Mr. President, public universities are no example of effective subsides

By Matthew Ladner, Ph.D.
Goldwater Institute
President Obama made the following statement during his recent health care address:

It would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities.

I almost fell out of my chair. Universities and health care share a common problem–massive subsidies. Both are suffering from runaway costs that have increased far beyond the rate of inflation. If public universities are keeping private universities in check, someone forgot to tell the private universities. Their costs have been rising even faster than health care for decades.

Congress has been chasing its tail on “college affordability”–providing increasing subsidies, watching costs go up, and repeating the process. The same is true of health care. Through Medicare, Medicaid, and the tax treatment of employee benefits, Congress has thrown more and more tax dollars at health care only to watch cost inflation spiral out of control.

As far as a “public option” to help keep health care costs down, the President might have a good deal more credibility if Medicare and Medicaid costs hadn’t spiraled out of control. Call me crazy, but I’d like to see the slightest bit of evidence that costs in these already unaffordable programs can be controlled before starting a new one. 

Dr. Matthew Ladner is vice president for research at the Goldwater Institute.


  1. I know college costs are really high but for me recently I had the choice between going to GW for law school or ASU for a resident like me it was 14000 and non-residents 26k. GW is 41k. One year at the private was all 3 years at the public option for me…

    So maybe that is just a bad example but with my experience the public was way cheaper, and made me make a tough choice between a top 55 school and top 25 school. So there was was competition so to speak.

    Also I know a lot of people do not go to grad so I went and looked at undergrad, if I had the same choice for under, of 6K in state or out of state 17k and GW private is for undergrad is 41,600.

    I am not saying the public is better, and this is probably just an example but from my experience private did provide descent competition…

  2. Ladner missed the point. The US has the best higher education system in the world. The US has both private and publicly funded universities. To claim that having publicly funded institutions with lower costs would put private institutions out of business is not true, nor does it follow that overall quality will decline.

    I also believe one needs to not focus on tuition costs but what students actually pay. In many colleges and universities there are substantial number of students who pay very little.

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