In an interview with Terry Gross, Will Bunch describes the current system of funding higher education in the US as “high tuition, high aid.” That phrase could very well describe the way medical care is funded for many residents of the United States.
With high tuition, high aid, people paying full tuition subsidize the tuition for those who can't afford to pay the full amount. Funding for subsidies comes from other students. In places where public higher education is heavily subsidized, the majority or all of tuition is covered by taxes. Funding for subsidies comes from the general public, not just students.
In both models, there is a significant amount of income distribution. Those who are believed to be able to afford to pay must pay more in order to provide access for those who officials determine cannot afford to pay.
The difference, of course, is that under the high aid model, no one is guaranteed a subsidy. In the public model, all students are entitled to subsidized tuition. In the high aid model, students must submit to rounds of examination to prove their need, prove their value as an investment, and conform to rules to maintain their eligibility.
Many scholarships go unclaimed each year, because there are countless scholarships contained in books and databases, each with their own eligibility requirements, tasks to be performed in order to enter the pool of applicants, and various rules for how the money can be used. Many scholarships are for small sums, meaning that cobbling together tuition money, money to pay for supplies, and funding for living expenses can require a mix of dozens of scholarships and various loans.
Sound familiar? Anyone who has had to apply for “charity care” will know the type of hoops you're required to jump through in order to access debt forgiveness and repayment plan programs.
The other big difference is that in high tuition, high aid, the people responsible for the cost of supporting higher education programs are those who are currently enrolled in higher education programs. In a public model, the cost of higher education is spread out among all residents. In 2020, there were 15.9 million students enrolled in US undergraduate programs. That's a lot of people to split a bill with, although we have to remember that each college is its own funding pool.
In 2020, there were 331.4 million people living in the US. When I was looking at apartments to buy in Brooklyn, I knew I wanted to live in a large building. If you’re splitting common expenses with a handful of neighbors, it matters when one of them stops paying or when you’re each responsible for coming up with your share of money to replace the roof. I wanted to split those costs with dozens of apartments, since it seemed likely that someone would fall behind on maintenance fees or not pay their share of an assessment. Of course, in New York, co-op boards require extensive financial information and personal references before they allow anyone to buy or rent an apartment in the building. Universities and hospitals don’t select people based on their long-term financial security.
In the US, everyone wishing to access higher education or medical care is assumed to be able to not only bear the full cost of services provided to them, but also to subsidize the cost of the other people accessing similar services in that institution in that year. If they feel they can't bear that combined cost, they must then submit to a procedure that gives them the opportunity to convince the institution that they should only cover their own cost, should have their cost subsidized by others, or should not be responsible for any payment at all.
In leaving it to the government to determine how to redistribute wealth — along with the whole process of calculation, verification, and collection — the public funding option is automatically streamlined. Everyone who is admitted to an institution is automatically determined to be worthy of receiving higher education (or medical care) without the second step of determining how much it should cost them personally.
In theory, high tuition, high aid is no less generous than the public model. It's a more direct form of mutual aid, where college freshmen are providing financial support for other college freshmen at their school. Cancer patients are covering the treatment costs for other patients in the same hospital. Instead of leaving the IRS to determine how to collect and redistribute wealth, each college and medical center gets to determine its own policies and processes. It allows wealthy Americans to choose an institution whose wealth redistribution system most closely matches their personal values.