Homes, Colleges, and Hospitals

President Obama has decided to “fix ” the college loan mess..  What do homes, hospitals, and colleges have in common?  The government has been getting involved, trying to “fix”them. Our system is set up for organizations–both for-profit and non-profit–to provide goods and services in exchange for money.  The costs of college and hospital (and housing) have become so onerous that no individual citizens can afford to pay them, so insurance companies have become the real “customers” of health care providers, and various banks and the federal gov’t have become the paying customers of higher education (and housing).   When there  is a disconnect between the provider and the receiver of the goods and services, the economics become distorted and unreal.

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Bureaucracies are high-cost operations

 

Colleges and universities and hospitals also share other characteristics, most of which serve to drive up costs:  Both higher ed institutions and health care institutions are bureaucracies, managed by highly educated people who tend to believe they are on a mission–a “higher calling”than us mere mortals who toil in mundane jobs.  In academia, tenure protects even the most ineffective practicioners, folks tend to seek to avoid taking on responsibility, and much time is spent on inter-departmental spats and CYA.  Medical institution bureaucracies are also marked by departmentalism and ‘It’s not my job’ kind of stuff.

 

Big Benefits from Higher Ed and Health Care

 

Many people–myself included–have benefited from the services of both types of institutions.  Perhaps that is why costs have been allowed to spiral in such an out-of control fashion.We need the benefits more than we need to be able to afford them.Until that changes, and the providers are more accountable to customers who have to pay their bills , the government will continue to have to intercede to cover the costs.

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