Bloated college administration is making education unaffordable
quillette.com
quillette.com
"The campus provides workspace for about 2,700 employees (including three of the university’s eight vice presidents) working in critical areas such as the School of Medicine administration, libraries and archives, business affairs, human resources, development and Land, Buildings & Real Estate. Stanford will be the city’s third-largest employer in Redwood City."
Amenities:
* Cardinal Café -- Located on the first floor of Cardinal Hall, serving globally- and regionally-inspired cuisine for breakfast and lunch.
* Recreation & Wellness Center -- The 28,000 square foot facility includes a six-lane rooftop pool, indoor basketball court, state-of-the-art fitness equipment, locker rooms, showers and an outdoor fitness courtyard.
* Stanford Transportation
* Digital Media Production Studio
* Wellness and Lactation Rooms
* Dry Cleaning
* Pine Cone Children's Center
* Stanford Catering & Conferences
* Stanford Federal Credit Union
That said, Stanford is private, so I'm not sure they're a good example. Various state universities seem like they would be a more apt target to look at to see what this is like in reality.
Stanford University has 24,916 employees.Jul 11, 2022
In 2021 15,750 staff members supported teaching, learning, research and core operations at Stanford ...This includes ... 1,603 staff at SLAC National Accelerator Laboratory .. Includes clinical educator and research staff.
Higher ed's admin:student ratios are closer to resort hotels.
My local uni has definitely transformed into a resort.
One of the consequences of charging full enrollment are the customers now expect a comparable (material) experience.
To understand administrative bloat in the US it's much more instructive to look somewhere like University of Idaho where the business of charging students for services rendered is the main game in town. It's there you can see how administrative services have drastically ballooned costs for just the education.
https://www.usnews.com/education/best-colleges/the-short-lis...
https://www.collegexpress.com/interests/international-studen...
Tax-funded universities are less generous, though.
That means for income <= 75K, Harvard tuition is free! That is impressive. Their system looks fair in comparison to other US universities. This system looks similar to progressive taxation (higher income pays more taxes).
For readers not familiar with US university system: This will not include "room & board" (housing & food).
(There is a student contribution of ~$3,000/year, which is fairly easily met through on campus jobs).
You forgot about the massive hedge fund – and the professional sports teams.
Then they are welcome to stop charging students fees.
"Student income" was 15% of Stanford's $7.4B budget (excluding capital improvement and hospitals) in 2021-22.
So... only $1.11 billion or so.
Price sets expectations. If you tie your service to lower tier pricing , you are indirectly communicating that your service value is substantially lower.
This calculus is literally happening in administrators minds. They so much have admitted this in the past.
SLAC National Accelerator, a National Lab that Stanford happens to run, employs about 1,600 people. They don't necessarily need to interact with students; other national labs are run by corporations (e.g., Sandia is run by Honeywell).
Stanford has a massive medical system, including an adult and children's hospital. They are teaching hospitals, and so part of the point is to train medical students and residents, but they also need all the staff of a regular (actually, top-of-the-line) hospital: doctors, nurses, techs, porters, billing, payroll, etc.
On top of that, Stanford also has a massive research program funded by grants from (e.g.,) the NIH, NSF, and DOD This requires people to actually do the research (heavily-funded profs rarely teach, plus postdocs and research scientists) and support it (animal health techs, machinists, etc). There is also a lot of bureaucracy involved in getting, doing, and accounting for that work. It certainly depends—in part—on grad student labor, but it's also not directly linked.
All in all, big research-intensive universities do a lot more than classroom education and the staff sizes reflect that. I'm sure there's room for improvement (I work at one and purchasing is currently a nightmare), but staff/students is not a great metric.
> "The campus provides workspace for about 2,700 employees (including three of the university’s eight vice presidents) working in critical areas such as the School of Medicine administration, libraries and archives, business affairs, human resources, development and Land, Buildings & Real Estate. Stanford will be the city’s third-largest employer in Redwood City."
Administration for the school of medicine is literally the first group cited.
Stanford Medical is everywhere around here.
The rest of it takes administration. The folks at SLAC need to get paid. Someone needs to check that the doctors and nurses at Stanford Medical are appropriately licensed; once they are, someone also needs to find somewhere for them to park.
They list what's out there: https://redwoodcity.stanford.edu/about/campus-directory, which also includes Stanford University Press and the Tech Transfer Office.
This is a legit function of a university.
Mmm... I read an article once that pointed out that there are two basic schools of thought on "why college is so expensive today". Some people say it's more expensive to run a college, and so tuition has to cover that. And some people say it's more important to have a degree, or easier to get your college expenses financed, and so tuition expands to meet demand.
It's very easy to distinguish between these two theories at a basic level: one of them says that prices have gone up because supply has fallen, and the other says prices have gone up because demand has risen. But the article pointed out that, while these two causes have the same directional effect on prices, they have opposite effects on quantity sold: if supply has fallen, you see fewer purchases at higher prices, whereas if demand has risen, you see more purchases at higher prices.
And it's very clear that colleges are in the second scenario, with prices and enrollment rising in tandem.
But "it's because of administration costs" is a supply-has-fallen theory. It would make more sense to explain Stanford's luxury campus for administrators by saying that Stanford has so much money coming in, the administrators can afford to help themselves.
Where the taxpayer money should have gone: on the supply side. For example, the number of UC campuses in California should have doubled as the population doubled. The last UC campus to open was Merced in 2005. Before that was Irvine and Santa Cruz in 1965. And we wonder why tuition keeps increasing? 1) Demand increases with population increase. 2) Demand increase with more people seeking 4 yr degrees. 3) Demand increases with the US subsidizing the ever living shit out of college tuition. 4) Supply stays relatively constant.
Similarly Obamacare drove the demand side by subsidizing health insurance and onboarding millions of new members. It did almost nothing on the supply side - same number of hospital beds and doctors. Insurers and medical groups made a killing as the price of their services grew dramatically.
In both cases, political stability was achieved in shoveling taxpayer money at education and healthcare without increasing competition. This is a very clever way for existing vendors in healthcare and education to soak the government.
Solution: drive prices down by investing in supply of education and healthcare.
The seats have increased dramatically.
You won't be able to create efficient competition. The value shoppers already go to state schools. The other people are looking for a specific "quality" or just plain emotion (my family went here, this school is prestigious, etc).
Supply isn't the real issue in most disciplines. The problem is the demand side individuals making economically dumb choices (sometimes semi-forced by the larger societal situation).
I'm not sure how you compel schools to compete on price, because the consumers don't care about price. They'd rather get they "good college experience" for $50k a year than the "sufficiently good education" for $7k a year, even though both options are available to choose.
I really wish we had 4 year institutions managed like our community colleges, though. I remember my 2 years there much more fondly than I do my time spent at a "real" university.
[1]: https://www.usnews.com/object/image/00000183-138c-db49-a3a3-...
https://hechingerreport.org/from-associate-to-b-a-more-peopl...
New research from the think tank New America shows that 24 states have approved at least some community colleges’ plans to launch bachelor’s degree programs; at least seven have been approved in the past five years.
Genuinely curious, what was it you liked about CC?
A few things that stick out in my memory are the greater number of non-traditional students, several of whom I made acquaintances with. They had more stories and life experience than the average 18/19/20 y/old and I thought were more interesting to talk to. Also, my CC had some vocational/non-academic tracks with accredited classes available as general electives, and I enjoyed stuff like some aviation classes, where again I got to hang around a totally different group of students.
It feels like it all was more developmentally important than the by-the-books liberal arts education I got at a private university, full of self-important pep-talks by upper level college administration, and professors who were only paid marginally better than the instructors at my CC...
(I want to emphasize this is about cookie cutter undergrad studies, and leaves out the other functions of universities, which a CC obviously couldn't compete with)
So, people picked the 'best' school they could get into. Not just for the 'experience', but to make sure they got the best education they could and opened as many doors as possible. Because you don't really get a do-over.
After having gone through it all, do you think if it matters how many doors open for a person based on the college they went? I suppose if someone went to a highly ranked school, it might matter.
But being able to get into a highly ranked school is probably because of what the person had (money, life experiences) or what they did (crushed some standardized test).
So, in the end, does it actually matter?
Interestingly, the renowned private universities don’t seem to have any better of a curriculum than the high-grade public research universities. So from an education point of view, there still exists a ‘good enough’, it’s just not the budget state college.
I did physics at a world top 10 university and the course work was basically day care. The vast majority of the 'difficulty' of the subject matter was because the majority of students were bad at algebra. The outcomes would have been better for everyone if we completely ignored first year and just taught people the Knuth Bendix algorithm instead.
