Friday, June 8, 2007

XVII. On Public Goods: Providing Education & Healthcare

 [This is a rather extensive, composite response edited from a dialogue related to a friend's healthcare blog, So what do you think about that? I'm addressing points made and issues raised by yet another friend about public education and healthcare as public goods. We are all in the same Great Decisions discussion group in Naples, FL.]

Two Policy Questions

First, aren't there two principal policy questions we must entertain in addressing issues related to providing either public education, public healthcare or public healthcare insurance? And the answer to the first determines whether we need have anything to say about the second. The first question is whether it is a public good, whether there is a public, national interest in assuring that every child has access to a basic education and, in turn, assuring that every child and adult has access to preventive and basic healthcare. Only if the answer to either is, yes, do we need to go further and ask the second question: what is the most efficient, effective, and fair way to assure access and the value of that public service to all?

The First Question

Education

There are only three "public goods"--as I loosely define them--that appear of such national interest, benefit, and long-standing status, that they enjoy more or less an American consensus. First is the postal service, which enjoys a constitutional mandate to be overseen by the government (at least with respect to letter carrying)--but for which a case can be made that modern day letter carrying and package delivery might more efficiently serve the public by being "privatized." But, the constitutional mandate doubtless rests on national security grounds, and the status quo seems assured. The second is our standing and reserve military--and, I might add, it's full-service healthcare delivery system. Both appear to function quite well, and no one I am aware of is suggesting privatizing either--for national security reasons, no doubt, although both are also internationally best of class. (Services such as police and fire protection might also be included in a similar category.) And the third is public education.

It is my perception that public education is accepted by most all Americans today as a public good, broadly defined, a developmental necessity that should be provided to all. That is, the public provision of k-12 education is too much in the national interest to leave to the uneven and too often denying allocations and administration of the marketplace. But yes, private education is also important; it provides not only an alternative for those who can afford it, but also a continuing showcase for the best practices that a fee-based market can provide, practices that could sometimes be usefully adopted by public education. But again, it is not a model that reliably delivers effective, affordable, and relatively equal education to all. And it is always expensive, most often more expensive per student than public education--at least among the better of them. (It was my personal pleasure to spend nine years on the board of a very good--and very expensive--private school, six as treasurer, three as president.)

Much has been said and written across the American centuries about the importance and power of public education, and its necessity to assure access and fair administration of basic education to all. It extends back to early colonial times with Boston Latin School being the first public school established in 1635, with girls first attending school in Boston in 1767, and the first public high school established in Boston in 1821. But education, on the whole, remained more private and unorganized until the 1840s, and the public school systems did not dominate until about 1900. By 1918, all states required all children to attend elementary school, and soon after high school attendance was required, at least until age 16 in most cases. By 1935, 40% of students were earning a high school diploma; by 1940, 50% of all young adults had earned one. Soon after the end of WWII, American public education had largely taken on the form and approach that we know today.

For most of the last century, American public education has been a model for the world, and those schools served the American public without issue or complaint. Well, there were some policy issues of course, significant issues, and principal among them were the inequities for the poorer inner-city and rural school districts, and minority community schools--including for far too long, segregated schools. (And most private schools, then or now, have done little to help advance solutions to those problems.) And yes, inequities in education in poorer communities remain a challenge today. Still, the performance of public schools in most middle class and up-scale communities has been well and supportively received--and in the main, still is today.

But to the extent it has achieved anything close to its purposes--and even if other countries may now do it better--public education still provides the foundation for a better informed citizenry better able to contribute to civic affairs. But just as important is the basic development of creative and productive leaders and workers in government, commerce and the professions. All of this enriches and strengthens government and the economy, to the benefit of the individual and the nation. It has often been observed that after our representative democracy and creative market economy, public education is the strongest contributing factor to America's vibrant society and economic success. But I'm sure I am preaching to the choir on this point.

Further, it might be relevant to consider that every advanced country and most others today provide public k-12 education. And whether they do it better or worse than we, it's value and necessity is universally recognized.

