Healthcare Costs Hurting Higher Education?

 A report by SHOUTAmerica demonstrates that as the cost to fund both higher education and Medicaid climbs, states prioritize public allocations for Medicaid while looking to students and parents to cover more of the cost of education   

Nashville, TN— Two recent hot items in state capitols across the country, increasing Medicaid spending and rising tuition in public higher education institutions, have a long and interesting connection.

During the healthcare reform effort, many state officials, including Tennessee Governor Phil Bredesen, expressed their concern over how Medicaid expansions would impact state budgets in the coming years and lead to cuts in other areas.  Historically, when state budgets are pressed, higher education gets hit the hardest and public colleges and universities use tuition and fees to make up for lost state revenue.

Recent tuition hikes and proposed expansions to Medicaid have brought this issue to the forefront, but a new report by SHOUTAmerica, a group that explores public policy from the perspective of the millennial generation, finds that this is just a snapshot of a long and worsening trend that has implications for the future of public higher education.

The report finds that in the scramble for increasingly scarce state resources, Medicaid has been winning out over higher education for a number of reasons both structural and political. Higher education and healthcare are both increasingly expensive enterprises for states to fund.  But looking at recent decades, Medicaid’s growth as a percentage of state expenditure corresponds with a steady decline in state support for higher education.  The decline in state funding for higher education is in turn hitting the pockets of students and their families in the form of higher tuition and fees, which between 2002 and 2009 increased by nearly 50 percent at public 4-year institutions.

Landon Gibbs, Executive Director of SHOUTAmerica, remarked, “At the same time that Medicaid is putting greater pressure on state budgets, state support for higher education is increasingly crucial for ensuring higher education is affordable for millions of young Americans.”

The report points out that Medicaid spending will only increase in coming years as the program, the largest funder of nursing homes in the country, is impacted by the needs of an aging population.  Such trends could ultimately jeopardize the affordability of public higher education and contribute to saddling millions of graduates with substantial student loan debts.

Gibbs indicated that the report is meant to start a discussion, “We simply wanted to bring attention to this issue and say that it requires a national conversation given its implications for young Americans.  He added, “This situation again highlights the difficulties that go along with balancing our concerns for the immediate economic situation with the need to lay the groundwork for a stronger future.”

Healthcare Costs Hurting Higher Education