healthcare system.
CI: As an economics professor, what are the biggest issues and challenges facing the American healthcare system?
SF: The thing is, we should be paying 75 percent less for our system than we do currently. We have the world’s most expensive health care program and the quality is not great either. We are spending 18 percent of GDP on healthcare while places on single payer like Bernie Sanders spend 10, 11, 12 percent. And admittedly getting down from 18 to 10 would save us a boatload of money. But the only country that has managed to actually figure it out is Singapore, which spends 4.7 percent of GDP on healthcare. And the thing is all the best ideas they’ve implemented they actually stole from us. One of the major problems in the system is the way pricing works. You don’t see prices up front and when you see a doctor you finally get the bill three months later.
CI: So what would your solution be?
SF: Well in Singapore they have literal menus for the services provided and the government has a website to make comparison shopping easy where they list the average price, the 90th percentile bill price etc. So you can actually see if the doctor you are seeing has a really high price. The government also publishes quality data and mortality, morbidity and complication rates for the top quarter of procedures. So you can actually be an informed shopper in Singapore on both price and quality. Adopting price tags alone would be a useful solution in the U.S., that alone could cause prices to fall 50%. The other solution to healthcare is a “magic” system called high deductible health insurance.
CI: So what is high deductible health insurance?
SF: So in Singapore there’s high deductible health insurance, the annual deductible is $2,000, meaning that if you’re a Singaporean citizen, the first $2,000 you pay out of pocket, then they have a 10 percent copay up to infinity. So even 10 percent of anything above that you still have to pay for. That means you always have skin in the game. So even if it’s a bigger procedure and say you’re only paying 10 percent of $100,000, really expensive surgery, you still have an incentive to find the lowest cost surgeon because you’re still being charging 10 percent of the bill.But the problem with high deductible health insurance is, you can put people on it, but typically they don’t save enough to cover the deductible. And then in a bad year when they have to cover it, they don’t have the money. And then they hate high deductible health insurance plan. They want to go back to a Kaiser plan or a PPO [preferred-provider organization] insurance or HMO. These things that have really low copays and deductibles.
CI: So what do you do to implement this? And how will this help?
SF: So what you need to do is rely on behavioral economics and what you need to do is make it look like a gift. So Whole Foods Markets has been doing the following since 2000: they have a high deductible insurance program and every full time worker over 30 hours a week was enrolled. The company pays the entire premium for that behind the scenes. So workers don’t ever see that they get paid for it. But the premium paid for by the annual deductible is $1875, so $1,875 hopefully creates our savings account. They just gift them the $1,875 and every year they worked for whole foods, another $1,875 and so on. But they’re told, and it’s true, any money you don’t spend out of that $1,875 rolls over to the next year. So suddenly everyone has an incentive not to waste money and believe it or not if you compare it to people in the whole foods program with what they were doing before on HMO, BPOS, they were spending 35 percent less without detrimentally affecting healthcare outcomes. We know that because they’re going to checkups just as often, they’re going for mammograms just as often all the preventive maintenance they’re doing just as much. So if you put people on high deductible health insurance and then you know give them the amount of the annual deductible you see a 35 percent reduction in healthcare spending, which more than pays for that gift, there’s actually about 11 or 12 percent in net savings.
This is like a Laffer curve argument that we know 100 percent actually works great. It more than pays for itself. And so the best version of this that everyone should know about is called the Healthy Indiana program. And this was a Medicaid expansion. It was done in 2011 under now Vice President Pence. Let me compare it with regular medicaid. So Medicaid is the joint federal state program that provides health insurance. The Medicaid program is normally first-dollar coverage, meaning everything is paid for by the government. One hundred percent. The first dollar, the second dollar, the third dollar, all the way up. There were lots of problems with Medicaid including bad provider networks.The reimbursement rates are so low, most doctors won’t use it, but from the perspective of someone on the system, the good part, because these are poor people, is they don’t have to pay anything out of pocket because they don’t have any money out of pocket. The problem though is that from their perspective everything looks free. For example let’s say I am an athlete, if I know everything is paid for, I go get an X-ray everytime. So the government pays your co-pay of say $50 and even though behind the scenes they cost $500. If I had to pay $500, I might just put some ice on it, although in some situations, if something feels weird I’ll get the X-ray. But anyway people make poor decisions in this program. So the state of Indiana says, all right, let’s create an alternative version of Medicaid and try this out. What they did was they created one with a deductible of $1,100. How can they pay $1,100? The answer is they can give them the money. They were gifted $1,100 and again they were told every year you’re in the program you get another $1,100 and so on but the deal between you and the government is that it is now your money in that account. Any money you don’t spend, you get to keep and it rolls over to the next year. If you compare the people on that Special Medicaid program with a high deductible and give them the amount of the high deductible compared with normal Medicaid which has the first-dollar coverage, the people on that plan with a high deductible spend 35 percent less and it more than pays for itself because the savings on the backend is bigger than the $1,100 a year the state pays out.
CI: Why haven’t we already done this?
