Health and Higher Education

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by John Goodman,

from NCPA,

We spend about twice as much as other developed countries as a fraction of national output. Yet our results are mediocre. Public and private spending is growing much faster than our income ― putting us on a course that is clearly unsustainable. It appears we are buying quantity instead of value. Outcomes vary wildly from state to state. And programs that target the poor seem to be backfiring instead.

I’m speaking of course about…Ooops. Did you think I was describing health care? No. I’m describing our system of higher education ― making some of the same points that President Obama made the other day. Yet even the president failed to note the obvious similarities between the two fields.

The problems of inner city public schools, for example, are very similar to the problems of the health care system. In both cases, the people who are supposed to benefit are different from the entity that pays the bills. In both cases, the beneficiaries are the excuse to transfer billions of dollars every year from payers to providers. In both cases, the providers and the payers argue about how much is enough, engage in an unending struggle over “reform” and blather endlessly about how dedicated they are to doing better next year.

President Obama’s solution in both fields is eerily similar. “Let’s find out what works and then go do it,” he says. What he doesn’t say is that we have been trying this strategy without success for 25 years in education.

Now the White House has turned its attention to higher education. If past is prologue you know what to expect: some very good analysis of the problems, coupled with an inability to focus on the real culprit: third-party payment.

My proposal is similar to what I’ve recommended for health care: a fixed sum voucher. Give students a bundle of money and let the colleges compete to see what they can provide for that sum. And give all the money to the students. The universities’ income will depend exclusively on how well they compete. I would also get rid of all the tax breaks for donors ― but as part of overall tax reform. The money we would save by eliminating those tax breaks is a potential new source of funds for the student voucher.

I would also insist on some pretty strict standards for the voucher. It appears that we are sending too many people to college these days. (There are 115,520 janitors in the United States with bachelor’s degrees?)

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