Demand is increasing due to the college wage premium, which keeps widening with no end in sight even despite Covid and online learning.
The college wage premium is the number one culprit for all these problems . For whatever reason, employers derive enough benefit from college grads to pay them waaaayyy more than high school grads
https://greyenlightenment.com/2022/09/22/blame-college-wage-...
The vast majority of people attend college to earn more money and be employable, as a sort of ticket the middle class. If college degrees only paid slightly more than high school instead of 2x more, demand would probably fall a lot, so would borrowing and tuition. Same for unemployment: high school grads have to 2x the unemployment rate. Maybe the onus is on employers: start finding ways to find hire more high school grads for better paying work...huge labor pool of high school grads..they cannot all be bad.
> The college wage premium is the number one culprit for all these problems . For whatever reason, employers derive enough benefit from college grads to pay them waaaayyy more than high school grads
That may be true. But there's an easy fix: any job requirements that ask for any college degree (e.g. "a 4 year degree" not "a BS in chemical engineering") should be illegal.
Honestly, I don't really understand why they aren't already: they clearly violate the 4/5ths rule. And it's hard for me to believe that some enterprising lawyer hasn't already brought suit under this theory.
My guess is because 'not having a college degree' is not any kind of protected class. Not an immutable characteristic. It is a behavior choice. Do we really want to get the gov't involved in telling private companies what qualifications they can require for a particular job?
That is true.
But race and sex are protected classes. And the 4/5ths rule says that if a particular requirement generates a resulting distribution that is more than 4/5ths different from the general population, then it is presumed to be a form of structural discrimination[1].
From what I understand, a requirement that is necessary for the job - for example, a particular degree like Chemical Engineering - would be exempt. But I doubt that the requirement for a college degree without regard to the subject would be similarly protected.
---
1. This is not idle conjecture on my part. There were a number of pretty high profile firefighting tests that were the subject of lawsuits for this very reason. And the cities lost. Sadly, I didn't save the test at the time and I suspect that they've been lost of the mists of time, but I did read at least one of the tests in question, and it was a bunch of firefighting related questions.
If you compare them in that light, the difference reduces quite significantly.
If/when I become President of the United States, I will hold back all education dollars on cartel-controlled education institutions, and heavily tax their endownments.
I wonder if it legal to completely clone a curriculum? Like could you clone an MIT EECS education? Down to the coursework? Or alternatively - force elite schools to license and manage franchisees?
I'd vote for you.
> is it legal to completely clone a curriculum?
Gray area. I'm no lawyer but AFAIK professor's syllabus/tests/etc. (being written documents) are subject to automatic copyright, I imagine the university is the holder of the copyright given that the prof is an employee. That being said, how many profs clone their syllabus/coursework directly from textbooks? The content of most online universities (Khan Academy, Coursera, etc.) is already superior to Ivy League based on first-hand experience of both.
The bigger problem IMHO is that very little of the overall $$$ and energy at Ivy League is actually spent on course content. For many profs, esp. in STEM, teaching undergrad courses is a "chore" / distraction from their research work. I think there is opportunity to make a "lean-and-mean" physical university (perhaps online hybrid) with minimal admin overhead, which a degree could be on-par with MIT in terms of prestige. Is anyone doing this?
MIT will do that for you themselves. https://ocw.mit.edu/
Schools don't compete on curriculum. Nobody pays for it. Nobody cares about it.
And in one particular case, I think the "conventional wisdom" has it right - the lectures don't really matter. You can record a lecture and then play it for any number of people, very cheaply. I recently watched a Chinese drama in which a minor plot element was a character (in the 80s) getting a degree from "the TV university", lectures available to the television-viewing public. (Having your own TV was out of the question, so she and her "classmates" would make long commutes to places that had a TV showing the lectures. This educational format has been very affordable for a very long time.)
That format is not as good as actually having a lecturer, or a TA, who you can ask questions of. If you lose track of a recorded lecture, it will not help you find the thread. All a recorded lecture can ever do is repeat itself. A lecturer versus a lecture is the difference between moving forward and getting stuck.
In western Europe and Asia all college education is more rigorous than American college.
And yet I don’t have the overall impression that the international bachelor’s people I know got something correlated out of the difference in rigor. It would be as obvious as the difference in rigor itself. It’s not.
Well, there are many functions (mostly to do with abrading things) where diamonds are useful for the purpose and a substitute is much, much less so. If you're distinguishing "precious" from "rare", this would seem to be proof that they are precious.
Also there is heavy rhethoric from diamond industry that "natural" are better
Many industries in the USA are quasi cartels, 2-5 companies own most of the market and competition is quashed by it being very difficult to break in. The airlines are a cartel but occasionally you see a new airline or there is a private equity attempt to cartel the vet business dispite the fact that some new independent vets can enter the market.
https://www.forbes.com/sites/michaeltnietzel/2022/01/10/fede...
The story doesn't even claim they collude on pricing! It just says that admissions is not needs blind, the way that these universities claim it is.
"Back in the 1990s, the Justice Department charged several elite colleges with price-fixing, including many current members of the 568 Presidents Group. Those colleges regularly communicated and gave "essentially the same financial aid award" to any student who was admitted to multiple schools, according to congressional research. The suit ended with a settlement, and a 1994 law allowed colleges to keep working together on financial aid packages."
"In writing the law, Congress specified that its goal was to spread the benefits of financial aid as broadly as possible."
And if they're discriminating against lower-income families, that aid won't go to those who ostensibly need it most. Being that the filthy poors won't receive that aid, they will pay more.
The dismissal was refused in August, the case is proceeding, I expect there is something veracious about it, huh?
The plural of (obsolete) anecdotes isn’t evidence!
Limit competition: How many new entrants to the prestiguous university club (Ivy League, Stanford, MIT, etc.) have there been in the last 50 years?
Fix prices: How do you explain tuitions growing at 5x inflation consistently since 1990, in an era where information itself has become dirt cheap (the internet.)
There does likely not need to be quid-pro-quo "collusion". I am not envisioning a shadowy meeting room where all the university heads smoke cigars and agree on tuitions. There doesn't need to be. Has any of the elite universities ever cut tuitions, in order to compete with the others?
The fact that most people can name the most famous schools seems to imply they are rare.
They are perceived as having better outcomes than regular state schools. Do they or dont they? If their grads do get better jobs and end up more successful - then they are genuinely better? People from state Universities end up sitting next to Ivys etc there is no difference - this is what I believe. We'll see if everyone else's perceptions change in the future as well.
https://www.washingtonpost.com/news/wonk/wp/2015/09/14/this-...
The US median income is still around $70k. An extra 40k - $3 grand a month - goes far.
All the people I know who went to Stanford got very nice, “cushy” jobs straight out of college. Most of the people I know who went to state schools had to bust their asses for years at much less pleasant work before they worked their way up to the nicer jobs.
The head start you get from an elite school in the US, in things that have nothing to do with education per se, can not be overstated.
Yes it can be, and you just did.
The people who routinely get the best jobs and keep them into their 30s and beyond are well connected people. It doesn’t matter whether they go to Ivies or other schools.
If connectedness could be controlled for, I think you would find that the most connected people at Ivies, Stanford, UMich, UTexas, NYU, etc. (let’s call it top 10%) are much more similar in terms of steep career trajectory than less connected top graduates (e.g., top 10% in gpa) even from the most prestigious schools. This is doubly true if you control for SES in addition to connectedness.
For folks who are not natively from these well-connected classes of people, it is possible to make a big jump in “opportunities”, but in practice that means socially integrating oneself into the elite class as an outsider (tough to do and rare) or finding work in a handful of places that facilitate social climbing (e.g., Goldman, also relatively rare).
Your median elite school grad will find it slightly easier to end up on the higher end of the SES class that they were already in, although even that is not a guarantee.
This is not nearly as life-changing as you make it out it be.
> All the people I know who went to Stanford got very nice, “cushy” jobs straight out of college. Most of the people I know who went to state schools had to bust their asses for years at much less pleasant work before they worked their way up to the nicer jobs.
I’m pretty sure that there are a large number of SJSU grads (a CSU school, of all things!) who would like to say hello. Plenty of them got and get “cushy” jobs straight out of school, with the folks who were already connected and/or worked on their connections taking the lead.
I have posted about this before on HN: One thing that is frequently overlooked, better schools (usually) have better/smarter students. My first uni was medium famous. My second uni was part of Cal[ifornia] State. The first was full of intelligent, highly engaging students. The second was... well, much less. The best parts of my uni education were working with other highly intelligent people on hard engineering problems. My second uni felt like an intellectual desert, but, hey, I got my degree.
