Voters consistently rank education and health care among their top concerns in the current presidential race. The education research outlined below offers advice on improving public schools, reforming public schools, reducing class sizes, developing alternative national tests, and closing the ethnic gap in higher education. The health care research described here diagnoses the chances for expanded health insurance coverage, for targeted coverage to vulnerable populations, for prescription drug coverage under Medicare, for improved treatment for depression, and for improved quality of care for all. Recommendations also appear for other domestic policy issues, including abortion, early childhood investments, income inequality, drugs, crime, and air safety.
To completely reform public schools, offer a comprehensive alternative to the existing governance system. To date, all efforts to reform public education have been piecemeal. Voucher plans give some parents the financial resources to demand better schools but do not explain how public or private agencies should provide better schools. Charter schools reduce regulations on a few schools but leave the vast majority unaffected. Site-based management changes local decisionmaking but does nothing to relieve pressures from the central office, federal and state regulations, or union contracts. And "systemic" reforms--which align mandated tests with mandated curricula and mandated teacher certification methods--do not eliminate the political and contractual constraints that can make schools unresponsive to change. All these proposals leave intact the core of the existing system: a rigidly top-down, rule-driven bureaucracy that is committed to governing schools by politically negotiated rules. But there is a real alternative: contracting. This alternative builds on the charter school movement but would extend the autonomy of charter schools to all schools. Under contracting, school boards would no longer directly manage schools. Instead, they would contract with independent organizations to run them. Contractors might range from the staff and parents of currently successful schools to community groups or universities. If they failed to deliver, they could be replaced. The role of school boards would be transformed. Their job would be merely to evaluate proposals, manage contracts, and ensure that contractors deliver on their promises. This arrangement would reduce spending on school bureaucracies and direct the money to the schools themselves. Large school systems could not convert to this new governance structure overnight. Big-city school boards could subject this proposal to a hard first test by contracting out for operation of their poorest-performing schools.
To reduce class sizes, make sure there are enough classrooms and teachers to go around. California's massive effort to reduce the size of primary-grade classes offers lessons for the nation as a whole. The good news is that California third graders in smaller classes have slightly higher test scores than students in larger classes, and the gains appear equally across all ethnic, racial, economic, and linguistic categories. The bad news is that the rapid implementation of the program, begun in 1996, has exacerbated the inequalities among schools. Space shortages at already overcrowded schools have made it toughest for them to add new classrooms, and teacher shortages have allowed the fully credentialed teachers to gravitate toward the "most desirable" schools (see figure). If anything, it is striking that the gains in test scores have been equally distributed across the state despite the unequal implementation. To make the program work more equitably, in California and elsewhere, future plans should include the construction of more classrooms where needed, the recruitment and professional development of high-quality teachers, and incentives for good teachers to work at the schools where their expertise is needed most.
Explore the feasibility of replacing paper-and-pencil tests with computerized adaptive tests administered over the Internet. Advances in information technology make it possible to overcome many limitations of traditional tests. For example, most existing paper-and-pencil tests measure a narrow range of skills; students may become frustrated when questions are too easy or too difficult for them; and there is typically a long delay in receiving the test results. These tests are becoming increasingly important, however, in the lives of school personnel and students. Several states use them to gauge the performance of teachers, principals, and schools, creating pressures to inflate scores, "teach to the test," or even breach test security. Results also have high stakes for students in many states and districts, with graduation, promotion, and tracking decisions based on scores. Because most existing tests are not well aligned with state standards or curriculum goals and are subject to artificial score inflation, these tests may be inappropriate measures of what students have accomplished. The increasing presence of technology in schools offers an opportunity to explore alternatives to traditional testing. Computer-based testing permits a broader range of questions to be administered, can adapt the difficulty of the questions to a student's proficiency level, and may improve test security because questions may be drawn from a "bank" of thousands of questions. In addition, results can be reported almost instantaneously, making them potentially more useful to teachers, parents, and students. Administering the tests over the Internet would eliminate the need for expensive hardware and software at each school. Of course, this form of testing does not solve all of the problems associated with traditional tests, and it introduces some new ones, such as ensuring that all students and teachers are comfortable with the technology. Such issues need to be explored before such a system can be adopted on a large scale.
