Government Spending: Should We Treat Health Care and Education the Same Way?

If you haven't heard of the Dartmouth Atlas of Health Care yet, wait. It is fast becoming the Book of Kells in the Washington policy world. The Obama White House has realized that Dartmouth's research could enable it to pull off -- or at least to sell -- the big dream of health-care reform: affordable universal coverage.

Under ordinary circumstances, broadening government involvement in health care would be a hugely expensive proposition -- and the more generous the benefits, the higher the cost. But researchers at Dartmouth have compiled decades of data showing two things: (1) there are huge geographic differences in Medicare outlays (e.g., more than $16,000 per beneficiary in Miami, versus less than $8,400 in San Francisco), and (2) those differences seem to produce no difference in health outcomes.

Dartmouth's research has been noted just this week in front-page stories in The Washington Post and The New York Times. And in a June 1 article in The New Yorker, Dr. Atul Gawande summarized some of Dartmouth's findings this way:

"The more money Medicare spent per person in a given state, the lower that state's quality ranking tended to be. In fact, the four states with the highest levels of spending -- Louisiana, Texas, California, and Florida -- were near the bottom of the national rankings on the quality of patient care . . . .[P]atients in higher-spending regions received 60 percent more care than elsewhere. They got more frequent tests and procedures, more visits with specialists, and more frequent admission to hospitals. Yet they did no better than other patients . . . .If anything, they seemed to do worse . . . . They got more of the stuff that cost more, but not more of what they needed."

According to The New York Times, that article made a big impression on President Obama -- whose budget director, Peter Orszag, has been going around D.C. suggesting that "nearly 30 percent of Medicare's costs could be saved without negatively affecting health outcomes." Naturally, members of Congress have glommed onto the idea that they could simply hammer down Medicare payments in high-cost areas and use the savings to cover the uninsured. Presto! Problem solved. What makes this discussion so interesting is the way it might apply equally well to education.

ACROSS THE country, there also are huge variations in per-pupil spending -- but they seem to have little correlation with academic performance. For instance, New Jersey and New York both rank near the top in per-pupil expenditures. But while New Jersey ranked fourth and sixth in the nation for 2007 eighth-grade reading and math (based on National Assessment of Educational Progress numbers), New York ranked 24th and 32nd. Connecticut ranked fourth in spending that year, but 12th in reading and 28th in math. Utah ranked near the bottom of the pack for per-pupil spending, but in the middle of the pack for eighth-grade academic performance. Virginia ranked roughly in the middle of the pack on spending, but outperformed most states on academics. And so on.

Similar discrepancies occur in city-by-city comparisons using other variables. Boston, with the highest per-pupil spending in the nation in 2005, had a high-school graduation rate of just 57 percent. San Francisco, which spent $7,000 less per pupil, graduated 73 percent of its students. Yet Dallas, which spent $1,600 more than San Francisco, graduated 77 percent.

Now it should be noted that many other factors enter the education mix (just as they do regarding health care). Confounding variables such as socioeconomic status can affect both per-pupil spending and academic performance. So comparisons across regions can be problematic. It has even been suggested -- jokingly -- that academic performance correlates highly with proximity to the Canadian border. After all, Massachusetts, Minnesota, and North Dakota have some of the best test scores in the nation, while Mississippi, New Mexico, and Arkansas have some of the worst. (Unfortunately for the gag, middle-of-the-packers Texas and Alaska confound the trend.)

On the other hand, it is also true that spending on public education has soared -- the average per-pupil expenditure (in real dollars) has more than doubled since 1970, and federal education spending has nearly tripled -- with no corresponding increase in performance. During the same period, reading scores at all levels have remained essentially flat.

AND THAT IS largely the complaint about heath care: The U.S. spends more and more -- and more than any other industrialized nation -- but isn't getting a commensurate return on its investment. Surely there must be a better way.

Yet outside of a few free-market think tanks, nobody seems to be applying the same kind of scrutiny to public education. To the contrary, ever-greater spending seems to be the universally approved panacea for the public schools -- regardless of whether the additional money is spent on textbooks, playground equipment, administration, laptop computers, teacher salaries, teacher-pupil ratios, or new buses.

Given the discrepancy between spending and performance in education, shouldn't we also also be asking if some students, like some patients, are getting "more of the stuff that costs more, but not more of what they need"?

If we could read the secret history of our enemies, we should find in each man's life sorrow and suffering enough to disarm all hostility. --Henry Wadsworth Longfellow.

Contact A. Barton Hinkle at (804) 649-6627 or .