More: Good schools act as a filter for employers. Why look for "diamonds in the rough" at a low quality school, when you can pay marginally more salary and get much better students at medium quality and above schools? I am on the hiring side now. I rarely find a diamond in the rough from a low quality school. The best candidates are mostly from the best unis. The same is true for former employer. If your CV has a bunch of low quality companies, you are also likely low quality. Again, rare exceptions exist. I won't name the employer: But one has had a 100% failure rate during interviewing. It is so bad, that I now regularly discard CVs with this current employer... unless the CV has something exceptional.
In closing, what if you are a diamond in the rough? My advice: Change employers as often as possible in your industry & country. Each change needs to be a step up the reputation ladder. If a sideways move, make sure you get title and/or money. In my last employer move, I move down one step in reputation. The quality of employees is much lower here than my other higher rep employers.
As for whether these schools are "precious", well, their students certainly are judging by the number of trigger warnings and emotional support pets.
Removing government help won't end the college dream... but it might, in time - since it took time to get this fucked up - restore some semblance of reasonable to the equation.
She has no conceivable way to pay that loan off on that salary. She will never qualify for a mortgage with that kind of debt to income ratio. The university promised this hopeful 18 year old child a dream job and a good wage to go with it and instead they basically destroyed her future.
The fraud universities are perpetuating makes the banks look like a freaking soup kitchen. The first politician who recognizes that this is modern day feudalism and has the guts to call it as such is going to be very successful.
I believe the reason is that since we print the global reserve currency, we can always borrow money at the Federal level and spend more.
I think that by looking for an excuse as to why the government messes up everything and using that as a way to remove government from things, you haven't changed the need for that thing, you just make it so that in order to fill a public need the government has to enable it in some way that is probably less efficient -- like giving out lots of loans for education, or by having people forgo basic care and then ending up in the hospital with a huge bill that the government pays for because they cannot.
There is usually a medium between these things and it would be great to get off of our collective ideological horses and find them instead of blasting rhetoric at each other.
"it would be great to get off of our collective ideological horses and find them instead of blasting rhetoric at each other."
Obamacare also has a huge positive impact besides just access to healthcare. For instance I couldn't have started a startup without it, and it's much easier to hire contract workers because of it.
Still, the supply side support necessary would also be an issue. For markets where the local going rate is expensive enough it would make a ton of sense to allocate military medical units to supplant the local market until more doctors of that type were in the area. If it takes long enough the military supply might even retire from the forces to open practices in that area.
What about between 35 and 50?
I mean I know only two interesting facts about you, the difference in time, and I already know a common sense reason why your price today is much higher than it would be when you were 15 years younger, in “literally” any time in history, and perhaps it was always about 3x more expensive premiums.
https://www.healthcare.gov/how-plans-set-your-premiums
> Age: Premiums can be up to 3 times higher for older people than for younger ones.
It is actually very available information. See age rating factors in these pdfs:
https://www.state.nj.us/dobi/division_insurance/ihcseh/ihcra...
For example, in New Jersey, a gold metal level plan would cost a 64 year old 3 * $730.86 ~ $2,200 per month, which legally has to cover 80% of a person’s expected healthcare costs.
For a silver level plan, ~$1,300 per month will cover 70% of the healthcare costs.
That just shows how much more healthcare people need as they get older.
SPY: about 4X
QQQ: about 6X
GOOGL: about 6X
CI: about 9X (Cigna health)
ELV: about 10x (formerly Anthem)
AAPL: about 19X
UNH: about 20X (united healthcare)
Health Insurance stocks in the US did better than tech stocks after Obamacare passed. Why?
This analysis shows the majority of health insurers becoming less profitable after Obamacare?
https://www.commonwealthfund.org/publications/issue-briefs/2...
Considering that an out of pocket maximum did not exist prior to affordable care act, and insurers were allowed to deny people with pre existing conditions, I would expect drastically higher spending on new insureds because they would finally start getting healthcare.
Now the insurance company has to pay the hundreds of thousands and millions per NICU/hemophiliacs/cancer patients etc, so why wouldn’t their expenses go drastically higher?
I'm asking why their revenue for increased exponentially for having 10% more clients.
Not to mention that the ACA forced insurers to subsidize old people from the young (maximum age rating factor), health to sick (can only price based on age, location, and tobacco status), and imposed out of pocket maximums. All of these mean the insurance company is spending a lot more after ACA than before ACA, and all of that had to be recouped as revenue from premiums, otherwise you have bankruptcy.
Also, all the US health insurance company financials are public. You can see their profit margin is a steady ~5% for over a decade. They are spending $95 for every $100 in premiums they take in.
> Also, all the US health insurance company financials are public. You can see their profit margin is a steady ~5% for over a decade.
https://www.macrotrends.net/stocks/charts/UNH/unitedhealth-g...
https://www.macrotrends.net/stocks/charts/ELV/elevance-healt...
https://www.macrotrends.net/stocks/charts/CVS/cvs-health/pro...
https://www.macrotrends.net/stocks/charts/CI/cigna/profit-ma...
https://www.macrotrends.net/stocks/charts/HUM/humana/profit-...
https://www.macrotrends.net/stocks/charts/CNC/centene/profit...
https://www.macrotrends.net/stocks/charts/MOH/molina-healthc...
Going back to testfoobar’s comment comparing tech companies and health insurers, I do not think any investors will be impressed by health insurance companies’ low single digit profit margins compared to tech’s 20%+ profit margins.
Is this a genuine question or is it rhetorical? I can’t really tell these days.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5145008/
Short answer is that insurance companies were “limited” to 20% profits and 80% expenses by ACA.
Smarter insurance companies realized quickly that they not only had zero incentives to cut costs, but they were actually incentivized to let costs increase to be as high as legally possible, thereby increasing their profit cap in absolute dollars.
I don’t know if this was the idea of one party, a bilateral backroom negotiation with the insurance companies, or a comprehensive lobbying victory, but it ended up being a massive boon for insurance companies and hospitals and a complete shitshow for consumers.
If this part of the ACA doesn’t change, it will break the US healthcare system.
It is a competitive business without a lot of pricing power. But what it will do is provide consistent, reliable returns. And since more people are getting more healthcare, the magnitude of the profits will obviously be higher, hence the increase in stock price.
Basically, the market caps now reflects what are essentially utilities that earn ~5% profit margin on huge revenues. This was not clear in the early ACA days, but investors have obviously warmed up to them.
It seems like you’re theory-crafting here rather that describing what is actually happening in the industry.
1. I somewhat sloppily used the term “profits” in my previous post, and I should have used “gross margins”. Specifically, 80% of premium payments have to be used on healthcare expenses. Their profit (~5% as you mentioned) comes after they pay their relatively consistent operating expenses out of their gross margins.
2. The increased number of people getting insured is not what has driven up the insurance companies profits. Those numbers don’t add up.
3. The prices of name brand insurance have increased fairly consistently. It’s not competitive at all, imho. It’s an oligopoly.
4. If you know people who work in medical billing and/or you’ve known a handful of people with substantial medical bills, you will know that hospitals have increased prices for many things to ridiculous levels, and they “nickel and dime” patients at ridiculous markups for anything possible. Why? Insurance companies don’t bat an eye at these expenses any more, and they are not incentivized to do so. As money out increases via payments to providers, money in can increase via premiums, and thereby absolute gross margin can increase proportionally. If you need further proof, check out the actual prices that people pay when insurance doesn’t cover something. Miraculously, charges come down and substantial portions of the bill will be forgiven/waived.
5. Investors have warmed up to the idea that health insurance is a government-supported racket that ultimately screws people who have to pay their own premiums in part or in whole.
Note that I am a fan of most parts of the ACA, but the 80/20 rule (and the misaligned incentives that it facilitated) needs to be fixed. That said, the hospitals and insurance companies are feeding at the trough, they have established a new excessive normal, and they will fight any change to the 80/20 rule by comically pleading poverty.
>Their profit (~5% as you mentioned) comes after they pay their relatively consistent operating expenses out of their gross margins.
Just like in any other business.
>The increased number of people getting insured is not what has driven up the insurance companies profits. Those numbers don’t add up.
Their profit margin has not been driven up [0].
>It’s not competitive at all, imho. It’s an oligopoly.
In an adjacent comment [0], I posted profit margins for 7 different publicly listed multi billion dollar health insurance businesses, which excludes Kaiser Permanente. If that is not a competitive business sector, I don’t know what is. If you are claiming collusion, I would need proof.
