Why Health Care Costs Are Hurting Education

I never really thought about health care costs and education trends as being fundamentally interrelated, but this point, from Peter Orszag's blog post on "The Case for Reform in Education and Health Care," just makes so much sense:

For years now, there has been a long-running trend toward declining State investments in public universities, as growing health care costs come to crowd out States' investment in higher education.

If you're more of a visual person like me, maybe you'd like to see some graphs:

The images below illustrate the crowding out effect pretty effectively. Here's a graph of "Dollars of higher education appropriations per $1000 of personal income" since 1978 from Orszag's presentation.
Picture 4.pngAnd here's the the ratio of public salary to private salary for assistant, associate and full professors since 1978.
Picture 5.pngWhat we're seeing in these graphs is pretty clear: state investments in public education have not kept up with private sector salaries or personal income. And, as Orszag notes, you'd be wise to pin the downward slope in these graphs to skyrocketing health care spending.

You can argue over the relationship of education spending to student achievement (DC's exorbitant per-student spending is always ground zero for that discussion) but I think the more important point here is that clearly rising health care costs necessitate trade offs and budget cuts that have an terribly negative impact in policies that have nothing to do with health care. Our inability to control health costs is directly feeding our inability to field, among other things, an effective public education system. If Obama can make this case - that health care spending is more than a health care issue - he might be able to build a reform coalition large enough to finally bring the issue to the forefront on Captol Hill.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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