Sunday, September 25, 2011

Where the money flows.

Bear with me as I try to work out my thoughts on this.

I can't tell if I'm being conservatively liberal or liberally conservative.

In a way, that's the point I'm going to try to make here -- that conservative and liberal values seem to get mixed up, when you try to combine government policies and programs with profit seeking private business.

There are many examples of this, from Fanny Mae and the United States Postal service, all the way down to local charities who combine paid employees and volunteers. There are even local for profit businesses who ask their employees to volunteer.

These efforts to combine social policies with private enterprise are attempts, I believe, to instill business practices to government programs with the idea that it makes them more ''efficient" somehow.

I think the opposite happens. You get the worst of both worlds.

I saw a recent discussion on C-Span, by the authors of the book, RECKLESS ENDANGERMENT,
Joshua Rosner and Gretchen Morgenson.

The following quotations from Joshua Rosner are from free-hand notes while watching, so they probably are 90% accurate in wording, but maybe slightly paraphrased. Nonetheless, I'm going to use quotation marks:

When you try "...commingling of social policy with financial markets, you create a toxic brew.
When you start handing the opportunity and subsidies to be delivered for social goals to private market players, there's going to be money that doesn't meet its target."

If private, for profit enterprises are efficient (which could be argued to some extent) they are efficient BECAUSE they are for profit.

So the conservative part of my argument is that for-profit businesses should be allowed in the free market to compete -- and hopefully not against government subsidized entities.

I also don't think private business should pretend to quasi-charities. (Or vice versa.) I don't want to get into specifics here, but I've had a number of competitors over the years who cloaked themselves in the "public interest." They'd say things like, "We're doing it for the kids. We're not trying to make money. We're doing it as a public service."

I'm immediately wary of such comments. First of all, for the Holier than Thou marketing technique. And secondly, because I truly believe a well run business is more in the public interest than a sloppily run, asking for help and volunteers, organization that is neither fish nor fowl.

The liberal part of my argument is: I believe there are many aspects of our culture that do indeed need to be addressed by programs. Poverty, hunger, health, youth, education, and on and on.

But I believe a government program which is created to help deal with these problems should be just that: a government agency. As Mr. Rosner says, such problems are better dealt with:

"...directly through government programs, which have greater control, less seepage of profit making behavior."

I think, for instance, that we should have a government run program like Medicare for the entire country -- that it was a mistake to use private insurers. I think, for instance, that the government should have taken over the big banks, Sweden style, cleared up their books, and then made made them private again.

These are hardly conservative values.

But ironically, I think, my stance on separating private from public is entirely conservative. In the old fashioned sense.

Of course, I understand -- public policy must be created to guide and regulate private enterprise.

But there is a difference, I believe, between setting up the rules and provisions for private enterprise to be created -- and having the government trying to become business enterprises themselves. A difference between trying to create an atmosphere where a project like Juniper Ridge might be created -- and the government trying to be the developers of the project themselves.

The local government seems to be really lousy at picking businesses to loan money to. Therefore, I think they need to stop loaning the money. If a business is viable, they can do it through private means. They should take those tax dollars and give them directly through no-bones-about-it charity.

See what I mean?

I can't tell if I'm being conservative or liberal.

I'm for government programs, where needed. I'm against government programs cloaking themselves as money makers. Or charities cloaking themselves as businesses. Or businesses cloaking themselves as charities. (Especially the latter.) I won't use any specific examples, because it would look like I'm against what is considered a public good.

I think this is probably a general rule. Which applies to private military getting mixed with government military, the United State Postal Service, Fannie Mae -- all the way down to the local city council and county commissions. Let private be private, and public be public.

At least that way, we can see where the money flows.


RDC said...

I spent 20 years in the pharmaceutical industry. Half of the time doing work for the government, half on the industry side. In my last position I was responsible for strategic pricing and contracting for a pharmaceutical company.

Government medical programs are very very inefficient. Lets take Medicaid, for example, which is run by the states, but pretty much driven by the Federal government with the money they give to the states. In New York the average cost to the state for a family of four on Medicaid is over twice the cost of what an insurance policy for that family of four would cost including the assumption that the max annual out of pocket cost was covered. Basically New York could cut their cost in half by moving Medicaid participants to a commercial insurance policy. However, they cannot because the Federal law for Medicaid does not allow it. Some state do better, but very few pay less than a commercial policy would cost. Those that do better limit what they will pay for and have very limited formularies.

Medicare would do better if there was a consistent policy across the country instead of having regions. Each region is making its own decision upon what is covered and what is not.

The advantage programs do a better job of managing costs than does the basic Medicare. A good example of the issues with costs is demostrated by looking at areasa where medical services are primarily goverment in nature. McAllen texas is a good example. Over 60% of medical services is direct covered by the government yet cost per patient is much much higer than national average. The problem is that the doctors in that area know how to milk the government system. The set up separate businesses for outpatient services and have a very very high use of those services (diagostic, surgery, x-ray, etc.). The amount of tests and other diagnostics procedures there run about twice the national average per patient.

With Medicare today alomst half of the program costs are final year of life costs with the most of that coming in the last few weeks. Intensive care costs in the final days is through the ceiling and you would be surprised some of the tests and procedures that get crammed into that bill by the medical community.

H. Bruce Miller said...

"McAllen texas is a good example. Over 60% of medical services is direct covered by the government yet cost per patient is much much higer than national average. The problem is that the doctors in that area know how to milk the government system."

True, but is that the fault of Medicare or of the doctors? And also the fault of the fee-for-service system, which pays for procedures instead of for results, thus incentivizing doctors to run patients through their offices as fast as possible and order unnecessary and frighteningly expensive tests?

Mixing public-sector money and private-sector greed almost always has bad results, as Duncan notes.

RDC said...

The fault is both. The system doesn't check and the medical professionals milk the system.

The problem with both Medicaid and Medicare is that they set rules and then as long as the paperwork that comes in seems to agree with the rules the money flows out. They do not assess the rules within the context of the medical care. The people running the program don't realy care about cost, only that they follow the rules. The people at the top level might care, but those processing the paperwork don't.

As a result you get massive amounts spent on tests and procedures through the doctors owned facilities knowing that the charges will not be questioned.

You also get things like the scooter ads being run by companies whose profit model is knowing how to get applications covered by medicare and getting as many people to file for scooters as possible no matter how marginal the medical need is, if there is even really a medical need. In some cases there is a true medical needs but in reality probably less than half that are being funded are truly needed. In many cases they are actually the opposite of what is needed since they reduce exercise and the use that may improve a condition.