Why not higher education, too, you ask? And you're right to ask. The most logical and pressing open question regarding public education may be whether there isn't a need to expand its scope as a public good to include higher education--both academic and vocational. An advancing world and economy now demand more education for today's elevated job requirements, and to command middle-class or higher salaries. The issue has taken on more importance in recent decades as the utility and value of a high school diploma has declined.

But there is a related issue, an equally pressing need: the need for higher education to be reformed and restructured to overcome its muddled mission and overwhelming and increasing cost. More and more often, it fails to provides a justifiable return on cost to students, their families, states and the nation. It has become beyond the ability of most families to prudently finance, and indefensible levels of higher education debt threaten the financial future of students and families alike. There are well understood reasons why (at least by researchers in the area), reasons that can and must be addressed.

But reforming and restructuring higher education--and especially research universities--will likely prove just as difficult as reforming and restructuring healthcare. It would seem to me there should be greater emphasis on separating the teaching and research functions so each stands on its own in terms of justifying its focus, scope and methods, managing its cost and revenue needs, and serving its different publics. The training of Ph.D researchers would likely be found in the research institutions, while BA and MA degree teaching would be found in the teaching institutions. Graduates with MA degrees should be qualified to teach in those BA and MA granting teaching institutions.

Then there is the real, market-driven competition for the best of everything non-academic: athletic teams and facilities, far more upscale college dorms, dining and recreational areas. All this drives up cost and tuitions. Fair consideration of alternative models or approaches is a necessity, but only cost and tuition levels that no longer allow schools to fill their classes will cause them to take alternatives seriously.

The less ambitious nature of the simplest four-year state colleges that focus principally on teaching has much to recommend it. So do the community colleges and their more utilitarian approach to vocational curricula and two-year academic preparatory programs--although, they too might be better served by separating those missions and functions for more effective focus and management. They also need to think more about converting their no-frills teaching competency to four-year undergraduate programs in more cases. The demand for them is likely to quicken as the financial breaking point is recognized by more middle-class families.

When more middle-class kids and families fully appreciate that they can spend their first two academic years at a community college and the last two years at a competent state college--or all four at the less expensive community college--and that it likely won't make much difference in their long-term career success, won't there will be a significant migration in that direction? And won't that place enormous pressure on private and public research universities to think about restructuring?

You see, even if cost alone were not enough to instigate this change in demand, recent research might tip the balance. The research I'm talking about is a longitudinal study that finds that kids with the same SAT scores and high school performance who go to the most prominent schools they can get into--including the Ivies and other elite schools--have, on average, no more long-term career and financial success than those who attend less prestigious, less expensive schools, including state colleges. That is, a similar level of ability and high school performance, combined with a competent college education--whether at an Ivy or a basic public college--usually yields a similar level of success. Of course, there's always the cache and appeal that attaches to brand-name schools, but are they worth subverting one's financial future? Not for most middle-class families and students.

Like k-12 education, the case for including higher education as a public good has now become more compelling. It is where the demands of advancing technology, commerce, and a more competitive world economy have taken us. Which, in turn, makes the case for reforming the delivery system for higher education all the more compelling.

Healthcare

And it is because of the universal recognition of public k-12 education as a public good that I consider it a useful analogy in addressing the mature case, the compelling national need, for universal access to preventative and basic healthcare services. It too must be recognized as a comparable public good.

Against that storied educational history and revered contribution to America's strength and identity, what can we say about the case for public access to preventative and basic healthcare? Well, we can begin by pointing out that as societies advance, as they reach higher in all aspects of the quality and strength of social and economic life, more is demanded from each person, social institutions, and government leadership--greater capability is required for greater contribution. We can observe that it has been long understood, and made clearer with time, that untreated illness, disease, and physical dysfunction, create a costly, retarding effect on the advancement of American culture and the growth of our economy. For decades, insightful employers have provided fitness centers or memberships, and done what they could afford to provide health insurance to cover basic healthcare, at least. They understand the benefit and payback in productivity terms--even if they are poorly situated, and often unable, to properly and fairly manage it.

