Health Care Crowd Out

Today’s Managing Health Care Costs Indicator is

$30 billion

Peter Orszag, most recently the head of Obama's Office of Management and Budget, has a column in today's New York Times  demonstrating that increasing costs of health care have a substantial impact on other social priorities.

He reports research that shows that in 1985 states spent 50% more on higher education than on Medicaid, and the ratio has now flipped. During this time period, 43 states have cut their support for higher education, and salaries for academics at public universities have slide well behind those at private universities.   Public universities represented 40% of the top ranked colleges a quarter century ago.  Now, they represent 12%.

If state colleges and universities were being supported at the rate they were supported in 1985, higher education would be getting $30 billion more in state aid a year ($2000 per student.)

Orszag concludes that controlling health care costs might be the best way to improve post-secondary education in America.