Public Options Are Ill Conceived
By John Palatiello and Leonard Gilroy • Aug 25th, 2009 • Category: Economy, FeatureThe CONNECTION newspapers ran an editorial, “Public Options” in its August — edition. John Palatiello and Leonard Gilroy wrote the following rebuttal:
Imagine for a moment the Fairfax County government deciding to get into the weekly newspaper business. The Board of Supervisors determines that the advertising rates of The CONECTION are out of reach for many and jumps in to offer the opportunity for businesses and individuals to advertise at greatly reduced prices, making it available to almost everyone.
After all, the county already has plenty of staff members in public affairs positions who are prolific writers. Through the magisterial offices, police department, tax assessments and other agencies it has a built-in infrastructure for news gathering and reporting, already paid for in staff salaries, so the new county newspaper won’t cost the taxpayers any money. There are already printing presses used for a variety of county publications, so that will keep costs low. There is no charge for office space, electricity, water, heat and other utilities, because they are already being paid for by taxpayers.
Since it is the county government, it doesn’t have to pay taxes. And since the staff already has offices, there is no rent or other overhead costs. And, since it is government, it doesn’t have to build a profit into its cost structure.
So the new Fairfax CORRECTION weekly county newspaper begins publication, offering advertising space at a 90 percent reduction below the rates charged by The CONNECTION.
How would the editors, staff and investors of The CONNECTION like such unfair government competition?
But that is exactly what The CONNECTION’s editor, Mary Kim, endorsed in her editorial Public Options published in the August 19-25 edition of The CONNECTION.
Every time the federal government has convened a White House Conference on Small Business, combating unfair government competition is always one of the top issues cited by America’s entrepreneurs. One agenda of small business concerns said, “Government at all levels has failed to protect small business from damaging levels of unfair competition. At the federal, state and local levels, therefore, laws, regulations and policies should … prohibit direct, government created competition in which government organizations perform commercial services”.
Surprisingly, in many states and local governments, those commercial services extend to taxpayer-subsidized golf courses, what Governing magazine once called “perhaps the most non-essential of the non-essential public services.”
And what’s even more disturbing than the notion that there’s an inherent public interest in low green fees is the fact that governments aren’t very good at running golf courses. Many municipal golf courses are running huge deficits, are in poor condition, and face competition from better-maintained privately owned public courses. For example, the Freedom Foundation of Minnesota published a report earlier this year estimating that municipal golf enterprise funds throughout Minnesota combined for approximately $2 million in operating losses in 2007, and earlier this year South Carolina state legislature rejected a budget proposal to privatize two state-run golf courses currently operating at an estimated $500,000 annual deficit.
In fact, government-run courses rarely turn a profit, thus requiring a subsidy from taxpayers at large. In other words, non-golfers subsidize those who play the public links. Advocates like Kim, see no problem with such inequity, arguing that government golf will “hold down prices” and offer links “at cost well below private options.”
But this is a false illusion and ignores the myriad of hidden costs. When a fully allocated cost is applied to public golf courses-including land acquisition, interest on bonds, operation and maintenance, labor costs, liability, retiree benefits and tax revenue foregone-it becomes clear that the “public option” is a bad deal for taxpayers.
Luckily some policymakers are paying attention, and over 25 percent of all municipal golf courses have been privatized over the last several decades. Governments from New York City to El Paso to Los Angeles County have either sold or contracted out the management of their golf courses to private operators, who have a natural incentive to focus on reinvesting in the quality of the golf course to attract more players, host more tournaments, sell more merchandise, and generally increase golf revenues. By getting out of the way, these governments turned these liabilities into revenue generating assets.
There’s a lesson here. Whether it is golf courses, miniature golf, water parks-or newspapers or health insurance-government should leave commercial activities to the private sector. Governments at all levels are running deficits and lack the funds needed to carrying out inherently governmental functions. It should forsake the “government competition option”. It is not in the public interest.
John Palatiello and Leonard Gilroy is President of the Business Coalition for Fair Competition, Reston, VA (www.governmentcompetition.org) and a former Fairfax County Planning Commissioner. Leonard Gilroy is Director of Government Reform at Reason Foundation, a Los Angeles, CA-based nonprofit think tank advancing free minds and free markets, and Senior Fellow for Government Reform at the Thomas Jefferson Institute for Public Policy, Springfield, VA.
