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Hospitalization and Higher Education: Price-Gouging
Mark Perry of the American Enterprise Association recently posted a chart that is getting a lot of attention because it is highly revealing:
As you can see, over the last two decades, the price of some things — housing and foodstuffs — has remained more or less steady if measured in constant dollars. Technological advances have brought down the cost of automobiles, household furnishings, and clothing, and they have dramatically reduced the cost of cellphone service, computer software, toys, and TVs. Wages have modestly grown, and the cost of childcare and medical services has gone up a bit. The shocker, however, is that the price charged for hospital care, college textbooks, and college tuition has gone up astronomically.
In the case of hospital care, there may be some excuse. The quality of medicine has improved dramatically in the last twenty years, and that comes at a price. Whether the increase in cost is fully justified I doubt. My suspicion is that the absence of market forces — the fact that there is no price transparency in the field of hospital care — has opened the door to gouging. The Trump administration, to its credit, seems to be aware of the problem.
In the case of higher education, there is no excuse. Our universities and colleges are not better today than they were in 1997. To be sure, they are more like country clubs. The facilities now available are impressive. But if you think that the ultimate test is what goes on in the classroom you will have to conclude that we have gone dramatically downhill. Nor is it the case that faculties have increased much in size or that their salaries have gone up a great deal. The real change is administrative bloat, and administrative salaries are considerably higher than faculty salaries.
This is a scandal, and something should be done about it — especially in the public institutions. For they are the worst offenders. If I were running for Governor in some state, I would try to make hay out of this, and I would attack them for their use of “adjunct professors,” who are paid a pittance. In today’s America, the people most apt to engage in moral posturing and virtue-signaling are the ones most likely to exploit the weak position of those under their supervision.
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Everything above 85% appears to be government subsidized items. Plus, as you mentioned, the quality of these goods isn’t getting better. Everything else is mostly free market driven.
Nothing new here. Government drives up cost and stifles quality improvements. Yeah, its a scandal, but its one we seem happy to keep growing.
If everyone that going to lose jobs to trade and robots is supposed to suck it up, the government has to make even single one of those lines flat or go down. Otherwise you are going to get more populism. More Trump and more Bernie.
Central bank generated inflation makes our lives better how? So we can have a “sophisticated financial system”?
The price of shelter should be going down everywhere, not up given all of the cheap labor and robots.
Government Is How We Steal From Each Other™
Good discussion here on education http://ricochet.com/549247/an-intro-to-homeschooling-for-me-and-you/
That comment nails it. The graph could just as easily compared price increase to degree of subsidization and got similar curves. The more the government “helps”, the more items are removed from price-driven incentives (and reality).
I don’t know if it’s nationwide or not, but around here the hospitals have merged while before they were independent. UNC and Duke have all the hospitals in my part of the world so there is basically an oligopoly.
Absolutely the case in NH. In anything other than some kind of trauma we don’t mind the 45 min drive across state line to MA – much to our surprise after moving here from CA 10 years ago. Just in time for the Perils of ObamaCare to hit. I trusted my ophthalmologist in CA. Not so here. The only care I need. So far. We have either Portsmouth hospital or Concord hospital. Both swept in all the independent physicians after the electronic records regulation.
It would have been nice if the GOP had some actual plans in place for healthcare / health insurance incase Trump won and they CONTROLLED EVERYTHING.
There isn’t going to be any improvement. They have no plans.
The ACA will be the greatest Cloward and Piven maneuver, ever.
We are all socialists, now.
Indiana University Health owns about every medical facility in Indiana now.
The situation with education seems particularly egregious when you consider the increase in general availability of information since 1997. How on earth could our first 20-25 years with the internet yield these results? The rise of the internet should’ve made education cheaper and more accessible.
Instead, our higher education system has produced a generation saddled with debt, delaying adulthood.
What’s really amazing is how the frustrated millennial generation doesn’t direct much of their anger at our higher education system. They view Elizabeth Warren as standing up for them against injustice and greed, but Elizabeth Warren is quite cozy with our educational establishment, and quite hostile towards any alternative education options who attempt to compete with our established model.
