The American Affordability Crisis — ft. Neera Tanden | Prof G Markets

They try and consolidate the market. And then they slowly but surely start raising prices. So I take Uber Lux. The average Uber Lux ride in 2015 was between $40 and $60. Today, by the way, Uber has raised its prices once it consolidated the market 7% to 10% a year, twice or triple times the rate of inflation. Now the average Uber Lux ride is $80 to $120. So 350 rides a year at an average price of about $100 because I'm usually going back and forth from the airport. I am spending every year $35,000 on Uber. That's true. And I realize this is a story of privilege, but what I've decided is I canceled.

Clip that now. I canceled Uber. I've been taking the tube and the subway in New York, which are incredible. I don't know if you knew this, but there's tunnels underground and these cars go through them on tracks and they get you where you need to go for like two or three bucks. They're just, they're really, they're seriously amazing. Some weird people and also the people aren't that hot on the train. That's the only thing I would suggest fixing. We need more hot people on the trains. Yeah, they could make like a hot girls train maybe that would fix things. Or hot dudes. I'm fine with the hot guys. I got Equinox. At this point, I just want hot.

So I figured out with the money I'm going to save, no joke, I could lease, including parking and insurance, with the money I'm going to save, having canceled my Uber account, I could lease a Mercedes G-Wagon, the new BMW i7, or a Range Rover with the money I'm saving. This is all a long-winded way of saying, go to Resist and Unsubscribe, and you will find out just how much money you are spending on different tech platforms that have slowly but surely increased their pricing, and you don't realize how much it's costing you. Anyways, I'm getting, just to really stick it to the man I'm going to go buy a Range Rover.

but here's the i mean here's the question because i mean how are you getting around are you not are you are you switching to lift because i know you're doing this thing where you you have two different uh subscriptions and you get rid of one of them is that is that what you're doing here i'm not exaggerating i've been taking the tube in the subway and i've been doing this awful thing called uber x where they have like air freshener and shitty cars and oh my god you're still taking ubers it's just you downgraded No, I do the Lyft, the cheap Lyft one. Lyft, it's called Lyft Walmart or something.

Lyft, life has not worked out the way I'd hoped. And a guy who doesn't know how to use Waze and is on an Android phone. God, I sound like such a douchebag right now. But I've been taking the subway. It's incredible. Good stuff. $35,000. That's pretty good. So anyways, I'm going one by one. Uber was the tough one. I'm excited about that one. I'm doing Paramount. Plus tonight, tomorrow, I'm going to do Apple TV Plus. I did Amazon Prime on Friday. That wasn't hard. I don't order that much from Amazon. But anyways. I'm shocked to hear that. Yeah, I don't buy a lot from Amazon. What have you unsubscribed from, given I know how emotionally invested you are in this movement?

I haven't unsubscribed yet, but I'm... happy to hear from you what you think i should unsubscribe from i could maybe go between left and uber memo hold on hold on one second one second ed one second memo to file re ed elson review and compensation does not like act like an owner is poor for morale music does not match the words it's disappointing our audience we'll see it we'll see how disappointed everyone is you have let me get this your boss and a person you you constantly say i'm your role model, has started a movement, and you have yet to unsubscribe from anything. Do I have that right? You did get that right.

Yeah. And by the way, none of this comes for free. We just lost an advertiser who rhymes with Snapple, and we just lost, or I lost, another telco advertiser that rhymes with Mint Mobile. Anyways, nothing's for free, Ed. And corporate agents are like, it's really great you're finding your virtue all of a sudden, but we're not down with that. And so, yeah, nothing's for free. Nothing's for free. Anyways. All right. Let's get to our guest, Ed. All right. Here's our conversation with Neera Tanden, president and CEO of the Center for American Progress. Neera, thank you for joining us on Prof. Tree Markets.

Thanks for having me. so i just want to start with a quick bio of who you are so you are the ceo of the center for american progress you've also worked in the white house you're the director for the domestic policy council under biden you also helped to create the affordable care act under obama uh you are a democrat but you have just plainly had a lot of experience in policy so we want to focus on affordability in this episode and the policies that we're seeing from the administration so far, but just based on your experience, having worked in the White House, having worked as a policy maker, how would you rate the performance of this administration one year in?

I think the first and foremost thing for any administration to do is to figure out how to do no harm. In that arena, the administration has definitely failed. What is kind of STARK is that at a time where people are concerned about really making ends meet, the administration's cornerstone policy is tariffs. Those tariffs raise the cost of goods for, you know, most Americans, a lot of small businesses, and just increased costs overall in the economy. But it's also important to remember that tariffs are essentially a version of a sales tax that is really disproportionately impacting kind of working class poor Americans.

