All countries eventually spend 100% of their GDP – and why not spend more on health care, which offers us benefits we really value?
Well –because health care costs ‘crowd out’ other important services, including societal functions that lay the groundwork for our future economic prosperity. I'm thinking again about education.
schools are singled out in The Atlantic Monthly as being far better than those of other states, although far inferior to the schools in many foreign countries. Massachusetts
This week, however, The Boston Foundation released a report detailing how health care costs across the state are putting our children’s education at risk.
Health care costs have risen on average 13.6% per year from 2000-2007, while general cost of living has only risen 3.4%. Health care costs went up a staggering $1 billion from 2000-2007 for
school districts – gobbling up every cent of increased state aid during that time, and devouring an extra $300 million in addition that required cuts elsewhere in the budget. High health care costs for state workers have also hobbled the state’s ability to provide full funding for poorer school districts. The report notes that “from 2000-2007, increased spending on health care consumed 2/3 of the entire increase in state spending” Massachusetts
This data complements a report from Peter Orszag in September which showed that as states spent more on health care, they underfunded public colleges and universities.
Here is how
school systems are coping with the 144% increase in the cost of health care from 2000-2007. Massachusetts
- Purchases of textbooks ↓ 57%
- Teacher training ↓ 23%
- Overall non-inflation adjusted budget excluding health care ↓ 2%
Click to enlarge
During this time, school budgets would have had to increase by 26% just to keep up with inflation. The report also noted that school districts in poorer communities have fared most poorly, while wealthy districts were in a better position to address rising health care costs by increasing tax rates.
If we want to have world class schools for our kids, we have to control the costs of health care.