>That said, the hospitals and insurance companies are feeding at the trough, they have established a new excessive normal, and they will fight any change to the 80/20 rule by comically pleading poverty.
How are sub 5% profit margins feeding at the trough? If that is feeding at the trough, what is Apple, Microsoft, Visa, Alphabet, etc doing?
If insurance companies had the pricing power you are claiming they have, why would the shareholders accept anemic profit margins?
It really seems like you are arm-chair quarterbacking your comments based on some quick online searches. I strongly encourage you to talk to folks who have worked in hospital billing pre- and post-ACA and (if possible) actuaries who work in the health insurance industry who will speak to you frankly (rather than toeing the industry line). The misaligned incentives are a complete shit show.
> Why is gross margin relevant?
If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit.
> How are sub 5% profit margins feeding at the trough?
The percentage is not the issue. The absolute amount is.
Some examples:
- My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general).
- This link (https://khn.org/news/article/surprise-bill-iv-push-hospital-...) is an example of hospitals feeding at the trough. Imagine this happening hundreds or thousands of times a day at every hospital. It’s absurd. I realize that this is basically a marketing piece by Kaiser, but the article is directionally correct based on folks I know who work in medicine, health insurance, and hospital billing. Their stories are all very consistent.
- There are many other countries with functional healthcare systems that do not charge anywhere near this much (for most people). Japan comes to mind. I have lived there. Premiums are based on a percentage of your salary, and the cost is much less than the US for 95%+ of the population. If you have no salary, it’s about $100 a year. When the US system reforms, I hope that the reformers take lessons from Japan since the transition from our current system to something like theirs will be relatively easier than many/most other options.
> If you are claiming collusion, I would need proof.
This isn’t CSI, and collusion doesn’t have to be explicit, especially with oligopolies.
Once the major players in any market in the US realize that they can take a win-win game theory approach to their pricing, they pretty much do so. They don’t have to have surreptitious back room meetings in order to realize that increasing prices more or less in step is mutually beneficial, especially in health insurance, which has a wide moat.
Do you expect profit margins to approach 0% over time?
> If you can increase gross margin number while maintaining operation costs at about the same proportional level, then you end up with more absolute profit. So 100 premium, 20 gm and 5 profit can become 150 premium, 30 gm, and 7.5 profit.
Sure, but because of competition, this is not happening. The premium payer will shop around and choose a different insurer offering 130 premium. If this is happening, there would be clear evidence, since all of these publicly listed companies have public financials.
> is an example of hospitals feeding at the trough.
This discussion is about insurance companies, not hospitals.
In any case, I will simply rest my case that a business with low single digit profit margins is, by definition, not “feeding at the trough”. Lots of competition, low profit margins, all lead to a pretty cutthroat business environment.
I suggest people direct their ire at drug manufacturers, healthcare providers, software providers, and others in the healthcare business with 20%+ profit margins. And increasing the supply of healthcare in general.
Or people can keep wasting energy on blaming the 3% middleman, which is beneficial for the 20%+ profit margin businesses.
Edit: final note:
> - My premiums pre-ACA to now have almost quintupled. There are some good reasons to explain a small part of that increase (e.g., I’m older), but 4-5x is absurd. Way higher than inflation, and way higher than the quality of care has improved (for me specially, but also in general).
Premiums pre ACA and post ACA cannot be compared due to drastic changes in laws about the terms is the insurance. Namely, the limitation of pricing insurance on only age/location/smoking status, and the implementation of out of pocket maximums. In addition, as of 2022, the no surprises act bill means out of network emergency costs are included in the out of pocket maximums.
Effectively, even though you feel you are getting less quality of care (and you very well might be), the insurance product is much different than before with much higher (nominal) coverage, much more expensive treatment options, and more subsidies for others in the insurance pool.
Based on aging demographics and declining labor force participation rates, I would not expect the situation to get any better. Healthcare, especially labor intensive, will cost more and more.
<rant-on>
Sure. On my back, and that of countless others. It's fucking highway robbery.
Before Obamacare we had excellent health insurance with excellent coverage, doctors and low deductibles for $650 per month.
When we were shoved into Obamacare, our rate TRIPLED to $1,800 per month. Today we are paying nearly $2,300 per month. This is equivalent to a mortgage payment or non-trivial savings either for personal use or to help your kids with college.
There is no other way to put it: We are being robbed.
Put some numbers to it for context:
Over ten years the increase amounts to about TWO HUNDRED THOUSAND DOLLARS. Money taken from us, by law. This doesn't even include a calculation of what this would be if invested in a low risk mutual fund or real estate.
The concept that a family has to pay so much PER MONTH for health insurance should make everyone take pause. This kind of thing is why I have always had a strong negative reaction to anything government-driven. It never ends well.
Even worse, Obama lied to all of us. His promise to the nation, easily found on countless videos, was that families would save in the order of $2,500 per year on health insurance. Right.
How do these people get a free pass on shit like that? Why?
I don't know if this is even possible. I wish someone could organize a massive class action lawsuit against all who forced this on us. I am happy for those for whom things improved. I truly am. However, doing it by causing serious financial harm to likely millions of families is not right, at all.
We (my family) are burning --quite literally-- tens of thousands of dollars per year on healthcare because of Obamacare. The other part people don't understand is that deductibles have gone up and insurance does not trigger until you spent a certain amount per person per year. In our case my entire family would have to be run over by a semi truck before we actually start to see significant benefits. In other words, the cost isn't just the premiums, but the expenses we have to incur before benefits actually kick in.
Here's an example: One of my kids ended-up in the hospital with myocarditis due to the Covid vaccine. That cost us over TEN THOUSAND DOLLARS, cash.
Needless to say, every time I see Obama, Pelosi and the bunch I have to try very hard not to launch into projectile vomiting. I know many people idolize them. Sorry, you have chosen to admire liars and criminals.
<rant-off>
I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system. While not as nearly unanimous as the metric system, well funded Public Health Care to a level where most people don't need health insurance to cover an emergency hospital visit for say a broken leg... is basically what everyone else around the world in other countries considers a normal and good thing...
In essence... You were already getting ripped off, now you're getting ripped off even more.
In England, Australia, Germany, France, Canada, etc, etc, etc... The treatment for your child would likely have cost you nothing, or nearly nothing. The fact it cost you over $10,000 is not entirely the Obama's fault, it's the collective fault of nearly a century of American citizens who have accepted the status quo and not pressed for any sort of change prior to Obama promising to change it single handedly, since that worked about as well as most people watching from other developed countries with modern socially supported public health care expected it to... it was a best case train wreck because of health care industry self interested lobbying efforts from pharmaceutical companies, insurance companies, hospital management companies, all the companies... not because it was a bad idea to stop the fright train that is employer provided health care in the USA. They just managed to convince them to stop the metaphorical train in such a way they could profit even more, and thus cost everyone including the government even more money...
Americans were simply going without healthcare, so it was unavoidable that it was going to cost the whole country more money.
>I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system.
Because once the government gives a subsidy to a certain tribe, that tribe no longer has an incentive to vote to increase that subsidy to members of other tribes.
For example, in the US, old people have had healthcare for many decades. And they have the highest voting rates. But as a politician, you are not going to get far advertising that you will increase their taxes so that non old people can receive healthcare, especially if many of those non old people do not look like the old people.
But, completely screwing people is also politically unpopular, so what can pass is a half measure, like Medicaid, where politicians can say they helped people get healthcare, but also keep taxes low. How? Well, you simply pay the doctors and drug makers and dentists less for people covered by Medicaid. And you pay more for people covered by Medicare.
And as the tribes get more and more politically influential, you can keep adding various tiers of subsidy recipients. And that is the beauty of “health insurance companies”, or rather, “managed care organizations”.
Businesses with young, healthy, office workers can pool their health risks into less risky pools and pay much higher reimbursements so they get premium healthcare.
Poor people get directed to Medicaid, which will have a network of fewer and overburden doctors so they get less care, and less quality care.
Medicare will provide old people with enough healthcare to keep their votes coming.
Federal and military employees get decent healthcare because their coverage pays more.
Others get dumped onto the statewide exchanges that are you get what you pay for type deals.
And all of this is funneled through the managed care organizations so that people cannot easily measure who is getting what and who is getting more from the system versus less.
So tl:dr is that as a country, we do not actually want to help everyone equally. Just enough to say they were helped, but at the same time, make sure we get as much of the pie for ourselves as possible, and give up as little as possible.
