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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

How U.S. K-12 Education is Like U.S. Health Care



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Josh Barro rejects the notion that the central problem with K-12 education in the U.S. is underspending, noting that the U.S. is among the highest-spending affluent market democracies.

The U.S. experienced an explosion in K-12 costs over the same period that we suffered from higher health inflation, but while the health cost explosion was exacerbated by our aging demographics, the education cost explosion was hidden by them: K-12 enrollments fell through the 1970s and 80s as the baby-boom generation aged, but the reduction in enrollments was largely offset by fast growth in per-pupil spending. But the broad story is the same as in the health-care sector: fast growth in unit costs without corresponding improvement in quality.

When the subject is health care, liberals have drawn the right lessons from the last 40 years of cost growth, understanding that more money doesn’t necessarily mean better outcomes. They should apply that same lesson to education: In a cost-bloated sector with poor quality improvement, we should be figuring out how to spend money better, instead of spending more of it.

So why are liberals are more inclined to embrace the notion that more money doesn’t mean better outcomes in medical care but not education? One explanation could be that liberals are actually wrong about medical care and right about education. Joseph Doyle, a health economist at MIT, has found that higher-cost hospitals appear to deliver better medical outcomes for emergency care patients. Though this is hardly conclusive evidence that higher spending levels yield better outcomes across the board, it does, as Arpit Gupta has suggested, challenge common assumptions about the amount of waste in U.S. medical expenditures.

In a similar vein, it could be that while public schools in Newark spend twice as much as the national average while yielding poor results, as Josh notes, this could reflect the fact that public school students in Newark are more than twice as hard to educate as the average U.S. student. This is the kind of explanation that advocates of increased spending are likely to embrace. But I don’t think this is the right way to think about the problem. In Milwaukee, for example, educational outcomes for students attending voucher-financed choice schools were essentially identical to those for comparable students attending local public schools, yet the per-pupil funding level for the Milwaukee voucher program was 50 percent that of the Milwaukee public-school system. Even if we assume voucher-financed choice schools rely on some amount of external funding to close the gap in quality, there appears to be a non-trivial gap in the effectiveness of spending. The goal of choice-based school reform, as Rick Hess has argued, should be to facilitate the emergence of high-quality or cost-effective suppliers, with the latter goal being as important as the former. 

Another reason why liberals might think differently about medical care vs. education is that while they consider publicly-employed teachers and administrators to be a sympathetic and appealing constituency, private insurers and medical providers, particularly those who are privately-employed, are somewhat less sympathetic and appealing. Conservatives, in contrast, are somewhat more inclined to identify with physicians in private practice, as they often have the mentality of small-scale entrepreneurs. The best version of conservative health reform, however, is motivated by the same goal as choice-based school reform, i.e., to facilitate the emergence of high-quality or cost-effective suppliers, a process that might run counter to the interests of physicians as insurers and integrated medical providers gain leverage over them. 



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