For decades, higher education has come under public scrutiny for rising costs. But there is at least one other sector that seems to feel even more heat from policy makers and ire from the public. That sector is health care — and the parallels are not lost on Peter Ubel, a physician who is a professor in Duke University’s Fuqua School of Business.
“I realize that I’ve been making my living off both education and health care, and they’re the parts of the economy where the cost has gone up far faster than overall inflation, and I’ve benefited my whole career,” he says. “So I feel guilty on both counts.”
He’s doing something to address that guilt. Ubel’s new book, Sick to Debt, describes the economics of health care and the decision-making of patients, and offers some solutions that could help both society and individuals save money. Health care’s changes have in many ways mirrored those in higher ed: Just as colleges have turned to adjuncts and distance education, hospitals now rely more on physician assistants and technology, like telemedicine, to help scale their services. Small hospitals and clinics are also increasingly consolidating, an outcome that seems likely for the nation’s small institutions.
But a big part of Ubel’s solution relies on making costs and quality transparent to the public. College leaders should consider whether his prescription for what ails health care could work in higher ed. Ubel spoke to The Chronicle about how health care is like higher ed, the future of medical education, and whether free college makes sense.
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Health care is often compared with higher education. But how similar are they really?
Health-care costs are sometimes rising for different reasons than they are in education. Technology explains part of the reason health care gets more and more expensive. You’ve got fancier imaging studies and newer drugs that are made for only 30 patients in the world with that genetic mutation, for example. You don’t typically see that in higher education.
A closer similarity that might drive the high expense in both is a lot of people don’t pay the full price — or that full price is hidden from them. In health care, you have insurance that covers a big chunk of the cost of care, which means that most of the costs of medical care aren’t borne by the patient who was getting the medicine or the hospital stay. In higher education, of course, the cost is borne more directly, usually by the student or the student’s parents. But you’re seeing a lot of people get loans that make it feel cheaper than it is.
A real similarity between health care and higher ed: You’re competing for people based not on lower costs, like you would in many parts of the economy. When you go to buy a dishwasher or a new cellphone, you are looking at quality and you’re looking at cost. There’s a ton of economic energy to try to bring down the cost of things or to hold the cost constant, while the quality goes up dramatically. You don’t see that in health care or education very much.
Both are difficult to scale, too.
Health care and education are labor intensive — and it’s highly trained labor at that, and you’re competing for that labor pool. That’s expensive. And quality is difficult to judge. If you just look at the outcomes — one school has better math scores, or a hospital has a better survival rate — you don’t know how good students were at math when they got to that school, or how bad the patients’ heart disease was when they got to that hospital. So many factors go into purchasing education and health care, versus purchasing a cellphone, where all you have to worry about is whether it works well.
So many factors go into purchasing education and health care, versus purchasing a cellphone, where all you have to worry about is whether it works well.
Is the discussion about free college a lot like the discussion for Medicare for All?
Anytime you give things to people for free, it actually can cause people to demand more than they otherwise would be willing to pay for. If an MRI is totally free to me, I’ll get it, even if it’s probably not going to help me. But if you ask me to pay $250 for it, I’ll think twice. It’s what we call a “moral hazard.” Now, in terms of education, I’m an overeducated person, and I think people who want to get a college education in this country should be able to afford to get it. To me, the bigger issues are about subsidizing the cost of education for people who can’t afford it versus making it free for everybody, whether or not they could have paid for it on their own. That very strongly parallels health care with Medicaid, a safety net for people who otherwise couldn’t afford health care.
We’re seeing situations where employers are now providing education as a benefit, like in the deal between Starbucks and Arizona State University, which looks like it could become a trend. Since health care became tied to employment, has that been good or bad for the economics of health care over all?
It went from being largely good to being less good over time. When people used to work for companies for their entire career and we had much less income inequality in this country, it was great to know that with a career at a big company, you got your health-care coverage. Now, with people changing jobs more often, it’s terrible to have it tied to employment, because you can lose your coverage, or an employer may not give you enough hours to provide insurance. Obamacare tried to break that link to make it easier for people to find affordable insurance without having to depend on an employer. We have to go further in that direction.
Does something in medical education have to change to enable a new and different future for health care?
There are lots of things. People typically apply to 15 to 20 schools, which involve classes, tests, application fees, airfare for interviews, clothes for those interviews. It is thousands and thousands of dollars. It makes it harder for lower-income students to apply to medical school. Then they get to medical school, and they end up in six figures of debt. That’s unacceptable. And it means it’s really hard to become a general pediatrician or a primary-care doctor when you get out of medical school because you’re trying to pay off huge debt. So you feel a need to get into the higher-paying specialties — and the more high-paying specialists you have around, the more that drives up health-care spending. You can compare a primary-care doctor here and in Germany, you don’t see much difference in how much they make. You compare an orthopedic surgeon here to one in Germany, and now you start seeing a very big difference.
How are university hospitals handling the scrutiny around cost and service in health care?
University-based hospitals tend to be more expensive than the average hospital. But they typically offer higher-quality care, they often take care of a more vulnerable population, and they care for sicker patients because they get referrals from other places. I’ve been in academic medical centers my entire career. They’re shining parts of our health-care system. But I don’t think they’ve come under enough cost scrutiny. Many people worry that if we make health-care prices transparent, which is one of the things I argue for, that’s going to hurt academic medical centers because everyone will realize how expensive they are. They have to prove their value.
This interview has been edited for brevity and clarity.