> I cant fathom why the majority of Americans are ok with their weird sociopathic Job = Health Insurance based system.
Agree with everything in your comment. I think I can say everyone in the US wants a solution for this, including the idea of healthcare not being financially crippling for anyone.
It is easy to wrongly reduce any issue to a single variable. Politicians love doing this because they can then identify good and bad and use that to divide the population for votes. The truth is that everything in life is a complex multivariate problem. Few take the time to take a deep dive into the tree of variables in order to understand.
While not a comprehensive explanation, I'll attempt to at least provide some perspective, particularly for those not living in the US and likely, because of that, not having direct visibility into the web of issues. From my perspective, there are four macro issues that drive our cost structures. I'll keep it short. Happy to expand on any of these if interested.
1: Education: K-12
2: Education: University
3: Student loans
4: Laws, lawyers, lawsuits, liability
Primary and Secondary Education
They are sold the idea that minimum wage should be a living wage because we are training people who can only qualify for minimum wage jobs. Except that faulty economic ideologies is constantly eroding living standards at every level. Politicians pushed the $15/hr minimum wage as a solution for all the problems. Today, with inflation and rising cost structures (some of it driven by the doubling of the minimum wage), earning $15 per hour is likely less --in terms of purchasing power-- than it was before selling people that fantasy.
Education is at the core of a number of problems in this country. How does that affect healthcare? You are creating generations of poor people with no or low skills. This means they have trouble financially contributing to the greater good.
University Education
The fact that K-12 schools do not prepare students well means a significant number of them have to either take (and pay for) remedial coursework or eventually drop out. Most drop out.
In addition to this, our university programs waste student time by forcing them to take irrelevant coursework. This is particularly visible in the STEM fields. Students have to engage in about a years' worth of irrelevant non-STEM coursework. I define "irrelevant" to mean: Coursework that no employer cares about at all and will have no effect in advancing anyone professionally. We could graduate people 25% faster and with 25% lower student debt if we just excised irrelevant coursework.
What's ironic about this is that anyone would agree that someone pursuing a degree in art would be wasting their time and money if forced to take a year filled with mathematics, physics, chemistry and other STEM topics. And yet, for some strange reason, we force our STEM students to spend tens of thousands of dollars and waste an entire year taking courses like "Young Karl Marx". No bullshit, my son was forced to take this course at a major university while pursuing his degree in CS. Forced? Yes. A sociology module was required for graduation. Magically, this was the only available class for something like two quarters. In other words, he would have had to delay his graduation by half a year or "choose" to take this irrelevant and utterly useless class. And pay for it, of course.
What does this have to do with healthcare?
Hang on, we are getting there.
<continued>
Student Loans
One particularly sad example I have of this is a young lady who was a member of the FRC robotics team I mentored for many years. She was duped --I have to use the word, no other way to describe it-- into accepting admission into a university that was going to charge her $300K for a degree in mechanical engineering. I and other professionals mentoring the team advised her against doing this. We explained what $300K in debt for a degree in mechanical engineering was a formula for financial slavery for three decades, or more. Well, we could not beat the marketing machine. She graduated with a little over $300K in debt and is absolutely hating life today.
This is where we make a connection that starts with K-12 and culminates with university outcomes and the healthcare systems.
An MD, depending on specialty, graduates with about $300K in debt. That's actually a bad number because it is an average, and averages are horrible metrics to apply to a population. The number can easily reach $500K, particularly when you include all elements, not just tuition.
Here's the connection: There's an ecosystem of professionals, all of whom participate in delivering healthcare through their own specialties. The MD, nurses, PA's, radiologists, etc. are the most visible layer. The next layer is likely an array of engineers, biologists, chemists and other university-degreed professionals working either directly for the hospitals or for tech and pharmaceutical companies that are an integral part of the healthcare dependency tree.
When you are on the table in an operating room, the team surrounding you likely has a collective student loan debt in the order of two million dollars, if not more. One layer removed are other nurses and support personnel at the hospital. That is also likely debt that must be serviced in the millions of dollars. The people who build the equipment in that operating room, conduct research and develop drugs and other tools represent hundreds of millions of dollars in student debt.
One can follow that cost structure tree as far as one might wish.
This means that healthcare in the US has a non-trivial baseline cost of doing business that is inextricably linked to the quality and cost of our education. That's an important baseline to understand. You cannot fix healthcare costs in the US without fixing this complex element of a complex equation. At a minimum, the government should have nothing to do with student loans. University costs should not be subsidized. Students should pay fair market value for what their degrees can actually deliver. Curriculum would also be fine-tuned as part of this process. Nobody wants to spend thousands of dollars for a course on "Underwater Basket Weaving" when it is irrelevant and has no value. Let the student decide, do not force irrelevant material on them and charge inflated rates for it.
The journey to this point includes additional variables that have not been accounted for. One example of this is the fact that K-12 education is dominated and ruled by regional teacher unions, none of which truly exists as real advocates for excellence in education. The effects of such a structure ripple all the way up into university, graduation rates and the cost of remedial education. These result also dominate life outcomes for those who either don't attend university or drop out. They leave K-12 without marketable skills that could seriously improve their lives and improve society.
BTW, my wife is a doctor; we actually live the above realities. We is over 50 years old and we still have somewhere around $80K in student debt to pay for her degree.
Lawyers
The baseline costs I mentioned above are, in fact, just the tip of the iceberg. Every single element of the healthcare story in the US, be it people, supplies, equipment or drugs, has massive legal and liability costs associated with them. If your medical practice has to protect against a potential hundred-million-dollar lawsuit, there will be a non-trivial cost associated with this. Same with hospitals, the EKG machine manufacturer and even the company making the pillows you put on the beds at the hospital.
One turn of the crank and all of these baseline costs add-up to a situation where the "system" has to charge insane amounts of money for everything or it will collapse under its own weight. Doctors have to order two, three, ten times as many tests for everything, just to cover their ass in case there's a lawsuit. Companies have to spend tens, hundreds, billions of dollars for similar reasons.
When your baseline costs are driven by such cost structures, there is no amount of income redistribution that is going to fix any of it. Making me pay four times what I was paying before Obamacare does absolutely nothing --not one thing-- to fix the fundamental issue of a seriously fucked cost structure to deliver healthcare.
I'll stop here. The topic tends to be emotional for some because it is human nature to pretty much just care for self rather than to take a higher level view, explore root causes and take the pain required to actually solve problems for everyone.
Objectively speaking, in the US, we need to fix education at every level, stop subsidizing ridiculous university cost structures and curriculum, fix our laws to reduce and mitigate the horrendous costs of doing business and focus on delivery quality care for everyone at a reasonable price. At this juncture, if we fired all politicians and did the right things, it could take 25 to 50 years to see the results. That's part of the problem and an indication of just how messed-up things have become.
Our medical establishment is very inefficient, pays for lots of useless shit, and subsidizes the world's medical research. All those things cost money.
Yes, that was the point. People who could not afford healthcare, are now receiving it. Hence people who can afford to pay for others to get healthcare, have to pay for others to get healthcare.
>However, doing it by causing serious financial harm to likely millions of families is not right, at all.
There was never going to be a way to redistribute wealth without taking to from those who have it or to give it to those who do not.
>Here's an example: One of my kids ended-up in the hospital with myocarditis due to the Covid vaccine. That cost us over TEN THOUSAND DOLLARS, cash.
And you are insured for amounts that go over the out of pocket maximum, which is legally around $17k for families. So if you need a $500k heart surgery tomorrow, you only have to spend a maximum of $17k.
Obviously, the price of healthcare is a problem, and the only way to fix that is to lower demand (let people die) and increase supply (more doctors, more taxpayer funded R&D into medicines that go into public domain, and tort reform).
Yeah, that’s why they had to resort to blatant lying to get it passed. But hey, it was for the greater good! Take one for the team and be a good sport about it. “We have to pass the bill to see what’s in it,” and all that.
> And you are insured
You are intentionally missing his point. The cost of that insurance has gone up massively the past 15 years. The same level of insurance cost at least an order of magnitude less 15 years ago.
again, because,
>There was never going to be a way to redistribute wealth without taking to from those who have it or to give it to those who do not.
Health insurance premiums are an explicit wealth transfer, from young to old, and sick to healthy. For all intents and purposes, you can consider them a tax (hence the individual mandate that was later removed).
https://www.healthcare.gov/how-plans-set-your-premiums
> Five factors can affect a plan’s monthly premium: location, age, tobacco use, plan category, and whether the plan covers dependents.
