Public Beats Private: Six Reasons Why
by Paul Buchheit
Private systems are focused on making profits for a few well-positioned people.
Public systems, when sufficiently supported by taxes, work for everyone in a generally equitable manner. The following are six specific reasons why privatization simply doesn't work.
1. The Profit Motive Moves Most of the Money to the Top
The federal Medicare Administrator made $170,000 in 2010. The president of MD Anderson Cancer Center in Texas made over ten times as much in 2012. Stephen J. Hemsley, the CEO of United Health Group, made almost 300 times as much in one year, $48 million, most of it from company stock.
In part because of such inequities in compensation, our private health care system is the most expensive system in the developed world. The price of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany. Two of the documented examples: an $8,000 special stress test for which Medicare would have paid $554; and a $60,000 gall bladder operation, for which a private insurance company was willing to pay $2,000.
Medicare, on the other hand, which is largely without the profit motive and the competing sources of billing, is efficiently run, for all eligible Americans. According to the Council for Affordable Health Insurance and other sources, medical administrative costs are much higher for private insurance than for Medicare.
But the privatizers keep encroaching on the public sector. Our government reimburses the CEOs of private contractors at a rate approximately double what we pay the President. Overall, we pay the corporate bosses over $7 billion a year.
Many Americans don't realize that the privatization of Social Security and Medicare would transfer much of our money to yet another group of CEOs.
2. Privatization Serves People with Money, the Public Sector Serves Everyone
A good example is the U.S. Postal Service (USPS), which is legally required to serve every home in the country. Fedex and United Parcel Service (UPS) can't serve unprofitable locations. Yet the USPS is much cheaper for small packages. An online comparison revealed the following for the two-day shipment of a similarly-sized envelope to another state:
-- USPS 2-Day $5.68 (46 cents without the 2-day restriction)
-- FedEx 2-Day $19.28
-- UPS, 2 Day $24.09
USPS is so inexpensive, in fact, that Fedex actually uses the U.S. Post Office for about 30 percent of its ground shipments.
Another example is education. A recent ProPublica report found that in the past twenty years four-year state colleges have been serving a diminishing portion of the country's lowest-income students.
At the K-12 level, cost-saving business strategies apply to the privatization of our children's education. Charter schools are less likely to accept students with disabilities. Charter teachers have fewer years of experience and a higher turnover rate. Non-teacher positions have insufficient retirement plans and health insurance, and much lower pay.
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