Monday, May 11, 2009

Information is Important

by Andrew Gillen
To be smart medical consumers, we need to be able to easily learn and compare prices for medical services
That is an astoundingly simple but important sentence from a eye opening piece in the WSJ about the cost of giving birth. For the three days the reporter was in the hospital, the bill was $36,625. Note that there weren't any complications. Luckily the reporter had insurance, with which the hospital negotiated a price of 17k. She paid a little over 2k out-of-pocket.

As an aside, the fact that the baby was born with it's own deductible and maximum out-of-pocket amount is too good of an excuse to show this cartoon.

But back to the main point, which is that access to accurate information is critical for consumers to make wise decisions in higher ed too. Health and education seem to have the lo-info areas switched (with outcomes being more murky with education, and price more so with health - though there is plenty of murkiness to go around). So I was pleased to see Chad Aldeman wade in on the issue. His stance is that the Federal government
should not dictate the actual decisions on the ground, but it should be able to provide information... you can pick whichever program you want, but here's some good information to inform your decision about which ones work and whether they merit their cost.
It would sort of be like an education version of the FDA but without the teeth (required approval). Since the main problem with the FDA is that it can (and it is in its interests to) prevent new drugs for too long, this strikes me as about right.

My main concern is that the function of such a federal agency would shift from identifying good ideas to enforcing their use. See the history part of the FDA on wikipedia for one instance of such mission creep. The various governments already provide huge chunks of money at all levels of education, and will continue to do so. As such, is it realistic to think that they would be happy with a largely hands off approach if a school was doing something it thought unwise? I also think that any enforcement role would quickly kill efforts at innovation (ie, how can you justify experimenting on our children with unproven techniques when we've already shown that X, Y, and Z work?).

The current problem is that innovative and effective practices can stay isolated either through lack of information about their value, or because stakeholders lack the incentives to allow changes. If mission creep caused enforcement to become a function of this hypothetical agency, I think we'd get current best practices, but at the expense of future best practices.

UPDATE: With uncanny timing to illustrate the drawbacks of an overreaching agency, the FDA says Cheerios (the cereal) may be a drug. HT: MR

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