Take aggressive steps to close the educational gap between ethnic groups. If current trends continue, the gap in educational attainment between whites and Asians compared with blacks and Latinos will widen in the next 15 years, but a national effort to narrow the gap could more than pay for itself. In California alone, taxpayers would need to contribute, in 1997 dollars, an additional $9 billion annually--or 21 percent of the state's education budget--to ensure that blacks and Latinos complete high school and college at the same rate as whites. In the rest of the nation, costs would need to increase $14 billion annually, or 8 percent. But for each dollar spent, the long-term savings from reduced public health and welfare expenditures and increased tax revenues from higher incomes would be $1.90 in California and $2.60 in the rest of the nation. (The reason for the difference is that California has relatively more Latinos, who use public services less than average, while the rest of the nation has relatively more blacks, who use public services more than average.) It would cost roughly half as much to add the educational capacity needed if only the high school graduation rates of blacks and Latinos were to be equalized with those of whites. These estimates assume that there will be a marked increase among blacks and Latinos in their preparation and demand for high school completion and college entrance.
Targeted federal assistance may be necessary to induce many states to expand insurance coverage for the uninsured. In the current political environment, much of the responsibility for improving health care access and affordability is vested in governors and state legislatures, not the federal government. But independent actions taken by states are unlikely to significantly reduce the number of uninsured people in this country, because states with the greatest need to expand coverage have the least tax capacity to do so (see map and figure). Federal-state partnerships may be necessary to substantially expand coverage. A good example is the Children's Health Insurance Program (CHIP), which gives federal matching funds to states to help expand coverage. Established in 1997, CHIP is likely to boost the number of low-income children who have insurance nationwide and to double their frequency of doctor visits on average. But the effects will vary greatly from state to state, with the biggest improvements in states that have traditionally provided the fewest health safety-net resources.
In efforts to expand health insurance coverage for specific populations: (1) do not count on medical savings accounts; (2) bolster coverage for mental health services, including treatment for substance abuse; and (3) account for early retirements. Since the failure of national health care reform, efforts to expand health insurance coverage have focused on vulnerable populations: children, employees of small businesses, the mentally ill, and the near-elderly. The discussion above notes that CHIP should boost the number of low-income children insured and their frequency of doctor visits. Research on expanding coverage to the other populations indicates the following:
Cover prescription drugs under Medicare for at least some of the elderly. For years, politicians have considered expanding Medicare benefits to cover prescription drug costs. It would be a fair deal, for three reasons: (1) The financial burden for the elderly can be catastrophic; (2) coverage would increase demand for drugs only by increasing the number of users, not by increasing the amount of drugs taken per user; and (3) although coverage would cost about $15 billion a year in 1990 dollars, or 17 percent of Medicare outlays, Medicare could negotiate discounts on drug prices to reduce the cost. The elderly who use prescription drugs spend an average of 3.1 percent of household income on them, but the elderly without private insurance bear three times the burden (see figure). Similarly, the elderly in poor, near-poor, and low-income house-holds bear nearly ten times the burden of those in high-income households. The burden is also at least twice as great for those with a chronic medical condition, such as diabetes. Although 55 percent of the elderly who use prescription drugs spend 1 percent or less of their income on them, 1 percent of the elderly spend over one quarter of their income on them. Given the uneven burden, one option would be to target Medicare coverage for prescription drugs to those who need it most: those with low incomes and those in poor health.
Spearhead a national strategy to improve the quality of health care for all. The U.S. health care system is inefficient. It wastes money by providing care that is not needed, and it causes potential harm by failing to provide care that is needed. Most Americans receive high-quality care, but 20 to 30 percent of the care given is unnecessary, while about a third of the needed care is not given. Regarding overuse, many medical procedures are performed for inappropriate reasons, meaning the expected health risks outweigh the expected health benefits. The rates of inappropriate use range from 2 percent for cataract removal to 32 percent for carotid endarterectomy, a procedure that reduces the likelihood that a patient will have a stroke (see figure). Regarding underuse, many people receive either too little care or the wrong care because of misdiagnosis and mistreatment. There is little evidence that economic incentives alone will improve patterns of care. Cost-cutting strategies by U.S. managed care organizations and by national health care systems abroad have decreased necessary as well as unnecessary care. Fortunately, new methods for measuring the necessity and quality of care are available. RAND has developed more than 1,500 quality indicators for nearly 70 clinical areas that represent care for the leading causes of death, disability, and illness. This new quality system applies to children, adults, and the vulnerable elderly. Tools have been developed to evaluate care from claims data, medical records, and patient surveys. This system should be adopted for national, regional, and local monitoring of quality and could guide the development of improved information systems that will expand the capacity to monitor and improve quality. Routine and widespread implementation of more clinically sophisticated systems should be among the highest priorities of the public and private sectors.