So I think on affordability writ large, the real challenge for the administration is that it's making the problem worse. So when you really go beyond just goods like groceries or just buying, like, soccer balls at your local Target to, you know, things like health care, it's an even starker picture. So there, the president is really—President Trump is the first president in my lifetime who has actually successfully taken health care away from people. You know, he's the one big, beautiful bill act. will increase costs for millions of Americans by ensuring they don't have health insurance. The whole debate on premium tax credits, the Affordable Care Act, premium tax credits is also fundamentally about affordability as well. So I'm going to go with an F.

Saw that coming. I know that might shock people. That might be, I just was like, I was really changing it up there. But yeah, Yeah, I'm going with a failing rig. I was expecting a D coming in. We went straight to the F.

We'll be right back after the break. And if you're enjoying the show so far, send us a link to our YouTube channel. it to a friend, and please follow us if you haven't already. We're back with Prof G Markets. I think one thing that I always find and that we always find whenever we try to dig into healthcare is we like try to figure out why are healthcare costs still so high?

Why are they so much higher in America? And then we kind of do the digging and digging and then And it's always comes around to some answer of, oh, there's a lot of just complexity in the middle somewhere. There's the pharmacy benefit managers, there's the insurance companies, no one can see eye to eye on this stuff. The whole thing is just like, oh, it's really complicated. Like, that's the explanation. Could you just give us like a 101 on what is going on with healthcare policy in America right now? And why hasn't America really gotten its act together in terms of bringing healthcare costs down? The way I bottom line healthcare costs in America is the per unit cost of things in America is much more expensive. Going to a doctor, getting a medical device, getting a surgery is much more expensive here than in Europe or other places. Just anything you do is a lot more expensive in the United States.

And the reason why it is a lot more expensive in the United States is essentially you have... a variety of forces, hospitals, insurers, PBMs, benefit manager, drug benefit managers like middlemen, the drug companies, all like very few of those forces are transparent. And so it basically the fractured system allows a bunch of people to drive up costs. A big area where things are just much more expensive in the United States is hospital care. It's just—and those hospitals often have a monopoly. And no individual group is using their—has enough market power to really drive costs effectively down.

So it's a very inflationary system. So I don't have, like, a much better answer than it's complex, and that's what makes it more expensive. But essentially of a system that is super fractured and in a way, everyone looks at somebody else to lower the, to be transparent. What we should do is have everyone be transparent. The hospital should be really clear on what it costs. And, you know, there, I do think that there is an additional problem in the United States, which is because people don't have health insurance. There are a bunch of forces, like hospitals shift costs. I mean, we've insured a lot of people in the United States, particularly after the ACA, but there are some people who still don't have coverage and they shift costs to others to sort of pay for that.

So it's two complicated things. But what we should do is have radical transparency everywhere, get rid of the PBMs. There's a lot of self-dealing in the system as well, and that would make it a lot better. What could government do about this? Like what I'm getting is like all of these, this fractured system, all of these independent actors, everyone's blaming it on each other, pointing fingers, being opaque. Like I feel like that's exactly the domain of the government to get in there and just figure it out. What would that look like? There are states that have done really effective things, and I'll give an example.

So it's to use the power of the government, not to set price caps, but to basically try to negotiate with all the insurers. Insurance is right. regulated in the United States, basically at the state level, for the most part. And so very similar to the German model, where you have kind of bargaining between all the employers and all the insurers to set, the government kind of oversees to set lower prices for insurance. And they do the same thing with hospitals. And essentially, it helps bring the whole price system down by taking negotiating power and concentrating it. And this is why I think it's important for Medicare to negotiate drug prices, because you have something that has a lot of market power able to match the power of near monopoly prescription drug companies. So I think other countries have used that model. Other countries have also done single payer. But in a system that's going to be, that you imagine, short of single-payer, having the government help, you know, basically negotiate with employers and, like, bring all the employers together and renegotiate rates down in a way where companies can still be profitable, but you actually are concerned about consumer costs as well.

You know, I think that's an important step. What is Trump, is this administration doing on healthcare policy that you think is either a good idea or a bad idea? I think the one thing that I'm kind of interested in particularly is Trump Rx. And from my understanding, it's this policy to theoretically get the cost of drugs down. That's also part of his whole great healthcare plan. The details are not very clear as to what he's actually going to do there. But just on health care, what do you make of what this administration has either gotten done or not gotten done so far? The Trump administration is trying to lower health care costs and actually lower the level of federal payments to Medicare Advantage plans.

So the Trump administration recently, you know, tried to put the brakes on some overpayments to Medicare Advantage, which Medicare Advantage is a private insurance in the Medicare system, which historically has been, you know, overcharging the federal government vis-a-vis, like, much more than, you know, it pays for traditional Medicare, fee-for-service Medicare that the government is just handling. So that's one area. And and Trump are. Like, basically, the Democrats in Congress passed Medicare drug negotiation. They have not undone that. And in some ways, it seems like they're trying to act like they're building on that by lowering drug costs.

