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Friday, October 15, 2010

Obama Care's unseen costs

Higher education is an impressive house of cards - but it will collapse as bachelor degrees continue to drop in value relative to cost and it may collapse even sooner thanks to ObamaCare.

Reason Magazine has a good article on the unseen costs of ObamaCare (including the very visible tax hikes that come along with the program. Cato Institute also has a new study on these tax increases. One thing is missing, however, and that is the squeeze Obama Care will put on state budgets. Medicaid has already grown to be the biggest budgetary item in state budgets (it is second biggest in Nevada behind K-12 education) and as it grows under ObamaCare I expect it to squeeze spending for education – most notably higher education.

And since universities can pass off part of state budget cuts onto consumers in the form of tuition increases, I also expect college tuition to increase even more rapidly. Since higher education tuition has already blown through the roof (already dwarfing the housing bubble) I also expect the Higher Ed bubble to pop sometime in the next ten years to twenty years (few people will be willing to pay that much for a piece of paper that offers little, if any, future monetary award). Watch out, it will be painful for everyone involved in higher ed as universities slash budgets by axing the jobs of all the highly-paid non-educators.

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