WATTS: See the lights? It's a train wreck coming
Some say demography is destiny. The baby boom generation has created enormous challenges and opportunities. The sustained economic boom following WWII, the fantastic growth in housing, the seemingly ever increasing demand for automobiles, consumerism, and the growth in every aspect of our economy has its roots in the baby boom. From 1960 on, higher education — especially public higher education — has been growing. The baby boom, which began in 1946 and is estimated to be 76 million people, has required an enormous investment in education at all levels. Failure to respond would have robbed the nation of a great human resource. This generation created the demand for education, and governments have responded with more schools, more and bigger universities and community colleges.
But things change. Children grow up. Students graduate, establish careers and grow older. Irrespective of the delay in retirement caused by the Great Recession of 2008 for the leading edge of the baby boom, boomers will still grow older. They will leave the workforce, will become ill and will need intensive and chronic care, like many of their parents now require.
The two government programs designed to care for the elderly are, of course, Medicare and Medicaid. Medicare, the great 1960s program, serves all people over 65 and is paid for with federal tax revenue and participant co-payments. Experts tell us that Medicare is financially challenged and will run out of money in 2024. Medicaid is the federal program, shared with the states, designed to help women, children and the elderly, who are poor and unable to afford medical care. These programs, as essential as they are, cost hundreds of billions of dollars each year. Their costs increase in a recession, as more people fall below the poverty line.
Medicaid now consumes 23 percent of the Texas state budget. By 2040, Medicaid will consume 40 to 50 percent of Texas’ projected revenues, and this does not consider the effect of the Patient Protection and Affordable Care Act (ObamaCare). A train is coming.
The numbers are compelling. Texas’ population of Medicaid enrollees will more than double by 2040. The elderly seeking Medicaid support will increase by 177 percent, in a pre-health reform scenario. If healthcare reforms happen as planned, the proportion of elderly receiving Medicaid benefits is projected to increase an additional 50 percent. The increases are staggering, and they will affect Texas’ ability to fund all other services, including education, higher education and everything else but Medicaid. Elderly females are and will be disproportionately enrolled in Medicaid as they live longer and outlive their personal resources. It is unlikely that a change in public policy or opinion will occur that will leave grandma in the nursing home parking lot today or tomorrow. Just as baby boomers have consumed enormous public funds when younger, tomorrow’s older baby boomers are going to continue to capture more state and national resources.
At the very moment that funding is being pulled away from education at all levels, the need is enormous and will become greater. From 2000 to 2010, Texas’ population grew by almost 19 percent to more than 25 million. It is projected that Texas’ college age population will increase by almost 50 percent in the next 20 years. Compounding the problem, Texas is now a majority/minority state. Hispanics are the fastest-growing segment of the population, and Hispanics have not participated in higher education at the same rate as Anglos or African Americans. Texas lags behind other major states in the proportion of the population 25 years of age and older that have college degrees. As a result, the earning power of Hispanics is less than other groups. Somehow this trend must be reversed.
The necessity of higher education for Texans demands a solution to avoid a train wreck. It is a simple fact that people with a university education on the average make more money over their lifetimes. They are less likely by half to be laid off — even in today’s recession. College graduates of the next generation will be the ones who will pay the state and federal taxes to support Medicare and Medicaid. If they cannot afford a college education, we are all in trouble. However, state resources are going to be dedicated to caring for baby boomers and taken from education, if past and current trends continue. Texas needs something like the post-WWII G.I. Bill to stimulate education into the future.
Texas’ support for public higher education has been declining rapidly for decades. In 1981, the state paid 52 cents of every dollar the University of Texas at Austin spent. In 2011, state appropriation covers 14 cents of each UT Austin dollar. In 2003, Texas chose to deregulate tuition, to allow universities the flexibility to increase tuition at the same time the state cut appropriations for higher education. Reductions in state support for public higher education have been consistent and continuous as states have grappled with changing priorities and increased commitment to lowering taxes. Public universities, in turn, have increased tuition costs.
Students may be at the breaking point. In December 2011, it is projected that student loan debt will exceed $1 trillion. Already, American student loan debt exceeds credit card debt. One source estimates that a third of 2008 baccalaureate degree earners will be paying on their student debt in 2028. Universities cannot just keep charging students more. There is a train wreck coming.
While analyzing an altogether different demographic problem, Thomas Malthus, a great early 19th century English demographer, believed that population growth would outstrip the resources available to support it. He believed that war, pestilence and famine would limit population. While partially correct, Malthus failed to see or imagine the development of technology that would make food supplies more abundant and scientific research that would conquer many plagues. Can technology help education, higher education, and health services?
For higher education the answer would seem to be yes. In 2009, the largest university in the United States was the University of Phoenix, a for-profit corporation with more than 500,000 students, and the bulk of its instruction is offered online. The largest public university was Arizona State with more than 75,000 students. Both institutions rely heavily on internet based instruction to serve their students. While both charge more than many traditional public universities do, the technology has many advantages over face-to-face instruction.
In 2009, a review by the U.S. Department of Education of more than 40 studies examining the effectiveness of online vs. face-to-face instruction found that students in online courses performed better than students in face-to-face classrooms. And students in blended learning classes performed better than classroom or online learning alone. Other research points to online teaching as effective.
Last year, UT Permian Basin’s online enrollment rose by 40 percent, while the university’s fall enrollment increase was 16 percent. As of fall 2010, a full 20 percent of our enrollments were online. UTPB offers a host of courses and eight degrees at the bachelors and masters levels. More are on the way. Online development is not free, but over the long term has the promise of greater flexibility, expanded offerings and, perhaps, cost savings.
If technology can be used to lower higher education costs, why not health care costs? The reality of recent years is that health care costs have risen, faster than the cost of living, at the very time that more and more innovations in health care have become available. Any savings in health care unit costs are likely to be overwhelmed by the more than doubling of elderly requiring Medicare and Medicaid. However, cost efficiencies in health care are desirable and badly needed. Already use of the internet is lowering the cost of some healthcare. Laparoscopic surgeries are less expensive than traditional surgery. Technology may reduce the per-unit cost, but the number of baby boomers needing acute and chronic care is going to be huge. For example, in 2050, 34 million Americans will be over 80, while only 12 million are over 80 today. Any increase in Medicare or Medicaid expenditures will gobble up funds from other priorities, such as education and public higher education.
What is clear is that technology, including online education, is where opportunity exists. Technology has the potential to help avoid a train wreck between the needs of the huge, aging baby boom generation and Texas’ need for quality, low-cost higher education to serve its rapidly growing young population.
