I’ve mentioned it before. There’s a wonderful little book called “How to Lie With Statistics” that should be required reading (it was required reading at my high school). Justin Fox’s recent piece at Bloomberg View, comparing overall taxes paid with the costs of education and health care for various different countries could be a case study. Consider this graph, for example:
It has several problems. What is it measuring? Average tuition? Median tuition? There no way to tell. Additionally, three-quarters of American students attend public colleges and universities. What percentage of Japanese college students attend Japanese private college or universities? Israeli? There’s no way to tell, at least not from the information that’s provided. Worse yet it adjusts the numbers based on purchasing power parity. In other words the data are already adjusted to normalize costs among countries. With all of that finagling the graph tells you practically nothing. I would bet that American public university costs are a lot higher than Japanese or Canadian but that’s just a guess.
Or this graph:
It has a similar list of problems. For one thing what is “voluntary health insurance” in the United States? Isn’t there an individual mandate? Is voluntary health insurance in France the same as voluntary health insurance in the United States? I don’t think so. I think a graph similar to this would have told a clear story if it had been limited to out-of-pocket spending for health care but I think it could have told a very different story. Or if it had just compared Medicare spending with spending for people over 65 in other countries.
I believe that Mr. Fox is attempting to make the case that Americans could get a lot more for their money by channeling it through the federal government via taxes. IMO the reality is that healthcare and education are expensive in the United States because so much of them is channeled through government at all levels and government is very expensive here, Americans know that, and, consequently, are wary of big promises by big government advocates.
We need to be more informed than we are. A co-workers’ mother passed away suddenly a few days ago. (dropped dead in the garage). 61 years old, actively working in a hospital billing department.
No one in the family knows the cause of death. They said: she was being seen for some thyroid stuff, hated the side effects of her meds, I said “was It cancer?
he said, I don’t know, she was trying to get into some thyroid doctor but they were busy. Her husband is overweight and therefore disabled, she was the breadwinner. No more. Husband said, “the meds make her hallucinate and stuff like that”.
So, no autopsy, just another dead breadwinner from the working class, they’ll get over it. (Actually, they will, I’m only surprised none of them has contacted a lawyer)
Medicare and Medicaid are both much more closely tied in to the govt than private health insurance and they both cost much less than private. On the international level, systems entirely by government are cheaper than ours. If you want to assert that govt is the case of health care costs being so high in the US you need some evidence.
Steve
Support prices are always lower than the market price. If they weren’t there would be no private market.
As I’ve documented multiple times before, incomes in health care rose rapidly after Medicare was enacted for seven or eight years until all capacity was absorbed and then for the next seven or eight years because it was what the market would bear—Medicare reimbursement rates just kept rising. Then Congress cracked down and they slowed. Read Uwe Reinhardt’s “It’s the Prices, Stupid”.
However, that’s not really the point of my post. The point of my post is that education in the U. S., most of which is administered and paid for by government at one level or another, is more costly than education in other OECD countries. We pay more per mile of highway or foot of bridge than other OECD countries. I haven’t studied it but it’s probably true of our defense spending, too. We may spend a multiple of what other countries spend but are we getting value for what we spend? I’m not even sure how you’d go about quantifying that. Basically, government is more expensive in the U. S. than anywhere else and that’s likely to pertain to health care as well as everything else.
In other words my conjecture is the converse of what you’re talking about. IMO the burden of proof goes the other way. Without recourse to the experience in other countries (which may be fundamentally different from the U. S. experience just as our experience with education and infrastructure spending are), make your case that health care channeled through the federal government would be less expensive.
However, here’s how you could convince me, steve. Point to a function of government that we perform a lot less expensively than other OECD countries with equal or better outcomes. I just think we’re a lot more expensive than other OECD countries, so assuming otherwise isn’t particularly sound.
Ahh, I think we are probably closer in agreement then if I am understanding you correctly. It is not so much that it is government per se, but that government in the US is more expensive. Certainly true for lots of things.
However, on this…”make your case that health care channeled through the federal government would be less expensive.” if we are comparing government care vs private care, then prices for Medicare services are about 20%-25% less for the same procedure or service.
Steve
Steve
OECD. A statistical agency, eh?
The notion of truly measuring a real, comprehensive price of health care, inclusive of stated price, quality, service and availability, falls somewhere between absurd to ripe for manipulation and interpretation.
A couple of observations on the education chart.
Its highly deceiving to use tuition as a proxy for the actual cost of higher education — its really the equivalent to saying the co-pay bears a relationship to the cost of a doctor’s visit or procedure. In many states, like Washington, tuition at public universities is regulated and is really just an arbitrary price the government thinks is most politically useful.
But it is possible to look for a true cost — that’s the price Universities charge foreign students. The results maybe a bit surprising. The University of Washington charges 35K USD / year for international students. The University of Toronto (roughly equivalent, somewhat more prestigious) charges 45K CAD / year. Once you factor in currency conversion, its about the same. So at least some US public universities are equivalent in cost to Canadian universities — not wildly more expensive.
The other is private universities use tuition rates as an advertising tool as much as it is to recoup costs. For example, its an open secret to get into Harvard without being a legacy or seen as a future President requires a $10 million donation. What’s 100K a year in that case? 100K a year is saying is this is an exclusive University where the student will get a chance to network with the future elite of the country (e.g. future Presidents at Harvard and Yale). Offering the best education for the lowest cost is not the point at all.
I doubt more government spending will change the calculus of these private universities; unless for example the US decisively abandons picking Presidents from Harvard and Yale (28 of the last 29 years).
Attendance at some elite schools may be a “Veblen good” in which the demand increases as the price rises.
I wouldn’t argue that elite schools are not Veblen goods. I’d also note that the endowments at those schools are so large that few actually pay the tuition.
You’re welcome.