By Patrick Callan and Andrew L. Yarrow
While America's deepening economic woes cast a pall over the nation, long-term U.S. fortunes are profoundly threatened by parallel crises of cost, quality, access, and equity in health care and higher education. Once-proud symbols of national greatness, these sectors no longer deliver world-class results, are increasingly inequitable, and elicit growing discontent from many Americans.
The U.S. health care bill is $2.3 trillion, 16 percent of gross domestic product - roughly double the percentage for Western Europe, Canada, Japan, and other rich countries. Spending is rising by 7 percent a year, with Medicare increasing by 13 percent in 2007. Escalating health-care costs are the leading cause of personal bankruptcy and are why America's $10.6 trillion national debt is projected to soar. Waste is a major culprit, manifested in such problems as vast overhead costs, overuse of medical services, insufficient competition and lack of information about cost-effective practices.
The United States also spends about 3 percent of GDP on higher education - again, roughly twice the percentage of virtually every other developed country. While health-care costs have risen 2.5 percentage points faster than economic growth, higher education costs have increased about 3.5 percentage points faster than GDP growth for the last several decades. Exploding higher education costs have caused real student loan debt to more than double in a decade.
Government support through Pell Grants and other student assistance has risen, but cost increases have outpaced public investment in financial aid. Reasons for this cost growth include the knowledge-based global economy and rising aspirations creating a seller's market for college; an "arms race" among colleges to have the fanciest facilities; and weak financial accountability and few incentives for controlling costs.
The problem would be bad enough if it were just a matter of cost. But it's not. Not long ago, the United States was arguably tops in both higher education and health care. No more. To make matters worse, a nation whose cherished ideals of equality were advanced immeasurably during the 20th century by the diffusion of high-quality health care and higher education now has become troublingly inequitable in both.
The World Health Organization reports that about three dozen other nations have better aggregate health-care outcomes than America, and the RAND Corporation finds that barely half the treatments Americans receive are considered "best practices." Similarly, the United States is no longer the world leader in college access, and is in the bottom half in Organization for Economic Cooperation and Development rankings in college completion rates and 10th in the proportion of its 25-to-35-year-old population that is college-educated.
Higher education increasingly reflects and reinforces inequities in American society. Large gaps in college access associated with race and income have not narrowed for decades. The wealthy can afford Ivy League tuitions, the upper middle class falls into debt to attend flagship state universities, the lower middle class also borrows heavily to enroll in regional state colleges and community colleges, and poor Americans simply lack college opportunity. What's more, the quality of much of higher education itself has declined, sliding behind both earlier U.S. standards and those of many other countries.
At the same time, nearly 50 million Americans lack health insurance, tens of millions have limited medical coverage, and millions more may lose coverage due to the current economic crisis. Access to good care varies tremendously by income. A sizable population faces the triple whammy of inadequate insurance coverage, poor health behaviors, and lower-quality health providers - compared to a decently covered middle class and a health-conscious elite with access to the world's best medicine. This has created a trifurcation of American health care equivalent to a beat-up Chevy, a new Toyota and a Rolls-Royce.
Few Americans are satisfied with their medical care. The once-friendly and admired image of a selfless corps of Marcus Welbys has given way to a more widespread belief that doctors, hospitals, and pharmaceutical companies are greedy, insensitive, incompetent and dishonest.
Likewise, three-fourths of Americans are worried about college costs and debt. Barely half think that students get a valuable return on higher education. Half believe that colleges "mainly care about the bottom line." And three-fifths think that talented students lack the opportunity to attend college; among African-Americans and Hispanics the proportions are even higher.
The danger to a prosperous, optimistic American future is enormous. Serious cost control, accountability for high-quality outcomes, and greater equity are desperately needed. Systemic overhaul of health care and higher education requires an outcry from the public and the business community, as well as political champions who understand that larger public subsidies without substantial reforms will not suffice; greater engagement by health-care and higher-education leaders; and public-policy intervention that recognizes the failure of market mechanisms to yield quality, affordability and access.
Higher education needs substantial rethinking about delivery and financing. Can online instruction be adapted and broadened to strengthen learning and reduce costs? Can colleges work collectively with high schools to identify readiness standards? Can transfer of credits among two- and four-year colleges become seamless, reducing costly and redundant course repetition? Can state finance and accountability systems increase college access and completion? Do four-year colleges need to look like swank corporate conference centers? And should scarce financial aid now used to compete for gifted - but less needy - students be refocused to qualified students strapped for resources?
How to control health-care costs is an even tougher nut to crack. Universal insurance - with government premium support, combined with some "managed competition" among insurance providers and greater cost-sharing - are important. Increased regulation of health-care providers and their costs, greater emphasis on public health and prevention, medical malpractice reform, some rationing of care, and use of information technology to disseminate best and most-cost-effective practices and maintain a national medical records database also could help.
Without such changes, even with additional public investments proposed by President-elect Barack Obama and others, America will be less and less likely to be healthy, wealthy or wise.
Patrick M. Callan is president of the National Center for Public Policy and Higher Education. Andrew L. Yarrow, vice president and Washington director of Public Agenda, is author of the new book, "Forgive Us Our Debts: The Intergenerational Dangers of Fiscal Irresponsibility" and teaches U.S. history at American University. His e-mail is ayarrow@publicagenda.org.
This article is reprinted from the Jan. 11, 2009, edition of The Baltimore Sun.