>Notice: FYI Your health, medical history, or gender can’t affect your premium.
You have more poor and more sick people getting healthcare, without commensurate increase in the supply of healthcare, so obviously costs are going to go up.
No, the point was to use healthcare to buy votes.
> People who could not afford healthcare, are now receiving it.
Nobody I know has a problem with the concept of helping others. Nobody. Helping others might be to tack-on $100 per month to help cover the under-insured. We do this with auto insurance already, everyone pays a little more for uninsured motorists. A QUADRUPLING of health insurance costs is theft. It isn't equitable by any stretch of the imagination.
And then there's the fact that the US President and everyone from his party who supported this told us, promised us, families would save $2,500 per year. Instead of that, we were forced --FORCED-- by law to buy a product that today costs four times what we used to pay for a better product.
We have a situation where the US government is forcing us to pay an exorbitant amount of money for a substandard product. Forced. So much for the land of the free.
> Hence people who can afford to pay for others to get healthcare, have to pay for others to get healthcare.
What's next? Pay for those who can't afford to buy a house? By that logic one can justify just-about anything.
Sorry, that's not justification for any government to force people to buy a bad product that financially brutalizes them.
Yes, we need solutions for healthcare. Obamacare isn't even close to a solution. It's a travesty. In the long term it has actually degraded our healthcare system. The problem is it will take years for the less informed and easily impressed among us to understand this.
Apparently you do, if the help costs more than $100 per month.
>We do this with auto insurance already, everyone pays a little more for uninsured motorists.
Uninsured and underinsured auto insurance does not help anyone else, it only helps the premium payer.
>what we used to pay for a better product.
I do not see how this can be true when there were benefit maximums, as opposed to out of pocket maximums, and pre existing health condition exclusions existed.
>What's next? Pay for those who can't afford to buy a house? By that logic one can justify just-about anything.
Yes, that is the crux of politics today. How much wealth redistribution should the government perform?
Previously, a few tribes in society had it made in the shade. Old people, government employees, employees of large businesses, especially white collar or ones with large union presence. Then sufficient amount of Americans no longer belonged to those tribes, hence the political will to pass reform. Which I guess you characterize as “buying votes”.
>Sorry, that's not justification for any government to force people to buy a bad product that financially brutalizes them.
You are not buying a bad product, you are paying a tax since your premiums explicitly subsidize others, just not paid directly to the government. Also, there is no penalty for not purchasing health insurance since 2018, so the government has not been forcing anyone to pay the “tax”.
BTW, and because the accusation is always made, implicitly or explicitly: I am not a right-winger/conservative. Not even close. I am driven by data and facts, not fantasies. Pure and simple. If I had to classify myself politically I would be a classical liberal. In other words, socially liberal and fiscally conservative. That, I believe, is, for the most part, the balanced formula that lifts all boats, not the madness both political parties force upon us.
https://en.wikipedia.org/wiki/Classical_liberalism
Live long and prosper.
What would happen if suddenly hundreds of additional institutions as good as MIT, Stanford and Harvard appeared out of thin air in the US?
Wouldn't we quickly revert back to the current state of things, once US News and marketers figured out a way of creating another "Top 100" hierarchy of schools, with parents shoving their kids into violin practice, water polo and building-orphanages-in-Nicaragua photo ops to make it into the new top 5 luxury brand name universities?
The scarcity IS the product of these institutions. This is the nature of positional goods.
Neither education nor health care make sense to organize by competition - the consumer lacks the ability to make the informed choices that an effective market requires. Obama care, in fact, contained a variety of pseudo-competition schemes to bring down costs, all of which predictably failed. And we're seen the disaster of various for-profit colleges.
> For example, the number of UC campuses in California should have doubled as the population doubled.
Maybe. But the number of students at UC campuses in California has doubled since 1965 — even though the number of campuses hasn’t.
I think the issue is that demand has more than doubled as the population of California has doubled—because college is more of a requirement than ever.
While more healthcare supply is definitely needed, this is ultimately a bottomless pit. Patients with complex chronic conditions have essentially infinite demand for healthcare services. The majority of those chronic conditions are caused by lifestyle issues including overeating, lack of exercise, and substance abuse. As a society there has to be a limit to what percentage of our GDP that we devote to healthcare.
Yup.
Early 70s, we started transformation from a manufacturing to a rent seeking economy. Cleverly branded as "supply side", "knowledge worker", and "service industry".
I still can't get over the fact that I have to spend money to use my money. Even more so the less money a person has.
This isn't really true. Obamacare was integral to the push toward increased capitation. Health care insurance paying for services provided instead of patients covered leads to incredibly perverse incentives that have been a huge part of why costs are so high. Capitation solves that by aligning provider incentives with patient incentives; provide timely, high quality care and not unnecessary treatments.
You get what you pay for. Student and parent expectations have changed and so have college and universities. If you want what colleges used to be like 50 years ago go to a small private or public school that is just barely staying afloat, it will be more or less similar to the so called halcyon days of low cost, no frills college.
The thing is—people don’t want this as voted for by their choice in school. The biggest drops in enrollment are at community colleges, state schools, and small private schools. If people were price sensitive cheap schools would have people busting down the doors to get in. They don’t. In fact, when a college lowers their tuition, they paradoxically often see a dip in enrollments.
Why? Because human brains are broken. We connate price with prestige and prestige with quality.
Colleges get punished if they lower the price, so what do they do instead? They increase the discount rate. Rarely do families pay the sticker price. Google any college tuition and you will see average price paid. It is typically anywhere from 50-75% of sticker price.
The government backs the debt.
The schools get cash.
> The government backs the debt.
I'm not sure if there's a name for this style of argument, but it happens a lot, particularly in defenses of uniquely or primarily American phenomena.
If you want what colleges used to be like 50 years ago — more power in the faculty senate, greater academic freedom, more focus on doing research and less on grantwriting, greater freedom to research moonshots, very few adjuncts — you aren't going to find it at small private or public schools that are barely staying afloat.
How do you define quality in this sense?
It sounds like you need to read Zen and the Art of Motorcycle Maintenance.
But as a former reliability engineer, i bristle as Persig’s claim that quality can’t be defined.
But i fail to see it’s pragmatic application here. Prestige implies hierarchy, and hierarchy implies ranked measurement. But we can’t define what we’re measuring in terms of quality research or teaching. Apparently, like porn, we’re suppose to just know it when we see it. Like a lot of Pirsigs dialog, it feels a little too precious, without necessarily adding much.
That seems to just be a reduction to subjective relativism, which is often the last refuge of people who don’t know what they’re talking about but still want to feel smart. (Or, alternatively, hiding behind rhetorical gimmicks like the “no true Scotsman” fallacy). If they know what they were talking about, I would suspect they could define it. To paraphrase Feynman, if you can’t explain it to a first year student, you don’t really understand.
I think I’ve met two reliability engineers ever and they were both professors so I’m not sure I follow your point.
The other side to the problem that most commenters here are missing is something that is much easier to see if you are employed by the school (as I used to be). There are dozens of layers of bloat and positions that exist only to make Doing Stuff (for values of Stuff that include both Research and Teaching) as slow as possible. Even getting a door fixed -- to stop the door stuck open alarm going off -- took multiple days and multiple people, and not because we had trouble getting a hold of someone. I got decent at navigating this stuff and acquired a reputation as a fixer, which I was all too pleased to move on from, but I sure did become aware of all the people I had to keep happy. There were a lot of them.
I firmly believe that at least half of those staff positions (not people, but positions) could have been eliminated with nothing of value lost. It was kind of ridiculous, and it's one of the reasons I don't work for a tier 1 research university anymore.
(These jobs also tend to be excellent sinecures and attract the difficult sort of person, often by virtue of who your coworkers are going to be, but that's another story.)
But, honestly, what sticks out in my mind with the Door Saga, what I remember years later, is what the union maintenance guy did. He showed up at 11:55, set up his ladder, then "noticed" it was noon, and left to go on break because that was The Rule. I don't remember what he did with the ladder, but it sure did piss the next guy off... so he left too, because he needed the first guy to do his job. Fun all around!
I have union blood in my veins. I don't cross picket lines. UFCW scholarships helped put me through college. So I don't say this lightly: Fuck. That. Union. Utterly destructive leeches. Unions have so much more to offer our workers and our society, and instead they do... this bullshit. Thanks for giving everyone a reason to hate you, you greedy assholes.
It is true—prestige grants price flexibility for the college. They can charge more equivalent to their relative standing. But what leads to that reputation? How do you measure quality of education?What makes Harvard better than any other college at educating students? How much better? What percentage? Okay now prove it. At least in a succinct explainable way.
