WHAT HAPPENS IF PUBLIC EDUCATION IS PRIVATIZED?

CLUES FROM THE HEALTH CARE FIASCO

Alan Singer
http://www.huffingtonpost.com/alan-singer/privatizing-
education_b_2610968.html
Apr 07, 2013

Do you ever wonder if the reporters and columnists for The New
York Times read each other’s columns? In January 2013, Nate
Silver, the FiveThirtyEight statistical guru, Eduardo Porter, who
writes an Economic Scene column, and Reed Abelson, an
Economix blogger, all wrote about the high cost of medical care in
the United States, but none of them includes information, or even
seems to have read, what the others wrote.

My concern is primarily the future of public education in the United

States. But as I put together the information from these three
columns, clues drawn from their discussion of the fiasco that is
America’s health care “system” provides unfortunate hints into a
future disaster if the U.S. public school system follows this model
and is privatized.

Silver’s column does a statistical analysis of the growth in

federal government spending. He discovers that the major
increase in spending is caused by increased government spending
on Medicare, Medicaid, disability, food stamps, unemployment
compensation, and other social insurance programs. His data
came from a website, usgovernmentspending.com, which divides
government insurance programs into three categories, welfare
programs such as food stamps and unemployment insurance,
retirement programs, principally Social Security, and health care
where spending has been increasing at the fastest rate. Between
1972 and 2011, federal spending on health care increased at a rate
of 6.7 percent per year, which is much higher than the rate of
growth for gross domestic product, which grew at a rate of 2.7
percent, or in tax revenues. In addition, Silver found that the
growth in health care spending was not just a government
problem. Private spending on health care has increased at
approximately the same rate.
Abelson’s Economix blog focused on double-digit rate rises by
health insurers. He found that small businesses and people who do
not have employer-provided insurance and must buy insurance on
their own were particularly vulnerable to the higher rates being
charged by the insurance companies. In California, Aetna applied
to state regulators for a 22 percent rate increases, Anthem Blue
Cross requested a 26 percent increase, and Blue Shield of
California asked for an additional 20 percent. In Florida and Ohio,
health insurance companies have already secured rate rises by
over 20 percent percent for some policyholders.

I found Eduardo Porter’s Economic Scene essay, “Health Care

and Profits, a Poor Mix,” both the most interesting and the most
frightening report on economic dysfunction when essential social
services are offered by private for-profit companies.

A study by the School of Pharmacy at the University of Wisconsin-

Madison discovered that patients in private for-profit nursing
homes received roughly four times as much medication as patients
at church-affiliated nonprofit homes. Porter cited sources that
explained this phenomenon as the result of corporate pursuit of
profit. The bottom line is that sedatives are cheaper than intensive
patient care. Similar studies also found for-profit hospitals
concentrating on more expensive and profitable procedures such
as open-heart surgery rather than on less profitable services like
home health care and psychiatric emergency care.

Porter reported: “From health to pensions to education, the United

States relies on private enterprise more than pretty much every
other advanced, industrial nation to provide essential social
services. The government pays Medicare Advantage plans to
deliver health care to aging Americans. It provides a tax break to
encourage employers to cover workers under 65. Businesses
devote almost six percent of the nation’s economic output to pay
for health insurance for their employees. This amounts to nine
times similar private spending on health benefits across the
Organization for Economic Cooperation and Development, on
average. Private plans cover more than a third of pension benefits.
The average for 30 countries in the O.E.C.D. is just over one-fifth”.
In other industrial countries universal public health care is
considered a basic citizen’s right and better health care is
provided at a much cheaper rate than in the United States. Great
Britain, Germany and France provide universal health coverage for
between 10 and 12 percent of their gross domestic product. Porter
argues that the U.S. for-profit system “delivers worse value for
money than every other in the developed world. We spend nearly
18 percent of the nation’s economic output on health care and still
manage to leave tens of millions of Americans without adequate
access to care.” It is projected to rise to over 20 percent of the
GDP by 2021. The U.S. dysfunctional health care system also leads
to high administrative costs as private health insurers try to avoid
covering high-risk people and patients who are actually sick and
expensive treatment plans ordered by doctors who are paid more
money for every procedure they prescribe. The near religious
commitment of the United States to private for-profit
administration of social programs has proved to be an economic
disaster. Moving Medicaid recipients into private HMOs has raised
the cost of services to each beneficiary by about 12 percent while
proving to discernable improvement in care.

What are the implications of the private, for-profit health care

fiasco for the U.S. public school system?

• First and foremost, the market and private for-profit companies

cannot be relied on to make decisions based on best educational
practice or the needs of students when their bottom line is always
the maximization of profit. They also cannot be relied on to deliver
educational services more cheaply.

• The public needs to be weary of miracle high-tech and online

solutions promoted by the American Enterprise
Institute and Thomas Friedman in recent New York Times op-ed
pieces. They are probably a chimera, offering hope but little in the
way of improved learning results. And costs will suddenly go up as
soon as they establish a niche, or worse, undermine traditional
schools and colleges.

• For profit charters that weed out the low performing and at-risk
children so they can show off-the-chart improvement should also
raise red flags. Miracle solutions aren’t miracles unless they work
for everyone.

• Educational “reformers” who blame teachers for the poor

performance in inner-city and minority youth rather than the social
inequality that plagues the United States want to de-
professionalize teaching and replace teachers with poorly trained,
low paid, transients who monitor students on laptops. Does
anyone really believe that resistant young people will respond
better to computer screens and testing? Or will they just find ways
to avoid the monitors and play online games?

• Last, the outsourcing of programs such as curriculum and

assessment, staff development, teacher evaluations, and even
building and grounds, will profit private companies, but probably
will not lower costs or improve services.

In a recent editorial, The New York Times warned that the

charter school movement had established a foothold in the United
States “by asserting that independently run, publicly financed
schools would outperform traditional public schools if they were
exempted from onerous regulations. The charter advocates also
promised that unlike traditional schools, which were allowed to
fail without consequence, charter schools would be rigorously
reviewed and shut down when they failed to perform.” However,
studies of charter school performance show that the thousands of
charter schools operating in 40 states have failed to keep either of
these promises. “[C]harter schools are generally no better — and
often are worse — than their traditional counterparts.” A study
conducted at Stanford University by theCenter for Research on
Education Outcomes found that that only 17 percent of charter
schools provided a better education than traditional schools and
37 percent delivered children a worse education. “For the students
enrolled in these schools, this is a tragedy that must not be
dismissed.”

A word about words. Nate Silver uses insurance and entitlement

interchangeably. Eduardo Porter is much more careful discussing
insurance and rights. Words are important and they shape how we
understand issues. I agree with Porter. Health insurance and
education are not an entitlements. They should be social rights.