I hope someone can find a way to use this example of higher education to illustrate to millennials how the big government ideology they currently support has made their own lives much harder.
The college education statistic here is likely a red herring.
The sticker price of college education has indeed nearly doubled, but the actual average price paid by students (including using student loans) has actually stayed right about at the rate of inflation. In essence, colleges have used a gimmick of increasing their list price while increasing financial aid to milk rich parents for more money while charging middle-class families roughly the same.
Of course, college education is still ridiculously overpriced for the educational value it provides, and much of that is due to federal loans.
Why would you expect the GOP to have a plan to make health care less government-run when Republican voters are fiercely protective of the single-payer system we already have in the US (i.e. Medicare)?
Elected officials still need to respond at least a little to their constituents to stay in office. And the constituents in many Republican-leaning districts have clearly said keep your hands of my Medicare.
The ACA is making everything worse in multiple ways. It’s a Cloward and Piven trap that they just empowered more by not wiping it out and starting over.
Perhaps, but I think the incessant obsession with the ACA and the motives behind it misses the point that the pre-Obamacare health care system was a hot mess that many voters were fed up with.
I find it interesting that in the graph in the OP, neither the curves for hospital services nor for medical care services change dramatically around the time Obamacare was enacted. The costs of health care have been skyrocketing for decades and Obamacare hasn’t really been much other than a blip in that regard.
If anything, our previous system could be called the Cloward-Piven scheme that gave us the slow-moving crisis which precipitated Obamacare in the first place; except that our previous system was not some deliberately-devised diabolic plan, but rather a series of disjointed and distributed steps toward ever-increasing government involvement in the procurement of health care.
I agree with all of that.
Kevin Williamson wrote a really depressing piece about this stuff last December. December 5 or so.
I don’t see how we can improve anything unless we force everyone into a universal multi payer system as Avik Roy recommends. The ACA will force single-payer.
“The sticker price of college education has indeed nearly doubled, but the actual average price paid by students (including using student loans) has actually stayed right about at the rate of inflation.”
What a bunch of BS. As a parent with a child who just went through college, I know of absolutely no evidence for that statement other than your phony PBS study. The costs for my daughter and her many friends who went to college were simply outrageous. Yes, there are some grants and scholarships for a very few kids. Always has been. To make matters worse, most of the time when you apply for aid you are penalized now in the admission process. I’ve been through it, I know. It is all about the money for these schools. The cost of education at the University I went to is now only 40 times that when I went there, and the quality of the education has gone down tremendously. My wife’s school over 60 times. That’s way over the rate of inflation my friend.
The reason for this inflation is the student loan scam where parents are lured by the so-called easy money of student loans so they can put their children in a good school with the desperate hope that the education provided will help their child get ahead. These colleges and universities are predators, pure and simple. The student loan problem has grown into a nightmare for millions of Americans, enslaving kids and parents into a lifetime of massive debt. The amount of student loans outstanding now have reached $1.6 trillion dollars, having tripled since our saintly President Buraq Hussein was elected. If the cost of higher education stayed right about the same as the rate of inflation ( officially about 2%) how did all these people incur another trillion dollars in debt over the last ten years?
Where does the money go? This is one of my many questions on the rising prices.
I know one answer is incompetence and graft. My husband is IT at a local college. Over the last few years he has watched the saga of several buildings built by ”artists”, no bid contracts (either officially or effectively), or any numbers of seemingly little stupid mistakes that end up costing a lot to correct. Such as the time they redid a building and finished all the walls before putting in any of the necessary cabling.
One thing he noted is that many of these projects are headed up by students or student groups, I guess with the idea that it enhances their education or something, but he observed that those students are only there for 4 years so they never have to live with the consequences of their choices, like the ”artist architect” building that they decided on that was twice the bid of anyone else and ended up costing twice that because artists don’t know crap about building and major things had to be constantly changed. A few months after it was finally finished a huge portion of the flooring had to be replaced because it was already falling apart.
So that answers part of my question. Does anyone else know where that money goes?