Peter Orszag Has it Half Right

Originally posted 10/26/2010

The former Obama Office of Management and Budget Director Peter Orszag made a compelling case in A Health Plan for Colleges (New York Times September 19) that when Medicaid costs increase (as they do every year), states respond by making cuts in higher education expenditures. Orszag estimates that if higher education’s share of state budgets over the past 25 years had remained constant rather than being crowded out by rising Medicaid costs, allocations would be $30 billion more (about $2000 per student) than they are currently. His strong and novel argument for controlling health care costs in order to preserve more funds for higher education goes beyond the more typical goals of increasing health care affordability and improving international competitiveness. 

But he should have taken the argument a step further. Better educated populations are healthier populations. A large body of evidence supports this claim. Compared to adults having some education beyond high school, premature death rates (e.g., deaths before age 75) are double among those having only a high school education and triple among those not completing high school. Research shows that those with more education also have fewer disabilities and better physical functioning.

What role could education play in biological processes that produce death or disability? There are probably two main pathways. The first operates directly, through better knowledge about the importance of health care as well as healthy behaviors and prevention. The field of health literacy has been rapidly developing. According to the Institute of Medicine, approximately 90 million American adults lack the literacy skills needed to effectively use the US health care system. Low health literacy rates have been estimated to cost the health care system more than $100 billion per year. Also, education likely enhances the ability to make difficult short term decisions (such as stopping smoking, eating better, routinely exercising) which affect health later in life.

A second pathway is more indirect. People with more education tend to have better employment options, including access to jobs that pay more and provide better healthcare coverage. Jobs that require more education also tend to be less stressful, in part because they afford employees a greater sense of autonomy and control than typical “blue collar” jobs. A growing field of research examines how stress influences disease and mortality through endocrine and immune system response.

So to complete the argument Orszag begins: lower health care costs improve education, which improves health, which lowers health care costs. The result is an even more compelling case for health care cost containment.

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