No, prestige is based on awareness and reputation. That can be gained a lot of ways. Recently a lot of schools have gained reputation through athletics. If you are good at one thing people think you are good at everything and so that reputation becomes overall reputation.
Three repeatable anecdotes regarding college enrollments:
1. When a college builds a new fancy building they see an enrollment spike. Almost every time. Especially if it is student quality of life focused.
2. Colleges that have lowered tuition to increase price transparency have consistently seen enrollment drops.
3. When a college or University makes it to March Madness they see an enrollment bump.
Reputation is tied to many things. Academic quality is hard to quantify or measure and so any reputation based on academics is apocryphal and based in word of mouth.
Others, like selectivity, are known to be gamed by encouraging students to apply even when they have no chance of getting in (which carries the additional income of the application fee).
An athletic conference.
Aren't most colleges turning away qualified students? If so, an enrollment spike is a decision by the college, not the result of increased demand.
Even dropouts make more money after being there, not to put too fine a point on it.
Yes - loudly signalling that the parents can blow $100K/year on an exclusive country club-cum-college for their kids, and never miss it.
Treatment #1 - Immediately start treating the $$$$$$-no-object "colleges" as for-profit luxury resort corporations. Donations NOT deductible, fully subject to property taxes, zero state/federal money for anything, rights to have their own police forces yanked, subject to all SEC regulations, degree-granting powers revoked, etc., etc.
I think government backed so urgent loans are a big reason why people are not price sensitive.
On top of that students are sold the idea that, as the above poster said, "you get what you pay for," and that cheaper schools are somehow worse and will mean they'll earn less money. If you're getting into debt to increase your earning potential anyway, it makes sense that you would try to maximize things. But you're 17, and might not realize that these adults who are in positions of power are likely misleading you.
Also, honestly, a lot of 17 year olds don't seem to be able to grasp the idea that debt is something you actually have to pay back (a lot of adults even don't seem to grasp that). What do people think would happen if they gave every 17 year old a credit card? Yet their financial competence is somehow expected to be completely different if we give them a much larger loan?
I was actually surprised with how beautiful the university grounds were. They likely spend a fortune on landscaping alone.
Our older grandson went to the same school studying CS and EE. I’d say he’s doing very well.
I agree education is over priced, much like any other investment or asset in this day and age.
Perhaps my world view is narrow, but what are examples of these “affordable” schools with spotty wifi?
I think the old buildings or drab dorm argument isn’t a huge deal. Call me old fashioned, but I’d prefer my grand kids being safe but having some challenges. Otherwise, we’re keeping them in a bubble. As long as their is climate control and cleanliness, I’m fine with them not getting a 4.5 star hotel treatment.
The price increases are massive, across the board, and not obviously linked to quality of facilities. There's definitely something more than you're suggesting at work here.
I have the feeling that you're looking only at elite institutions. At the time I was in college, the place came in around #100 on the list of top liberal arts schools in the country, which while not especially shabby, also wasn't in any way elite. In comparison, the one elite university that I'd applied to back then was $36k/year for tuition, and is now $59k/year. Surprisingly, its tuition has grown at a slower rate.
Agree. Part of what is enabling this is all the easy money to pay that tuition.
How is this related to tuition? Do you not cook your own food or eat from private restaurants in US universities?
If the underlying cause were primarily administrative overhead, that should be readily apparent in the (public) budget of any public university. I’m not going to go do Silvergate’s research for him, but I’m surprised he doesn’t cite such a readily available piece of compelling evidence, which at best suggests he’s too lazy to track it down, and at worst that reality does not support his hypothesis.
I think Baumol's cost disease explains a lot of the increase. I find it suspicious that it's not mentioned in TFA. But there are other drivers, of which much higher student expectations play a part. A school patterned after a typical university in the 60s would have some charm but probably students would not enjoy the Spartan living environment or the lack of support services.
In fact given that the numbers of admin staff per student and per graduate has increased, you could credibly argue admin productivity has declined.
Per https://nces.ed.gov/programs/digest/d21/tables/dt21_334.30.a..., after two minutes of googling, if I am reading correctly, the percentage spent by four year institutions on “academic support”, which includes admissions, has remained at about 8% from 2000 to 2020. That seems like a basic statistic Silvergate should have on hand, and one that invalidates his hypothesis, right?
Why do you assume these influences to be mutually exclusive? Upward price pressure for unnecessary bureaucratic positions does not invalidate the problems with those positions, but rather exacerbates them.
That was my point: not addressing alternative theories, while failing to furnish seemingly readily available supporting evidence, seems on its face dishonest.
Easy credit made it so demand for degrees outstripped capacity. Schools raised prices to meter demand. At these increased prices, schools felt compelled to invest in programs and administration.
Also, as I understand it, the accreditation process is pretty broken in the country. Whatever the top programs are doing becomes the benchmark for everyone else to match. So it's a never ending treadmill to keep up.
a lot of cultural differences (and other historic path dependencies) led to using degrees and other signals for hiring instead of actual performance.
even by-definition woke (and I'm not using it pejoratively here) employers have trouble letting go of their mindless credentialism.
https://twitter.com/mattyglesias/status/1539188973553299457 [audio version seems non-paywalled https://curio.io/publications/matthew-yglesias/matthew-ygles... see also https://www.slowboring.com/p/crt-school ]
https://www.pewtrusts.org/en/research-and-analysis/issue-bri...
If you look at Figure 4, within the last 10 years, and for the first time ever, the amount of federal money flowing into state universities exceeded state money. There are all sorts of consequences for this. Mostly, I mention this to echo that state contributions to higher education have gone down consistently and the editorial's assertion that the high cost of a university education can be reduced to a bloated administration is a simplified argument of a complex issue that is likely made in bad faith.
> In 2018, the United States spent $14,400 per full-time-equivalent (FTE) student on elementary and secondary education, which was 34 percent higher than the average of Organization for Economic Cooperation and Development (OECD) member countries of $10,800 (in constant 2020 U.S. dollars). At the postsecondary level, the United States spent $35,100 per FTE student, which was double the average of OECD countries ($17,600).
https://nces.ed.gov/programs/coe/indicator/cmd
How much spending is enough?
1. State cuts funding
2. Public schools need to raise tuition to make up the difference
3. The gap in price between public and private school decreases
4. Schools need to improve their product to attract students in order to make up for this lost savings
5. Schools work to improve amenities and add ancillary services (and this can now become cyclical when other schools improve, sending you back to step 4 again)
6. The administration bloats as they hire people to work in these new areas.
Basically one person's "administrative bloat" is another persons "investment in attracting students". I think really the only difference between the two is whether the return on investment is positive or not.
In principle, this helps two ways. It increases the prestige of the school, thereby attracting students. More directly, it brings in new revenue streams, both from tuition (paid directly or via federal training grants) and via overhead on research grants. However, it requires more--and fundamentally different--kinds of admin.
Even better - make colleges guarantee loans. If people can't get a job after 2 years of graduation make the schools start making the loan payments until they do get a job. BS degrees would dry up overnight too.
https://studentaid.gov/understand-aid/types/loans/subsidized...
My wife wrote five articles on the myths behind rising education costs, including administrative bloat: https://michellelessly.com/2016/08/08/5-myths-behind-the-ris....
She casually mentions Title IX and “high touch services”, and then calls those expenses a “necessary cost of doing business”.
I think most of the folks who end up paying the bills would rather them not be.
And why should they be? Why can't students partake of the services that the rest of the population does? This is how it typically works at European schools which seem to cost much less. Why can't schools just be schools?
Save for most STEM and subjects that have an external certification (bar exams).
The article nails the cause of more administrators--the schools have more money to spend and need to spend it--but completely misses the reason schools are able to charge so much more these days.
Yeah, but you're ignoring the mechanics of that happening.
> completely misses the reason schools are able to charge so much more these days.
I don't think it misses it. I think it just ignores it as a matter of practicality. It would take an act of god to get money removed from the system, but there is a very real chance he could cut some cost and bloat from single, incredibly influential, school.
Collage is largely an exception to that as elite schools don’t charge 100+x the average the way say watches, clothing, etc do, and most people aren’t going with the low cost options.
Do you have an example?
Supply and demand is exactly what drives the prices up. People have a huge supply of dollars due to financial aid loans, and cannot spend those dollars on anything but education. With more money available, schools charge more.
It’s the same mechanism as inflation.
