Saturday, September 5, 2009

Inflation in health care and education

Two industries have a 30-year record of high inflation: education and health care.  I'm in one and pay for the other.  Most people just pay for both and are frustrated by the contrast with television, computers, cars, and almost everything else that gets cheaper and/or better.  My first solo airline flight was from Seattle to New York in 1980.  The flight cost $800 (in 1980 dollars!) booked way in advance; I could jump on a flight tomorrow for less than $500.

The common problems for education and health care are 1) an inability to achieve any significant gains by automation and 2) a growing, perhaps metastasizing, organizational structure deemed necessary to serve more people.

In the past 30 years, there hasn't been much of a change in how many patients a doctor can see during a day.  Likewise, at the university level we can sometimes shoehorn 300 or 400 people into a few large lectures, but most real learning, from K-12 and beyond is done in smaller classrooms. As a result, for both doctors and teachers the ratio of boots-on-the-ground workers to consumers served has not significantly changed.

As enrollments have expanded to meet our larger population we aren't developing new school districts or new universities.  Instead, we add schools to existing districts add new campuses to existing universities.  The result is larger school bureaucracies where the support staff are increasingly the tail wagging the dog.

I have less experience with the health care system, but from the outside it appears that the  complicated billing procedures of insurance companies and medicare are continually pushing up the numbers and quality of support staff required.

Given the above, it's not surprising that education and health care costs are continually outpacing inflation.  Unfortunately, there isn't a clear solution.  There isn't much hope of addressing the worker/consumer ratio without degrading education or health care.  Thus, we are left with trying to address issues of the bureaucratic structures of both industries.

Anyone got a fix?

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