But more insidious is the effect on children of untreated, often chronic illness or disease, most often poor children. For them, it is not just about the temporary loss of productive time; rather, like poor nutrition, it often becomes a life-long limitation on readiness and ability to learn, on the future level of employment or on employment at all, about realizing human and productive capability. And the cost to society and the economy is great. The research and its implications have been piling up for decades. It seems to me, at least looking through my eyes, assuming my values and understandings, it is not the case for universal access to healthcare that is weak, it is the leadership of our national politicians, and the related understandings of some political constituencies.

But it is also important to reemphasize what I have stated before about a cost-justified definition of "preventative and basic healthcare," my term of preference in referring to public healthcare or healthcare insurance--and why that's important. Politicians are loath to address the true complexities, needed private and government discipline, and necessary cost reduction in the system. And yes, that includes "rationing," intelligent cost-benefit trade-offs, by some well-informed, responsible, public policy standards. After all, we are already rationing health care services through the haphazard mechanics by which the system now provides or denies service to various classes of patients. And it is class-and-income based.

Too often that means denying preventative and basic care to poorer children and adults, which is inexpensive and strengthening of our national health and productivity, while at the same time accepting unlimited costs--35-40% of all healthcare costs--to keep aged or terminal patients alive for another week, or month or so, in the last year of life. We routinely over-test and over-prescribe, and unnecessarily use the most expensive alternatives in diagnosing and treating many illnesses. Defaulting to this unaccountable system that makes those decisions is a most irrational and indefensible way to set public policy on providing healthcare. And make no mistake about it, it is a default policy--and one that does not serve our people or our country intelligently, cost-effectively, or well.

We need an approach that sets appropriate, cost-defensible priorities if we are to have an effective, sustainable healthcare delivery system. And, for those who want more, who can afford it, there will always be a market for supplemental healthcare plans, "Cadillac plans" that offer coverage including the most expensive alternatives, or continuing care and life support to the terminally ill.

The healthcare needs of the American public have long cried out to be treated as a national priority. Now the case is clear: the national interest demands that healthcare be treated as a public good, a service which all Americans, whether rich or poor, should have access to at a cost reasonable and appropriate to their means. I wish I could just declare that it should be every American's right, a matter of their quality of life, pursuit of happiness, and fulfillment of their potential, and that would make it so. But in the end, I also know it has to be paid for. In the end, it also has to be justified to some reasonable extent in economic and productivity terms as well. And it can be if our leaders can marshal the strength to lead.

And here, I must also point out that, notwithstanding the cost and challenges, all advanced countries today provide universal access to healthcare, except America. Among those most advanced who provide healthcare through a national health service, the cost per capita is approximately half that of the U.S. And in most of those places, it is viewed as a right of all. We are the outlier. Now we may be right and the world wrong, but the answers I find provide little to support for that conclusion.

The Second Question

Healthcare

At this point, I'd ask that you indulge my analysis and conclusions on the step-one questions--whether you are persuaded by them or not--so that we can move to the step-two question: what is the most efficient, effective, and fair way to assure access and the received value of that public service by all? And it may be that many of the step-one concerns or issues can be be resolved in more intelligently designed and implemented structures animated by better-aligned incentives.

First, I have no ideological predisposition to any particular way that either public education or public healthcare/insurance might be delivered. It's whatever approach touches all the bases most efficiently and effectively. I'm an advocate of market answers in the production or provision of most goods and services. But, I do not believe that markets and market providers can be relied upon to touch those bases of fair and equitable service provided at fees reasonable to all consumers' means. It's not the way markets work.

Perhaps there is a better way to think about the role of government and role of markets that incorporates the necessary accountabilities, best features, and most efficient contribution of each. Let's explore the possibilities of such a model and role definitions. The function of the market is to drive the best quality, lowest price product or service to meet (or create) specific needs of customers able to pay. The role of government--in this context--is to protect its citizens and taxpayers, and provide them or pay for needed services judged a national priority--and do so on an equitable basis.

If we were to visit that approach on a solution to our problem, it might look something like the healthcare legislation we now have. But as I have written before, the unfortunate, politically bastardized result takes us only half way there.

