The Productivity Challenge: Is Health Care as Bad as Education?

Catherine Rampell, editor of the NYTimes Economix blog, has kindly relayed my challenge to her readers: “name a field with a productivity collapse worse than that in education.”

Ms. Rampell, like several Cato@Liberty readers, suggests health care as a possible “winner.” I haven’t yet spent enough time with the data to be absolutely sure one way or the other, but so far I have to disagree.

It’s true that health care costs have risen dramatically over the past 40 years. The CDC has a great digest of health statistics that puts per capita health care spending at $356 in 1970 and $7,026 in 2006 (table 124). Adjusting the earlier figure for inflation it comes to $1,851, meaning that per capita health spending has gone up by a factor of 3.6. Public school spending per pupil has gone up by about 2.3 times from 1969-70 to 2005-06. But while educational outcomes at the end of high school are stagnant and the graduation rate has declined, we’ve enjoyed incredible medical advances. After spending an hour or two with Google and the CDC stats book, here’s what I find:

  • Neonatal mortality was cut by 2/3 between 1970 and 2005, from 20 to 6.87 per 1,000 births
  • Fetal mortality rate (miscarriage) was cut by more than half: from 14 in 1970 down to 6.2 in 2003 (per 1,000 live births plus fetal deaths)
  • Life expectancy at birth was raised by 7 years
  • Limitation of activity caused by chronic conditions: 13.3 % in 1997, 11.6% in 2006
  • There’s now a nearly 90% cure rate for a childhood leukemia
  • Depression is far more treatable
  • Fertility treatments are greatly advanced
  • Prosthetics are dramatically better
  • Lasik eye surgery was invented
  • Gastric bypass surgery is now available for the morbidly obese
  • Joint replacements are far more common and effective
  • Reconstructive surgery is greatly advanced
  • We now have vaccines for rubella, pneumonia, hepatitis A and B, chicken pox, lyme disease, and meningitis
  • Smallpox was eradicated
  • Numerous technological advances have made diagnostic and surgical procedures less painful and easier to recover from, including: arthroscopy, laparoscopy, MRIs, CTs, SPECT and PET scans

It’s also important to consider that Americans have chosen to lead lives that seem more likely to engender health problems over the past four decades. Though we’ve cut down on smoking, which should make us healthier, Americans today are both less physically active and more gluttonous. Not surprisingly, obesity has more than doubled, rising from 14.6 to 34.1 percent of the population. You’d think that heart disease would have gone off the charts as a result, but it’s actually been more than cut in half, from 493 to 211 deaths per 100,000, thanks, presumably, to medical advances that have more than compensated for our couchpotatofication. [And lest anyone assume that students have become harder to teach over the past 40 years, the evidence seems to point in the opposite direction.]

So far at least, the evidence doesn’t seem to support the notion that the health care sector has suffered a productivity collapse quite like education. It still looks as though schooling, and only schooling, has gotten both worse and substantially more expensive since 1970.