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I (WE) compete with the cities Cemetery operation daily. We just wish we had the Parks and Rec., and other taxpayer money to operate our business. In all fairness, if they are going to compete in one area they should compete is all areas. Wouldn’t that wake us ALL up!
I disagree with the author of this editorial. While a golf course might be better managed as a for profit enterprise, IMHO I think health care is far more important and should not be put into the same category. Seems to me that the geniuses that have told us how government never does anything right have gotten us into the situations we are now experiencing. I am for a public OPTION in the Health Care overhaul that must take place. Healthcare delivery for the citizens of Virginia is not a mere commercial activity. Who ever wrote this must have great insurance and obviously believes that executive compensation and stockholder satisfaction supercedes meeting the health needs of a health providers policy holders. If you business friendly people want a well educated and healthy population to work for you then you must be willing to invest in both. Fully funded public education and heathcare services.
I’m surprised… I thought we wanted increased competition and that when we don’t have it that govt usually steps in and removes the obstacles to it.
no?
Can we honestly say that there is any semblance at all of “competition” from the private sector health insurance companies and the providers of health care?
What do you think when it’s time to get a Colonoscopy or need services?
You don’t think …”can I afford this” or ” I wonder who offer the best quality and value”
NOPE! the only thing you care about is whether or not you are “covered” and what your co-pay might be… the idea of shopping around for a better deal is not even on your radar screen…
Surely the folks who support the principles of this Blog would want to offer “something” more than just opposition to competition …
what would you offer to make the healthcare industry more competitive and less costly than twice what virtually everyone else in the industrialized world pays …and they live longer to boot.
We had how many years to address this problem … with the party that claims capitalism credentials owing the Presidency and both houses of Congress and what exactly did they put on the table to address the lack of competition and costs that are running twice as high and higher than core inflation?
So if the govt option is not in the public interest, what is?
Excellent commentary and spot on!
Francis, please share with me where in the Constitution you believe the Federal Government has the enumerated power to become involced in competing with private businesses in providing our health care? Aside from the point that the Federal government is not empowered to “compete” with private sector healthcare businesses, the point that this commentary makes is that no private sector business CAN “compete” with government when Government has the force of might to extort it’s cash flow from citizens in the form of taxes – and when government is exempted from many of the costs the private sector must pay to offer their services or products.
Healthcare isn’t a “right”, it is a responsibility each of us has to provide for ourselves.
unless of course you cannot get insurance.. and then of course it’s tough cookies….so then you go bankrupt… get out of paying your creditors.. then get government assistance including the most expensive free medical care in the world – the American ER.
we do need to insure that people are responsible. In a way that’s what Social Security is. It’s a forced savings plan for the folks who won’t do it unless you make them do it and we do it simply because if we don’t then we get to pick up the costs to feed, clothe and house them when they can no longer work.
There is a dividing line between everyone being responsible and Neanderthal policies that actually impose more costs on us.
Unless we are going to go back to refusing to treat people at the ERs and having poorhouses.. we need to join the 20th century on our policies.
we need to have basic insurance available to everyone – if for no other reason that it saves taxpayers money.
there is a reason why we pay twice as much per capita for health care than the rest of the industrialized world ( and the per capita number INCLUDES people who have NO insurance).
we have a dumb system that completely lacks any semblance of competitiveness… and the view seems to be similar to the view that was held back during the days of oil company monopolies… that they earned those monopolies fair and square and it was the duty of everyone else to pay the prices being demanded or just do without.
saying that the Govt is not empowered to compete is more inability to deal with realities. The reality is that in a Democracy – as in the rest of the industrialized world – you don’t let words on a piece of paper get in between common sense and making it the enemy of stuff written in a time and place that never comptemplated the world as it is now.
” I am not an advocate for frequent changes in laws and constitutions, but laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths discovered and manners and opinions change, with the change of circumstances, institutions must advance also to keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy as civilized society to remain ever under the regimen of their barbarous ancestors.”
do ya’ll know who said that?
