At the end of my last post, I asked a question that I said I would answer tomorrow. Tomorrow came and went as I became extremely busy with a work-related project. But here’s the answer to the question:

What major sector of the United States economy has seen costs rise more quickly than the health care sector – and by a wide margin?

Higher education, of course.

Why have higher education costs risen so quickly? Certain higher education officials would like to convince you that it’s because state appropriations have not kept pace with inflation. But that’s really only a small part of the explanation – and not even that if you factor in all the new federal and state funding coming through the back door in the form of merit- and need-based financial aid. The dirty little secret: The back door funding of rich and poor kids with financial aid has removed market forces from the fee-setting calculus. With almost no pressure to control prices, tuition costs – and thus the revenue institutions have to operate in real dollar terms – has increased exponentially. I’m oversimplifying a bit here, but this certainly is the case for West Virginia’s four-year higher education institutions over the last decade – and what the public higher education sector tries to hide using an inflation measure called the higher education price index. (It has a legitimate purpose, just not the purpose for which it is most frequently used.)

Were I less busy, I would connect the dots that support my contentions for you sooner, rather than later. But alas market forces require me to do real, paying work. When I return to posting on this blog (this coming weekend), I will share my thoughts about our newest higher education market force – the Governor, who’s saying “no” to tuition increases, as well as address the legislative auditor’s assessment of the appropriate number of four-year institutions, which I think may be wrong-headed. Plus I’ll flag three interesting news articles about subjects that I think may have a larger impact than people realize.

But alas it’s back to paying work.