Invest in proven early childhood programs that can benefit disadvantaged children. Government funds invested early in the lives of disadvantaged children can provide significant benefits and could result in future savings to the government and taxpayers. Some proven programs can help overcome the limitations that may characterize the environments of disadvantaged children during their first years of life. These programs can improve child health and educational achievement, offer parent training, and connect families to social services. As a result, the children may spend less time in special-education classes, the parents (and, later, their children) may spend less time on welfare or in the criminal justice system, and all participants may ultimately earn more income and pay more taxes. However, investing in proven programs implies the ability to prove their value through sustained research and development (R&D). Some activists are advocating a national investment in such programs in the hundreds of millions or billions of dollars. But research is needed into why some programs work, especially if the intent is to expand them on a larger scale. A modest R&D expenditure now could ensure that maximum benefits would come from a much larger program expenditure over the long run. In the areas of health, energy, and transportation, the nation spends 2 to 3 percent of all expenditures on R&D to improve the efficiency and effectiveness of the rest of the spending. Yet the nation devotes less than half of 1 percent of its spending on children and youth on R&D. We are almost certainly underinvesting in R&D related to children.
Invest in proven programs that can divert children from crime. Despite headlines about falling crime rates, the rate of violent crime in the United States is several times higher than that in most industrialized democracies. In this country, most of the money for fighting crime goes toward incarceration; much less attention goes to diverting youth from crime to begin with. However, interventions for high-risk youth can be several times more cost-effective in reducing serious crime than even California's tough "three-strikes" law that mandates lengthy sentences for repeat offenders. Three interventions look promising: (1) four years of cash and scholarship incentives to help poor youths graduate from high school and enter college, (2) parent training and family therapy for families with elementary-school-age children who show aggressive behavior or begin to "act out" in school, and (3) monitoring and supervising high-school youth who have already exhibited delinquent behavior. The three-strikes law averts about 60 serious crimes per million dollars spent. For the same amount of money, graduation incentives could avert more than 250 serious crimes; parent training, more than 150 serious crimes; and delinquent supervision, more than 70 serious crimes (see figure). These interventions could also take some of the burden off prisons and make the three-strikes law more affordable. None of this suggests that incarceration is the wrong approach. But it should not be the only approach. The three-strikes law might reduce serious crime by about 20 percent. For a fraction of the cost, adding graduation incentives, parent training, and delinquent supervision could reduce serious crime an additional 20 to 25 percent. Broader demonstrations of these programs would be an investment worth the cost.
Repeal federal mandatory minimum sentences as a matter of efficiency, if not justice. For many reasons, crime rates are currently low, while prison populations and incarceration costs are way up. But current sentencing policies are not necessarily cost-effective. For example, federal mandatory minimum sentences now impose very long sentences. One federal law requires that a person convicted of possessing a half kilogram or more of cocaine powder be sentenced to at least five years in prison. Many states impose similarly lengthy sentences for drug crimes. Yet if reducing cocaine consumption is the goal, more could be achieved by spending the additional amount of money arresting, prosecuting, and sentencing a greater number of dealers to standard prison terms rather than sentencing fewer dealers to longer, mandatory terms. It would be more cost-effective to repeal mandatory minimum sentencing laws and expand the number of enforcement agents, prosecutors, and judges enough to hold constant the total spending on drug enforcement. Similarly, California's tough "three-strikes-and-you're-out" law for mandatory sentencing of repeat offenders is not the most cost-effective option available. An alternative approach--guaranteeing full terms for all serious offenders, even first-timers, with no imprisonment for many minor felons--would produce the same reduction in serious crime at lower cost.