SF: The insurance companies have no incentive to offer these kinds of plans or promote them because their profit model is about taking three percent on the largest possible volume of billables. They don’t want people on an insurance system where the volume of billables falls 35 percent, right, so they have no incentive to market or sell this stuff essentially because it’s so efficient at making good profits. The insurance industry is heavily regulated state by state and most insurance commissioners I think about half are directly elected like here in California and the other states they are appointed by the governor, but either way they’re beautiful positions, heavily influenced by lobbying from the insurance industry and so we don’t have a system right now that encourages this type of health insurance. So one thing I would do is make it mandatory for insurance companies if they’re going to sell any kind of insurance. Also I’ll have half the market fees for smaller businesses. You can give tax credits to the businesses or whatnot, you know, to cover the gift costs of putting people in the health savings accounts every year. But we should be able to very sensibly and easily transition the economy. Combine this with the price tags, we can instantly make a law that says the price is the price. Everyone has to post a price and you know, if you say it’s a thousand dollars for knee surgery, everyone has to come in at a thousand dollars and just like it would be illegal for a coffee shop to say, put up a menu where, alright, tall people, get charged five dollars for coffee, but short people get charged $25, the insurance companies would be forced to operate the same way. It has to be one price.
CI: Why is healthcare right now so expensive?
SF: The reason most people who work in public policy, the incorrect reason they think healthcare is so expensive is because they think it’s caused by the fact that American hospitals clinics use really expensive technology and therefore it’s expensive. We only have expensive stuff because we’ve mismanaged the system. Imagine your favorite car, like a Maserati or something. Lets say its $300,000, could a college student afford that? No, of course not, but suppose I come in and say I’ll subsidize 90 percent of it. So you only need to pay $30,000, and the cost of the average new car is around $32,000 so now the subsidized price is less than average. You can put it on monthly payments over five years from probably $300 a month at $300 a month even on a student budget it is within possibility that you’d now buy a Maserati and if you are already out working almost definitely. If you compare a Maserati with a Honda Accord, the Accord will do 90 percent of what the Maserati will do, except for going really fast and looking impressive. In the context of healthcare, most of the time all you need is a Honda accord, but if you make everything look 90 percent off, people all of a sudden get Maserati’s, right?
My favorite example is proton-beam therapy for brain cancers. So there’s chemotherapy, which is drugs, where they basically try to poison the cancer cells. It makes you sick and nauseous and then there’s proton beam therapy where they build a million dollars particle accelerator to accelerate neutrons up near the speed of light and then you point them at someone’s brain tumor, ready to bombard them and blow things up and get it. We know from clinical trials that proton-beam therapy does not work any better than chemo, but it costs like 10 to 20 times more. If someone had to pay out of pocket they’d choose chemotherapy but if everything is subsidized, they go with the proton beam therapy. The only difference is not in treatment but in luxury, where you can avoid the nausea. And so what we’ve done here in America is we made all the Maseratis is looked like Honda Accords and the reason being, everyday people only are only seeing 10 percent of the 90 percent of the cost. Which makes everyone think everything is artificially free.
This is the biggest public policy fix in America. If we get our spending on healthcare down to around 5 percent, we save 13 percent of GDP which is like 2.6 trillion dollars saved. Two percent of GDP would balance our Social Security system and four percent was how much we spent on defense. The Federal Deficit is four percent of GDP. And with the fix I am proposing I just found up to 13 percent of GDP. This would fix our pension problems and solve any looming debt/financial crisis to come. The current health insurance system is like a cancer. It’s sucking resources out of the rest of the American economic body, that should be going into growth. And so to me, fixing the health insurance system is the number one biggest public policy fixing America that we already know how to solve it. I don’t know how to solve racism. I don’t know how to solve war. I don’t know how to solve crime, but I do know how to bring down the cost of healthcare 75 percent, which would have all these other great effects. And we also know how to fix the student loan mess and the college tuition mess, right? Because we used to do things inexpensively.
CI: What are other issues that you are looking to deal with, specifically regarding the 31st district?
SF: Well I would say jobs and crime. Look at the city of San Bernardino, voted one of the best cities to live in 1977 but then it turned into a west-coast rust belt city. The major defense contractors, steel jobs, railroad jobs all left. Over 50,000 jobs lost all at once. All those jobs imploded and then they started getting massive crime as people moved in from other areas. And so last year, or now maybe it was 2016, San Bernardino had the highest murder rate per capita in America. It’s only 200,000 people. So the sheer number of murders was less than Chicago, but the murder rate per person was actually the highest in the country. It’s also a nexus for drug trafficking. These drug cartels bring things from Mexico, human trafficking, they traffic girls across the border. It’s because all the freeways meet over there and so they can transport girls north and south.They can transport the East and West to Vegas and Phoenix. And we don’t have an opioid crisis here in this county because the price of meth coming up from Mexico is so cheap that everyone dies.So we have just as many people dying as in Ohio from opioids. But you know, the drug cartels undercut the price here. So people are addicted to something else. The city of San Bernardino in particular needs major help. And so what I’ve got in mind there is the city of San Bernardino went bankrupt in 2010. The police force was cut 50 or 60 percent completely undermanned and overwhelmed. This is why the murder rate went up, so the city can’t afford the level of policing they could really push back on. This isn’t to blame the police, they’ve got a great local police force, but they’re undermanned and understaffed. So what they need is a lot of outside help and assistance
CI: So what are your proposals?