That is, the only way we get there is for government to exercise fully and more intelligently its legislative, regulatory and financing role, restructuring the requirements and incentives of market product and service providers, eliminating the counterproductive and unnecessary role of private insurers (who do not act in the patients interest or the national interest, where the government arguably does), assuring cost accountability, and restoring the patient to a meaningful role as consumer and judge of services rendered, even if he is not--and cannot be--a meaningful party in setting prices.

I believe that taking this legislative and regulatory process to its logical conclusion can provide a workable healthcare delivery system--perhaps even an efficient and effective system--one that incorporates as much as is practicable, significant market elements or features. But again, what is most important is the presence of an intelligently designed system. It must have properly defined roles, responsibilities, and accountabilities--and the most effective and appropriate incentives to assure a competent and efficiently provided service. All things that do not exist now.

Education

Education today is also complicated. It is being delivered in different settings to different populations with their own unique characteristics and needs. It is one type of challenge to deliver effective education to students in an upscale community with relatively stable families, including parents who are college educated and successful. These are parents who most often encourage and prepare their children to attend college--and more, create in their children the expectation and confidence that they will attend and graduate from college. Those are what the research tells us are the most influential factors in the educational success of most students.

But it is a very different challenge, and demands a very different approach, in delivering effective education to the directionless child from a poor, dysfunctional family--often a single-parent, inner-city or rural family where the parent is struggling to survive with children. Most often, the parent(s) fail to adequately encourage their children's education, at least with the needed confidence and credibility . Too often, the result is a failed or underperforming student. If you pair that with poor nutrition and inadequate healthcare, the probabilities of failure are greater still. Only an extraordinary parent and child, an influential peer, or the credible intervention of a teacher, coach, faith leader, or other role model willing to make an exceptional personal investment can provide the special support necessary to sufficiently lift such a child's confidence and hope. (The dissertation I had to abandon because of chronic illness was to have been on this topic.)

And then there are the issues you may be thinking about: the poorer relative performance of American students on international standardized tests of learning. For at least two decades a debate has been going on, a debate that has moved us toward more rote learning of facts and a curriculum oriented to preparing students to perform better on those tests. So far it does not seem to have helped much. Attending it has been a debate about appropriate incentives for teachers and school systems to help bring us again to the top of the testing ranks. But various experiments with that have not been notable for their clear success, either.

More, during this same time when more emphasis has been placed on factual knowledge--often to the exclusion of discussion and problem solving time--student scores on tests of creativity (the Torrance creativity index) have also been steadily declining. Interestingly, the Asian tigers, and particularly China, have observed that while America is moving away from her older pedagogical model, they are moving toward it. Creativity is now first on the minds of Asia and Europe. America is now more concerned with scores. Surely, the better answer is a balanced approached to both, a curriculum that sets the exposure to and teaching of factual knowledge within the context of discussion and problem solving. (I recently posted a piece to my blog site on this subject, "Flagging Student Creativity.")

It has been observed that public education too often serves first the teachers and administrators. Teachers unions have long been allowed to insinuate themselves too deeply into educational policy making, and too often frustrate reform, changes that would strengthen curriculum or the educational experience, that would allow the dismissal of underperforming teachers, and would set salaries and benefits by market driven standards. It is an excellent example of how dysfunctional and counterproductive roles and incentives can become. And if there is a major difference that I would identify between public and private education, it is that. I hope we can agree that American public education cannot address and effect needed reform until the influence of unions on education policy is limited to an advisory role--and teacher hiring, retention and advancement is based on performance evaluation.

What about something like voucher programs, you ask? Good question. Is there any practical opportunity to employ them in public education? Perhaps, but we know the notion of a voucher program makes many public education advocates just too uncomfortable. Yet, shouldnt we explore further that possibility? But first, we need to get back to our model of government and market roles.

In the case of education, insurance is not the role of government, direct provision of service is. But in looking at the possibilities and promise of a voucher program, we are asking whether government could and should take on a variation of the role of insurer, guarantor--or payor, by whatever name--for the cost of private education in the marketplace. That is, they would offer to pay a private school the average cost of a public school student if the private school would accept the student on those financial terms. Oh, but the school should also have to meet the basic curriculum requirements of the public school department--or something comparable to it--and student performance by some comparable measure would have to equal or exceed the public school measures. Yes, in this way, the private school becomes an extension of the public school system, a next step removed from charter schools, but nonetheless generally accountable to public school policy setting, curriculum development, and performance expectations.

