Archive | June, 2012

Post 13. Health and Education: Rising Costs

2 Jun

There must be a lot written on this subject, but I have decided not to research it because I am hoping to come up with fresh ideas. It seems that no one disputes the fact that costs in the USA for these expenses, have skyrocketed and have become a severe burden in our society. Education costs have become an almost impossible barrier for young people. Graduates cannot easily find suitable work and often are deeply in debt. Government loans have allowed non-rich students to pay high tuitions and to get higher degrees, in spite of the high costs. In the area of healthcare, most people have private insurance (mostly through employers), or if older, through a first rate government Medicare program. In both cases, well-intentioned government support has unwittingly been an enabler of cost increases — but I would not recommend its termination as that will only cause more student hardship.

Here is a way to understand these rising costs. Imagine a baseball on a table that is slightly tilted downward to the right. Because the baseball has a slighly irregular shape, it will tend to be stationary. But every slight vibration can cause a small movement. Since there is a small force (tilt) to the right and no force to the left, the ball will gradually drift to the right. Your own exeriences may help to verify this principle.

Healthcare and education costs are like the tilted table. Basically, there are no significant downward forces for salaries and fees. So they increase little by little. No one in authority is calling for lower salaries for doctors. The type of person that makes the laws (often older Congressmen) are very dependent on the services of doctors and are not likely to alienate their health providers by demanding lower salaries, or by promoting socialized medicene. There is also tremendous pressure to leave it alone because it creates high profits for influential rich executives. The healthcare business interests, such as health insurance companies, are very clear. There is little resistance so the rates just keep going up.

Rising education costs are not as clear, but I think they do operate on the same principle. Universities compete for government and private research grants. And also have excellence as a natural goal. All of this competition drives the search for professors that will bring in the grants and increase the prestige of the institution. To get the best educators and researchers, you must pay higher and higher salaries. Supporting the increases are government loans to students at low interest rates. I can’t think of any downward pressure, except for the complaints of powerless students who are mostly cocerned about their own personal problems. There is a lot of upward force and little downward.

Education and healthcare systems are well protected by their administrators. Rich, private health insurance companies have powerful lobbies and political friends. Although not as clear, universities have powerful alumni associations and political support. Making major economic changes to these system is almost impossible. It would take a dramatic plan involving socialization or severe regulation. These systems are entities subject to the general principle of “evolution.” An entity if successful tends to grow stronger — in this case, to bring in more money.

What can be done? Perhaps, look to Scandenavia, where costs are less and citizens are happy. In that part of the world, the governments have taken over and controlled costs. If this were attempted in America, doctors, professors, administrators, insurance companies and all those they pay off, will fight like hell to keep their outrageous income. It seems that there is no other way. But, perhaps gradual government regulation can have the effect of “tilting” the table a little in the oposite direction.