SF: What I have in my mind is something like what we do after natural disasters. Imagine if we just had enough cops to smother the gangs and put everyone in jail. So managing with the city of San Bernardino, we send in 500 federal agents, just every sort of agent, and all these guys have arrest procedures. You work with local police and send in the federal prosecutors, we get all these drug dealers on interstate trafficking, which is a federal thing. Just send it on the federal resources to places like San Bernardino, you know, and begin with the public safety. And then after that they could just go back to a normal level of policing because they’d broken up the problems. Then you can do follow up with things like some additional assistance to the local public schools, tutoring programs and after school programs. You could follow up with a federal tax holiday. Just tell any business for the next 10 years, if you’re in the city of San Bernardino, you don’t pay federal taxes, right? You could go even further. The federal government says, for any business that moves into San Bernardino and creates at least five local jobs, we’ll give you $50,000 or whatever, some number, to actually reward people for moving into the area. The San Bernardino actually still has lots of empty factories, empty office buildings, low cost housing, right. If it were safe, people would move in again probably anyway. But if it were safe and subsidized in this way, that I think is fair and equitable, you could have a really quick renaissance and a boom there. And so that’s what I would like. Something that looks like FEMA, but for a manmade disaster. The city of San Bernardino is a manmade disaster. It’s not a natural disaster. So that would be top of my mind.
CI: What are your thoughts on the partisan divide right now in the country?
SF: There is obviously a strong personal divide. President Trump is in the middle of this, the way he tweets and behave sometimes causes me even great consternation. We are in a divided time, but on the other hand, I think the vast majority of Americans are either in the middle or even if they’re on the right or the left, they just want things to work again. And so I’m sitting here as the candidate in this race that actually has a solution to help. And it doesn’t matter if your politics are left or right, but imagine where we could give everyone the same high quality healthcare in America, like Singapore for instance, everyone’s in the same system, right? We put our veterans in one system, we put our elderly in another medication system and yet another and they ended up having quality problems, right? You want everyone in the same high quality system. We could do that with reform. To my mind, these are one hundred percent bipartisan and everyone can get behind them. So I’m the guy that understands how to fix the healthcare mess. I’m the candidate who understands how to fix the high cost of tuition and the student loan mess. I got great ideas on K-12 education. None of these are partisan or ideological. I’m not going to sit here and say the government’s always bad. No, we need to go right at my party. My Republican Party has a great tradition of regulation, right? It was Teddy Roosevelt, a Republican that created the Food and Drug Administration. It was Richard Nixon, a Republican who created the Environmental Protection Agency here in California. It was Ronald Reagan when he was governor that created our our local environmental protections. This party has done great progressive things throughout its history to protect the environment, to protect workers. We were the party that was created to end slavery. We did. We were the party to push through women’s suffrage. You know, every feminist in the country will tell you this. They still think it’s peculiar, but yeah, it was western Republican governors who pushed through women’s suffrage. So the Republican Party has a great tradition here to draw on that has unfortunately been forgotten the last few decades, but for anyone who is thinks of themselves as disposed to the left and in general against the right, I’m not your stereotype, I am a centrist Republican who actually has ideas on how to get things done that will appeal to you. And so that’s basically the message out there and we’re not running me as strictly a conservative. We’re running me as a guy who actually has solutions, unlike the incumbent. And so I really think that anyone who’s a Democrat, if they learned about me and these ideas, they would consider me by far the better candidate in this race.I have solutions and the current incumbent doesn’t have any because it looks like his primary concern is climbing the power hierarchy in Washington and given that the higher hierarchy and his party is hard left, that puts them completely out of touch with the district.
CI: How do we begin to bridge the divide?
SF: I think the first step, and not just for me but for everyone involved in politics and that includes ordinary citizens as a voter, is to try and keep in mind that even if someone disagrees with you on a particular policy issue or worldview, almost certainly that person has good intentions, right? We’ve gotten to the place in this country where we assume the other side is actively malicious. Everyone’s sort of throwing around a rhetorical worldview that the other side has bad intentions. When you see various Republican presidents, you know, being called Nazis and Hitler its not good and I won’t absolve the right; there has been some vicious name calling towards the left. And so for instance, with me and my incumbent, I don’t think he’s a bad guy. I just think he’s got the wrong priorities, he always has been a lobbyist with insider politicians and he wants to climb the hierarchy in the Democratic Party. Doesn’t make him an evil, poorly intentioned guy, but it does mean his focus is not on the district and helping the people in the district. He’s well intentioned person, this and that, but he doesn’t have any policy fixes for healthcare. He doesn’t have any fixes for the environment. He doesn’t have any policy fixes for student loan debt or higher education. We want a polite, respectful fight because then the country wins; that tones down the rhetoric that gets everyone out in their tribal warfare.
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