Commodities often follow a similar trend with global Steel production resulting in lower prices per pound over long stretches of time. The trend is less obvious over short periods of time but compare steel prices every 50 years say 1820, 1870, 1920, 1970, and 2020.
Some things like beachfront property are inherently in short supply, but it’s hard to argue that applies to collages across decades.
Students who wish to pursue higher education shouldn't even have to think about finances for that education, aside from maybe the travel and food expenses (although now with remote work/learning that also is going down)
However, university can be very cheap. Here in Sweden university education, which is here funded in the way proposed above (i.e. the government pays for it all, for those students who get in) costs the state less than high school education costs the state (72 000 SEK/a for university, 124 300 SEK/a for high school).
I imagine that it could be the same way in the US.
Quite few people play it anyway.
In the US? No we absolutely can't. College football is practically a religion. Its cultural importance cannot be overstated.
I don't care about it at all and never have but oh biy do other people ever. People's lives revolve around it.
Furthermore, surely there is no need for additional facilities; and surely they don't need to be fancy.
No, we do not agree that this is a problem, or the cause of a problem.
https://www.forbes.com/sites/noodleeducation/2015/05/28/more...
The evolution of education has already been diluted (die looted :p).
I just saw a video on California's education system in the middle of the 20th century, compared to where it is today (actually thier ecomony). Not the finest of the bunch in the 21st century.
https://worldpopulationreview.com/state-rankings/public-scho...
Economic evolution happens :)
It is a reward puppy mill scheme and a triple-dippy pension scheme ... all at taxpayers' expense.
I don't think the system you're proposing would work for open-ended subjects.
"Hey Siri, could you go back over step 3 for me? Where did you get the X-squared term in the denominator?"
a growing portion of the bloat discussed in this thread goes toward increasingly luxurious lodging, amenities and services
generally agree with your broader point, with caveats (e.g., how the credentialism encouraged by the university system might be considered an obstacle to personal and civic development)
What is better is the hub approach of key-research public universities, say five per state and then ten commuter campuses that re-use courseware from the research facalities.
In fact in the USA several states are moving to this model, including such states as Indiana.
College is too expensive, but it's not because people who work at universities are overpaid.
I worked in EDU.
Colleges are investing in amenities instead of quality, affordable education, because the bloated admin is useless and corrupt, so they spend on big ticket sports facilities and buildings (where does the money go?) to justify the administrative excesses (if you build a $100 million stadium it's easier to justify a few million to renovate the presidents office).
The root of the problem is the terrible leadership, that is enabled by the broken funding model. Fixing the funding model won't resolve the leadership problems.
There should be a middle ground in reducing costs of overpaid bureaucratic bloat while also providing everyone on campus enough support, from undergrads to grad students to professors, etc.
The best solution here is just to start enforcing pip quotas lol.
A lot of unskilled lazy people want to have a salary being in-between those who actually produce value.
Surely the rationally-acting rational actors at all of these institutions are acting rationally in accordance with rationality?
After all, we live in a time when any "entrepreneur" can affix his name to a suburban sprawl wasteland strip mall storefront, open a University, and get accredited by at least SOMEONE and drive all of the wasteful and bloated (and liberal sissy-manchild-- their words not mine) institutions out of business, using the holy and righteous motive of PROFIT to deliver a better, cheaper, more rationally rational product to all of the young impressionable minds out there, right?
They’re kinda the worst of both worlds: massively subsidized by the state and federal governments, with very little government oversight.
None.
Several open every year. All you need is the capital and that’s what we’re all about, baby!
And then you can get the same subsidies and low levels of oversight as the big boys!
It would be interesting to see the trends in the costs of getting accredited over the decades.
People really lost patience with that crap after Corinthian, Capella, etc. so there are a lot of new limits and regulations. Basically the only non-accredited colleges that can make a go of it are those that have some other kind of rich sponsor - most often a religious one.
You can't make risk disappear magically.
Demand is through the roof - there are 20 candidates for every 1 place, and those candidates have almost unlimited access to loans. So the price is immaterial, if you get a place, you pay whatever they ask.
So sure, there's going to be administrative bloat - because there's literally no limit to the purse strings. And this is exacerbated by university rankings which will literally list staff:student ratio as a metric. But none of this has anything to do with Quillette's racist agenda.
https://www.cbpp.org/research/state-budget-and-tax/state-hig...
The same school is now $46/unit with no cap.
Though, through the google, it looks like there’s some sort of two years of free tuition program so it’s probably a wash practically speaking.
So why bring it up?
The last 40 years has seen interest rates steadily fall, allowing students to pay the cost of education further in the future. This in turn allowed students to bid more for education that they otherwise would have paid less for.
If interest rates and inflation reverse their long term course, then there is no reason to believe that students will be able to afford their previous rates.
And the banksters who make the student loans which are difficult to discharge in bankruptcy. The price ramp started after the no bankruptcy provision was made law.
https://thehill.com/blogs/congress-blog/economy-budget/28362...
Simply repeal this law which was a gift to the banksters in the 1990s.
Only if you assume that the purpose of a bachelor's is to provide job training in one specific profession. Not so much if you believe in the value of a well-rounded education, for people who are likely to change careers multiple times, maybe also be civic leaders, etc.
I'm not saying you're wrong, but the debate between these two visions has been going on for centuries and IMO it's not very useful to assume one answer (especially without recognizing the assumption as such).
Do you think university graduates in France, for example, are less “well-rounded” than those in the US?
It's hard to totally dissociate this from second-language issues, but I've noticed that international science grad students sometimes struggle to organize their writing, often in ways that go beyond grammar/vocab. I didn't realize this at the time, but writing essays on (e.g.,) feminism in The Canterbury Tales are really just exercises in putting together a cogent argument. Those skills transfer over to project proposals and design docs too.
In a similar vein, European PhDs are also laser-focused on one topic so that they can be finished in 3-4 years. I think there's a pretty widespread sense that many need to spend a little longer as a postdoc to "round" out vs. Americans with slower PhDs.
In STEM? Certainly not.
Calculus I/II/III(vector)/IV(linera algebra) Physics I/II Chem I/II
That's two whole semesters just getting the basics. You've only got 8 courses left.
In EE, that gets you: Circuits I/II, Digital I, Data Structures I, Computer Arch I, Signals & Systems, Electrostatics, Electrodynamics,
You're out of courses, and you haven't even gotten outside of the minimal major basics--and no labs either.
First year is general math and science. Many people earn some of those credits in high school, so it's already effectively on an as-needed basis.
Second and third year are the core engineering curriculum. At that point, you have all the specific course prerequisites to start a master's program.
Fourth year is a capstone project. You could do that over a summer in the second calendar year. The electives are redundant if you're going to do a master's.
General education requirement is also redundant with high school, and is about a semester's worth of classes.
So depending on your first year preparation needs, it could be as little as two calendar years. Assuming the program requirements are reformed.
A big part of education is studying what you don't necessarily want because it helps inform your intellectual interests.
Is your suggestion that YouTube could function as a way to audit potential college courses? Good idea, except you would already need to know what you're looking for to not be captured by the recommendation algorithm.
We haven't been trapped in a world where the only access to the arcane and the esoteric is held in hand copied, gilded manuscripts, we've even largely transcended the need for libraries.
"Higher education" is, at best, internally conflicted with two very different motives. On one hand it is the arbiter of the gates of the middle class. On the other it operates under the pretense of being the authority of intellect. Frankly my experience with the latter half is a joke, a mixed bag of disinterested people that are just there for the class, some that are disinterested in education in general, some egregiously incompetent at the coursework, and the very few (often none) who are passionate about it. This isn't uniquely on the side of the students, but that of the pedagogues as well. And it is contagious. If anything I'd be willing to bet that it does just enough trauma to people that they put a terminal end to their curiosities.
Anyways, I don't agree, I think the old approach is wrong, I expect it's harmful from the many anecdotes I have. I think it's one of the many coats of lacquer varnishing the piles of shit that these institutions represent to ensure their continuity, and justify their ability to arbitrate so much of the world around us.
https://www.manhattan-institute.org/html/underfunded-teacher...
Just grabbed a random link for the above, but underfunded retirement accounts and underfunded pensions explain math in 2022 quite well.
Any inferior integer is good enough /s
A few links that date back to 1993 (pulled at random):
https://www.investors.com/etfs-and-funds/sectors/sp500-ge-no...
https://www.deseret.com/1993/12/12/19081151/list-of-underfun...
https://nrtwc.org/underfunded-union-pensions/
Many industries are "beyond a crisis", its not a permacrisis :p
The public employee pensions are their own mess too