Mr. Greenmum, Guess you and I don’t live in the same reality or we must be experiencing a time warp. The writers of our precious constitution never envisioned “medicine” as a business. Back then a barber cut your hair, pulled your teeth, and applied leeches as they did to Thomas Jefferson when he was ill. Look what that got him. Please cut out the Original Framers stuff and bring yourself to the moment that we live in. If you can afford your present health insurance premiums I applaud you and the system that supports your world view. A thinking person would realize that your life story might not represent others at the same time. They might be just as valid as yours without the same results. Life, Liberty and the pursuit of Happiness is a wonderful ideal. When a citizen finds themselves underinsured or without insurance due to redundancy then life, liberty and the pursuit of happiness has a hollow ring. Why don’t you just man up and admit that to live in this country is not just about you and we collectively have to create a way to help all of our citizens have access to medicine that will make us all more productive citizens. IMHO, if you can’t see that then this state, this country means that if you can’t pay to play then you can go drop dead.
The facts are astounding and have been known for decades: The most painfully obvious first: American healthcare costs more per person than any industrialized country in the world. Twice as much as compared to some countries such as Japan where life expectancy exceeds ours, where care is efficient and excellent and there is no rationing! The only rationing currently going on in America is by insurance companies who only make a proft by cancelling coverage when you need it most and otherwise nickel and dime every other procedure! Waste is endemic in privatel healthcare where the bottom line is what matters, not ensuring the health of our citizens.
Inspite of our advances, research, etc. upwards of 42 million have no health insurance of any kind — this does not include approx. 5+ millions of whom are illegal residents. To those who think private health insurance is the only way — spiraling costs are breaking everyone — I have relatively good coverage now, but my co-pay costs have quadrupled, and premiums have also significantly increased over the past 10 years — our income certainly hasn’t! Having endured a variety of insurance coverage all over the US I have never met a doctor & their staff who haven’t complained bitterly about how complicated and needlessly expensive it is to have to deal with hundreds of insurance plans. Likewise my own dealings with a large variety of insurance companies has been similarly unpleasant. And I’ve had mostly routine issues and not any life threatening disease.
How manyi hundreds of thousands of Americans go bankrupt every month and end their lives in poverty because their insurance company has decided to ‘pull the plug’? None of the astonishly ignorant comments quoted in the media and/or seen at the town hall meetings ever mention the millions of Americans who’ve lost everything due to a castatrophic disease. Or those who will have to decide between medicine and food on a daily basis. Or how about those who because they did not have appropriate ‘preventative care’ had their illnesses and/or disease grow into something much worse and thus more expensive to cure (if at all)? Or how about those COBRA costs that increase to the point where those temporarily laid off can no longer afford them? Who picks up the pieces of millions of Americans caught between the cracks through no fault of their own?
Tjhere is absolutely no justification morally or economically for not having a public OPTION. The ill-conceived editorial fails to mention the HIDDEN costs that are a large part of the problem with our system of health care. For example, when hospitals treat indigent patients in their ER – (the most expensive kind of health care delivery) we all pay — it’s only one of the reasons why hospital stays include such outrageous charges. Those costs are part of why insurance companies are passing on costs. What about the HIDDEN cost of not insuring those who will pass on a very contageous disease because they couldn’t afford an innoculation? Swine flu for example is coming, and many of the uninsured will spread the disease for that very reason. Viruses such as this mutate and this will be a major problem in the future.
Frankly, comparing golf courses to health care is just ridiculous and absurd. Adequate health care IS a right (just like education) in the 21st century and shouldn’t be delivered only for a profit. Those who are think otherwise and hark back to the Constitution are seemingly stuck in the 18th century and should remember that universal healthcare is not just commonsense and practical, but also a moral issue in this world.
Joyce J. I applaud your comment and agree with everything you said. I don’t exactly know where Mr. Pallietello or Mr. Gilroys editorial was supposed to lead it’s readers but find it difficult to see a co-relation to the major issues that we are facing. Golf is a great game. Let’s keep it private although there is a publicly maintained course down here in Norfolk/ Virginia Beach. To my original post when I questioned the Authors about Health Care debate I wondered if that was what this was ultimately about. President Obama’s speech tonight gave me a renewed belief that he means to resolve this issue in a way that serves all Americans and Virginians in their health care needs.Watching Eric Cantor work the keys on his blackberry did not give me hope that Virginia Politicians are willing to engage the debate in an honest way. While we can all appreciate a cerebral debate about big government, it would be nice to know that our representatives clearly see the reality that all Virginians face when illness and pain level our political divide.