Observations on life

The growing cost of ? is the problem.

Ask ten people and I suspect nine will say health care. If those people are politicians it will be 10 for ten. After all, it’s pretty obvious isn’t it?

Health care inflation is far higher than general inflation. We all know that.

Then there is the other villain, student loans. But in this case we hear very little to nothing about the actual cost of college.

The year I was born the tuition at Harvard was $420 a year. Today tuition is about $45,000 (excluding room and board).

If you apply the CPI inflation to tuition, it should would be $5,949, but it’s $45,000

If you apply medical cost inflation, the tuition would be $17,808, but it’s $45,000.

Should we be asking why?

While we focus on health insurance premiums instead of the price and use of health care, we do the same thing with the cost of college.

Instead of obsessing about student loans while ignoring the variable that create them, we should be asking why college costs what it does and why it takes four years to obtain a degree

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2 replies »

  1. Interesting fact. I have a Medicare Advantage Plan. Covers everything that regular Medicare covers but by an insurer vs government. Before I had joint replacement I was told I would not be able to go to rehab facilitate ‘as Dr. felt there was exposure to too many germs’. This was in spite of the fact that I live Alone, bedroom and bath are on 2nd floor. My nephew recently had joint replacement, has regular Medicare lives in single floor home with wife, same doctor group, spent ‘regulated’ 3 night stay in hospital, then a week in rehab facility. My niece, not on Medicare, husband and 12 yr old son at home, joint replacement, spent 1 night in hospital (no regs) 3 days in rehab. I am 75, nephew is 66, niece is 50. All patients were/are healthy individuals. No chronic illnesses or other factors to take into consideration. Individual Medicare insurance companies that have been given incentives to be cost efficient appear to be saving money while also giving patients quality of life procedures.

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  2. It is my belief that college tuition rose as a direct result of the GI Bill following WWII and has been propped up with government back student loans. The ideal to get people out of poverty is through education to me is a sound ideal based on some true facts. However, both the GI Bill and government backed student loans essentially gave colleges a blank check. Anti-poverty groups and colleges to this day insist that everyone needs a college education. They may have created an artificial demand and have increased in size to meet that demand. There are just not that many jobs requiring all those degrees to justify the numbers of graduates in some fields.

    So where is the blank check for medical costs? Medicare. Very limit costs controls. In fact, there are laws that prevent some forms of restriction that could help control costs. There are some laws that prevent regular health insurers from restricting treatments too which basically allows innovators to change whatever they want for new procedures or drugs.

    The free markets have made some for profit colleges go bankrupt, but I do not think that free markets will ever be able to control costs in healthcare because many costs are only known after the procedures are complete.

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