Why healthcare and education costs keep rising

HostI was looking at an old ad from the seventies the other day and it's wild how much the world has flipped. Back then, a big color television was a massive investment, like something a family would save up for over a year. But a year of college or a stay at the hospital was something a part time job or a basic insurance plan could handle without much stress. Today, the television is practically a checkout lane buy, but the school and the doctor feel like they cost the moon. Why is it that the things that are easy to make get cheaper, while the things we really need just keep climbing in price?

GuestIt's a strange puzzle if you only look at the price tag, but it actually comes down to a simple rule about how we work. Think about a factory that makes those televisions. Fifty years ago, it might have taken a hundred people to put together a few dozen sets a day. Today, with better tools and smart machines, those same hundred people can churn out thousands. Because they're making so many more things in the same amount of time, the cost of each TV goes way down. But now, think about a nurse or a teacher. A nurse can only look after a few patients at a time if they want to do a good job. A teacher still sits in a room with twenty or thirty kids. You can't really use a machine to make a teacher teach ten times faster without losing what makes it teaching.

HostI see where you're going, but does that really explain the price? If the teacher is still doing the same job at the same speed, shouldn't the cost just stay the same instead of going up?

GuestYou would think so, but the teacher lives in the same world as the factory worker. If the factory worker starts making more money because they're more productive with their new machines, the school has to raise the teacher’s pay too. If they don't, that teacher is going to quit and go work at the factory or find a job in an office that pays better. So, even though the teacher isn't producing more than they did in the fifties, their pay has to keep up with everyone else in the country. Since they're not making more of their product, which is the lesson, the only way to pay them more is to charge more for the school. This is what people in my field call the cost disease. It's not really a sickness, just a side effect of some parts of our lives getting much faster while others stay at human speed.

HostThat sounds like a bit of an excuse for bad management. I mean, we have computers and the internet now. Why can't a professor just record a lecture once and show it to a million people? That seems like a huge jump in how much they can produce. Why hasn't that made college dirt cheap?

GuestPeople have tried that, and for some basic things, it works. But for most of what we value in healthcare and school, the human part is the whole point. You can watch a video of a doctor telling you how to fix a broken arm, but you still need a person to actually set the bone. You can watch a video of a great thinker, but you need a person to read your essay and tell you where your logic is weak. When we pay for these things, we're mostly paying for someone’s time. And as a society, our time gets more expensive every year because we're getting better at everything else. The more we can make with machines, the more valuable a human hour becomes.

HostI still struggle with the healthcare side of this. We have amazing new tools and scans and drugs. Shouldn't those make things faster and easier for the doctors, which would then drive the cost down?

GuestIt actually works the other way. In a car factory, a new tool usually makes the job simpler or faster. In a hospital, a new tool like an MRI machine usually lets us do something we could never do before. It doesn't replace the doctor; it gives the doctor a new, complicated task to perform and a new set of data to read. So, we end up needing more experts and more time to use the new tech. We're getting a much better product than we were forty years ago, which is great, but it's a product that requires even more human hours, not fewer. We're chasing a higher bar, and that bar is built out of very expensive human labor.

HostBut we have to talk about the office workers. If you look at a hospital or a college today, there are way more people working in the back offices than there were decades ago. Is that also just part of this disease, or is that just bloat?

GuestIt's a bit of both. Part of it's that as we get richer, we demand more stuff. We want more counselors for students, more people to handle insurance paperwork, and more people to make sure we're following safety rules. All those people in the office are also humans whose time is getting more expensive every year. They're not like the factory workers who can use a robot to do ten times the work. A person in an office handling a student’s financial aid is still just one person talking to another person. So the cost of all that extra support and management adds up fast.

HostSo is the end game just that these things become so expensive they break the system? If school and doctors keep getting pricier while TVs get cheaper, eventually the math stops working.

GuestIt feels like that, but the strange reality is that we can actually afford it because the other stuff is so cheap. We spend less of our paycheck on food and clothes and gadgets than people did a century ago. That leaves more money to move over to the things that can't be automated. The real tension is that it makes our lives feel very lopsided. We have amazing tech in our pockets for almost no cost, but we feel constant stress about the basics of health and learning. The open question is whether we'll eventually find a way to let go of the human touch in those areas just to save the money.

HostThat old television set was a luxury that became a toy, but the human time we spend in a classroom or a clinic remains the one thing we can't find a shortcut for.