Accountable Strategies blog

A blog about accountability issues in the public, private, and nonprofit sectors

Chipping away at the government-can’t-do-anything-right myth

Posted by David Kassel on July 29, 2009

Sometime ago on this site, I wrote about a battle  going on in Massachusetts over privatizing the Fernald Developmental Center, the nation’s oldest state-operated facility for persons with mental retardation.

This is a battle that has been playing out in state after state.   The argument for closing these Intermediate Care Facilities (ICFs) is that the private sector can provide this care better and cheaper.

This same myth that government can’t do anything right or efficiently is behind the opposition to President Obama’s public option in his health care reform package.  None other than Karl Rove has sounded the alarm that allowing government to complete with private health insurers will drive them all out of business and turn us into European socialists.

But shouldn’t competition from government simply bring down the rates the private insurers pay and, in turn, force the providers to cut their costs and generally operate more efficiently?  As efficiently as, perhaps, the public sector operates?

When it comes to the delivery of human services to some of our most vulnerable citizens, it is also often overlooked that government can in fact do the job as well or better than the private sector.  ICFs, for instance, must meet higher federal staffing and treatment standards than does the community-based group home system, which is primarily operated by private human service vendors.  So, while it’s true that many states want to eliminate ICF-level care because it tends to be expensive, it’s just not logical to assert that the care provided to the mentally retarded under lower standards will be better.

And as is the case in the management of health care, the public sector is capable of managing programs just as, if not more, efficiently than private-sector providers.  As the Truthdig blog noted, Medicare has far lower administrative overhead rates than private insurers (2 to 3 percent versus rates as high as 40 percent in the private sector).

And look at the CEO salaries of nonprofit human service and health care providers.   These salaries far outstrip their counterparts in the public sector.

Also, while we’re on the subject of efficiency, consider the lease-purchase plan that the Patrick administration is pursuing to develop group homes for persons with mental retardation in Massachusetts.  It will cost $257,000 per bed over 20 years to lease these group homes from developers.   The developers themselves can obtain low-cost state mortgages for the homes and then charge the state to pay back the loans.

Unfortunately, the folks who argue that government can’t do anything right and that the private sector should be running everything have had the upper hand in recent years.  Government administrators themselves are often hired for the sole purpose of fobbing off the functions and responsibilities of their agencies to the private sector.

And it’s not only state governments that are shedding their public responsibilities.  Consider federal public advocacy organizations such as the Disability Law Centers.   Our federal tax dollars fund these organzations, many of which have taken it upon themselves to file “class action suits” to close primarily state-run ICFs, whether the guardians of the residents want those facilities closed or not.

The National Voice of the Retarded, Inc. lists 28 lawsuits filed by protection and advoacy organizations in 19 states to close institutions.  The irony is that many, if not most, of the families and guardians of those facilities are involuntarily represented in these suits.  They cannot opt out of them even if they want to. 

In the name of their civil rights, facility residents are being evicted from their long-time homes under these lawsuits.  U.S. Rep. Barney Frank has proposed legislation which would give individuals and guardians the right to opt out of the suits.

All of this isn’t to say that private companies should get out of the business of providing human services or that private insurance companies should not be providing health coverage in America.  I’m not arguing here for a government-run single-payer plan. 

What I am arguing for is including government in the choice that prople have in obtaining human serivces and health care.  As President Obama said in reference to health care, the public option will keep the insurance companies honest.  It will force them to keep their premiums down and, in turn, will put pressure on hospitals and other health care providers to keep their costs down.

Similarly, in the delivery of human services, a public option is needed to provide a full range of choice in care to those most in need.  And, contrary to the long-standing myth, that public option may well be the most cost-effective one.

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