Of course, there are few strong private schools that would agree to all that, likely very few. And the ones that would, would too often be new or failing, those with financial, leadership or accreditation issues. Again, proven performance against public school requirement and measures would have to be non-negotiable. That is what it would take, I think, for public authorities to be comfortable in their responsibilities for the education of public school students, and the use of public tax resources to fund it. But attempts have beeen made to experiment with vouchers.

As I remember, there were several earnest attempts at test programs starting in the 1990s in places like Milwaukee, NYC, Washington, DC, and Dayton, Ohio. And there may have been others since 2003 when I stopped followed this topic closely. But the results were uneven, sometimes inconsistent. There were some modest successes, especially with inner city black students. And there are other studies that appear to show increased success of inner city black students enrolled in urban parochial schools. Unfortunately, none of those studies were controlled enough to confidently eliminate a number of potential influences on the results, both positive and negative.

And then there are the more practical problems, the same problems that would face an attempt to move en masse toward a patchwork quilt of charter schools. There are the issues of public responsibility and accountability to assure adherence to basic curricular coverage, performance measurement processes, and student performance standards in a range of different types of schools. But that is not an insuperable problem; if school system authorities really wanted to make it happen, they would.

But there are more challenging problems, perhaps insuperable problems. To the extent that enough private schools--or charter schools--agreed to meet all criteria required of them and were approved, they would create excess capacity and inefficient economies of scale in the public infrastructure. The process of unwinding, reallocating or selling existing infrastructure, and unwinding or restructuring the management and teacher staffing of existing public school systems would likely prove very expensive, and very disruptive, too.

I'm sure you appreciate what an ugly, dysfunctional, near impossible political and professional process that would likely be. And the political compromise required for any kind of agreement would likely produce an unsatisfactory result in its own right. A more measured and stable process, by necessity an incremental process, would take many years--if the agreement of the required parties could ever be negotiated. But just as bad might be the more likely, part-way case where the system must still support much the same infrastructure and retain near the same level of teaching and other staff, but without the same revenues to support them. I am much less encouraged about the role of voucher programs than I once was.

Then how about charter schools? Charter schools have been a great idea, although results have sometimes been uneven. In some states that adopted a wild-west, open marketplace spare on regulation, accountability and experience--Arizona comes to mind--the results ranged from encouraging to distressing. There were good stories and very bad stories. (Although I haven't kept up with them the last few years.) Other states have gone more slowly, and the results have been more consistently good. With their relative success came the approval for a few more, then more still. In most states, charters still do not appear a prominent factor in public education, but most of the ones that exist are succeeding, and doing innovative things with teaching and curriculum. And that means their students are most often succeeding.

And the ones that are serving best, and bringing the most attention to themselves at the same time, are in urban settings. Given that, and the appearance of satisfaction with most suburban schools, I see charter schools as more an adjunct, experimental arm of public education, most needed and most helpful where special challenges or system failures face a school system--an educational "skunk works," so to speak.

It seems to me the prescription for public education remains to "simply" effect the necessary changes of roles, responsibilities and accountabilities of teachers and their unions, parents and administrators. The changes should provide appropriate incentives to assure that the best, most balanced curriculum is employed and constantly reassessed, the most effective teaching is being developed and delivered, and the best educational results are realized as determined by an appropriate and fair range of performance measures for teachers and students alike. And teacher hiring, retention, advancement determinations must be made on those performance measures. But there is nothing simple about that prescription. Efforts to that end have been made by many for a long time.

Still, I remain optimistic that our public school systems can retain the best of what they do, take the most effective practices developed in charter schools, and bring better, more efficient education and student performance to our most challenging urban and rural school systems--and to the suburbs, too. It can be done. But as we've already seen, it will take a lot of public dissatisfaction, worsening budget challenges, and a lot of honest self-examination and willingness to change by our strongest political leaders, school system administrators, and teachers. At least that's the way it appears to me.

First written: August 2010

© Gregory E. Hudson 2010

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