But, you know, whatever that's good, it's good if this is an area where they are trying to continue that work. And there are plenty of areas that are not continuing important good work. So, you know, I think that's a really important step. I think the fact is that even Donald Trump recognizes Americans pay more for drugs, prescription drugs, than anywhere else in the world. And we do that at the same time where we spend the most money on research for prescription drugs. So consumers are paying on both ends, and I'm glad he's trying to take some steps there. We'll be right back. And for even more markets insights, sign up for our newsletter at profgmarkets.com slash subscribe.

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We're back with Prof G Markets. I want to take advantage of the fact that you are sort of at the intersection of kind of a think tank. Is that how you would describe your group right now, policy group think tank? Yes, I would say the Center for American Progress is an action-oriented think tank. An action tank. So, and the fact you've worked in the Obama administration, you have a solid understanding of economics. What I want to do is sort of a lightning round here. I want to propose a series of policy ideas and get you a sort of quick 30,000-foot action-oriented reaction. Are you ready? Single-payer or national health care?

If America could start over again, there would be a lot of benefits to single-payer. It works well in other countries, but it would be a radical transformation today. So I we support I support more of a public option to people that would create competition for insurance companies. And they'd actually have to compete on lowering costs vis-a-vis the government. Mass distribution of GLP-1 drugs. That would be great. I mean, GLP-1 drugs are they have many facets, one of one of which is the drug companies just kind of discovered like they basically struggled with these drugs. They weren't expecting to invest to have this kind of benefit.

They are exceedingly expensive. They have huge costs, huge health implications. They would make Americans' lives much, much better on a whole range of issues. We're discovering health, sleeping, heart conditions, as well as weight loss. So it would be fantastic to get wide distribution and much cheaper price. Federally mandated minimum wage of $25 an hour. I think, you know, we're looking at things like a $20 an hour. I think the most important thing to think about here is how you set a wage that people can live on and do it in a way that creates more job opportunities and doesn't give people an excuse to get rid of jobs.

So, I mean, you could do $25 minimum wage and think of some regional variation, but I think the impetus to drive the minimum wage up is really crucial and hugely necessary. Just in much of the landmass of the country, it is still $7. Just as a reminder. So think about what that's like. In most of the South, it's still $7.25. In much of the West, it's still $7.25. And I think that is outrageous, frankly, in this day and age. Elimination of capital gains and mortgage interest, one basic income tax rate, and similar to what Reagan did. I think the country over the last 20 years has seen a big increase in wealth that goes towards capital versus labor.

And, I mean, there's been some studies that show when you really raise capital gains that, you know, people play games around that. But fundamentally, I think we should raise we should have we should not have this big differential between capital gains and traditional income that benefits very wealthy Americans. Last one, alternative minimum tax of 50 percent for anyone making over, say, three million a year. Yeah, that sounds good. I think what I'd say here, and, you know, you've talked about this yourself, I think we have a real kind of cancer in the country in declining opportunity. And I'll also say, you know, we had Raphael Warnock here at CAP a few months ago, and he was talking about, you know, essentially a spiritual crisis in the country.

And he identified it really with a sense that millions of Americans, most Americans, in fact, don't think that they can, that they have a real fair shot in the country. And they might think that because it's true that upward mobility has really declined. We have less economic mobility than Canada, almost half. We have less than most countries in Europe. This was a country that used to be a place where you could go as far as your talents can take you. So I think we have to transform our institutions to make them put that issue, like opportunity for every American, at the heart of what they do. And those ideas are part of that.

Last question for me, just along the lines of the lightning round. What do you think of the idea of the notion of mandatory national service? I love it. I wish we could get it done tomorrow.

If you were the emperor of America for a day, so there's no Congress, there's no checks, no balances, you can basically just do whatever you want, you've got a day to do it, what would you change in the law?

Or what would you implement and why? I would ensure that we built mixed income housing in the suburbs and wealthier parts of America. And I'll say why I think that, you know, essentially what we've learned about poverty in America is that people who have access to, like, wealthier places, poorer people who have access to wealthier places, their upward mobility goes up like this. Rod Shetty has done a lot of work in this space. And, you know, to be candid, this actually is a bit the story of my life. My parents got divorced when I was really young. My father left just as a kind of accident of policy.

Massachusetts had passed this encouragement of low-income housing in suburban areas. My mom was able to move into an apartment. We had really good schools. If she didn't have that apartment in a middle-class town, I could have grown up in a place where no one went to a college. I grew up in a place where everyone went to college. I went to college. I went to eventually law school, and I'm here because of all those decisions. So if I could change one thing in America just for a day, there'd be a lot of opposition from some, like, wealthy homeowners,