Saturday, February 11, 2017

Cost disease in education and health

The two graphs describe the problem:

The question an economist would ask is simple:
So, imagine you’re a poor person. White, minority, whatever. Which would you prefer? 

  • a.  Sending your child to a 2016 school? 
  • b. Or sending your child to a 1975 school, and getting a check for $5,000 every year?

We ask the same question:

Do you think the average poor or middle-class person would rather:

  • a) Get modern health care
  • b) Get the same amount of health care as their parents’ generation, but with modern technology like ACE inhibitors, and also earn $8000 extra a year


  1. Healthcare is an economic choice for many Americans as the cost of health care premiums is continuing to rise up to double digits each year for employer sponsored and individual plans. Costs for employer sponsored plans have shifted to the employees in order for firms and organizations to keep costs down. Employees will feel the burden of the increased costs.
    That leads many families to make different decisions in regards to the plans that they enroll in, switching to high deductible plans with some plans including co-insurance. Family deductibles can average $5,000-$10,000 out of pocket expenses before the health insurance kicks in covering costs. For an average poor or middle class family they will skip treatment or prescribed medications because the out of pocket expense of a sick appointment is so great. Thinking of the rational choice theory where people will weigh out the pro and cons of a decision. Looking at the EpiPen controversy, corporate greed increased the cost of the essential drug so high that many had to make sacrifices to pay for the drug or to find other resources. Mylan Pharmaceutical company increased the price of the drug and healthcare companies absorbed the cost, it was not noticed by insured until they switched to a high deductible plan and the costs were now out of pocket.
    Many individuals may choose to have a program like generations past but with modern technology and also earning $8,000 a year. Extra money they may be needed for increased healthcare costs such as costs of prescribed drugs. The average person will have to look at the opportunity costs and what that individual is giving up with the healthcare decision they have made. In a June, 2016 article in Fortune magazine reports that employers may shift to the trend of providing employees with a lump sum to go to healthcare care costs or what is known as a defined contribution strategy (Lorenzetti) in hopes to control the cost of healthcare as an employee benefit. As a result more individuals will have to make choices about their health and the expenses that go along with it.
    Laurenzetti, L. Here’s Why You’ll Likely Pay More for Your Employer-Sponsored Health Insurance. Fortune Magazine.
    Scott, J. (2000). Rational choice theory. Understanding contemporary society: Theories of the present, 129.

  2. There is an epidemic in the United States in respect to the continuing rising costs of both Education and Healthcare. Perhaps one of the most frustrating dynamics in respect to surging educational and healthcare costs is the lack thereof of added value or benefit.
    An interesting question is posed in respect to being the recipient of or having access to both education and healthcare with a classification of poor and/or minority as to which time period is optimal to receive such benefits: modern society 2017 or in the mid-1970s?
    I can answer without a shadow of a doubt that it would be preferable to receive such benefits in the mid-1970s.
    For purposes of this discuss I will focus on education. There are high economic and social costs involved in receiving an education today and the typical aftermath often results in difficulty obtaining a job and student loan debt.
    It's not hard to find indications that student debt is a large (and growing) problem. But unless you or someone you love holds student loans, it can be hard to feel the problem's immediacy.
    That may not be the case for long. Mounting student loan debt is ricocheting through the United States, now affecting institutions and economic patterns that have been at the core of America's very might.
    The high levels of student debt are also serving to perpetuate and even worsen economic inequality, undercutting the opportunity and social mobility that higher education has long promised. Current economic trends show it is taking longer for students to secure jobs upon graduation and often still live at home with their parents after graduation. But for those who are saddled with massive student debt, even getting by can be a challenge, much less getting ahead.
    Often you wind up disadvantaged just as you begin. It has reduced the ability of our educational system to be a force for upward mobility, and for an equitable chance at upward mobility.
    There are several causes for the rapid increase in levels of student debt.
    For one, despite the growing costs, Americans believe deeply in the importance of higher education.
    Policymakers also encourage college attendance. In a speech earlier this year, President Obama called higher education "one of the crown jewels of this country" and said it was "the single most important way to get ahead."
    There is also the matter of "credentialism," the trend in many professions to screen for ever higher qualifications for jobs that may not require them.
    PayScale, a research firm, has gathered data on the graduates of more than 900 universities and colleges, asking them what they studied and how much they now earn. The company then factors in the cost of a degree, after financial aid (discounts for the clever or impecunious that greatly reduce the sticker price at many universities). From this, PayScale estimates the financial returns of many different types of degree.
    Overall, the PayScale study surely overstates the financial value of a college education. It does not compare graduates’ earnings to what they would have earned, had they skipped college. (That number is unknowable.)
    The lousy national job market does not help, either. A report by McKinsey, a consultancy, found that 42% of recent graduates are in jobs that require less than a four-year college education. Some 41% of graduates from the nation’s top colleges could not find jobs in their chosen field; and half of all graduates said they would choose a different major or school.
    What is not in doubt is that the cost of university per student has risen by almost five times the rate of inflation since 1983, and graduate salaries have been flat for much of the past decade as compared to obtaining an education in the 1970s when the cost was more far less and which resulted in less debt/loans and the job market and ability to earn significant pay-raises had been much more robust.


  3. Healthcare and education cost seems to always be one of the most popular topics of discussion. For most of the American society healthcare is no longer an option to have thanks to the implantation of Obama care a couple years ago. If you choose not to have health insurance due to the extensive amount it costs then you will be penalized on your taxes. Some people have found that paying the tax for not having private insurance was cheaper than paying the high monthly premium rates. Since I started with my insurance company twenty years ago with my company my monthly payment has gone up three hundred dollars a month and that is subsidized with my employers help. I can’t imagine how people will be affording insurance in the next ten years with the cost increase at the rate it is and the coverage decreasing. This also makes me wonder how countries like Canada and Great Britain can offer free medical to all residents and offer premium services at the same time.
    Most of the American population find that education is optional for many as they can’t afford the cost of the schools. Most of the state schools now are just as expensive as the private schools. Most look toward community college to help them to get basically classes at a lower rate. In today’s career market you need at least a minimum of associate’s degrees with most jobs requiring a four year degree and experience. NYS is looking to offer free education to family in certain income levels however that doesn’t apply to student like me who are currently enrolled. Someone needs to pay for the “free” education but the governor keeps saying taxes won’t increase. Trade schools are free and far between now a days and the people are afraid to join the military for the might actually be sent off to war. I think schools need to come up with more scholarship offers to help people obtain their degrees and find a cheaper way to offer classes to working class Americans or more jobs offering tuition reimbursement to employees to help further their careers.
    I am would like to say I am lucky enough to have health insurance that have great coverage and I am lucky enough to have a job that paid for my four degree but now I am doing student loans for my masters program but I see the benefit of it in the long run. If it came down to choosing between health care and education I would always choose healthcare because if I don’t have my health then I can never presue my education.