Update and Correction to SMI Case Study on Pharmacy Privatization

Posted on by David Stokes

Last year we released a case study on the privatization of the county’s pharmacy services. With the release of the 2008 county budget at the end of last year, we have been able to update and correct come of the information it contains. Here is the original study. Here is a statement explaining the updates and corrections in detail. Finally, here are some things to keep in mind about the update and corrections:

  • Nobody called us on this. Our own follow-up research led to the corrections, and we are making these changes in the interest of accuracy.

  • The error in the 2007 data was not our fault. We used a number provided to us by Saint Louis County. I am certain that nobody intentionally gave us a lower-than-accurate number. It was just an error. These things happen; you correct them and move on.

  • Most importantly, the essential point of the case study, and its conclusions, remain exactly the same: that privatization has been great for county government, patients, and taxpayers. The only change is that the new numbers show lower savings — but there are still savings. If you adjust for inflation, the new numbers still show substantial cost savings. The improvements to patient services brought about by privatization remain a primary argument for the benefits of privatization, and are not changed by these new numbers.

Bellefontaine Habilitation Center Is a Difficult and Emotional Issue

Posted on by David Stokes

The St. Louis Post-Dispatch has a very thoughtful editorial this morning (link via Combest) about the Bellefontaine Habilitation Center in north Saint Louis County. The problems there are heartbreaking and long documented. There have been cases of abuse, neglect, and patient death both at the center and among patients who have been moved to private facilities for care. Each case is awful. The Post states, "As it turns out, privatization is no magic bullet."

Indeed, privatization is not necessarily the best choice for circumstances such as this, which deal with the absolute neediest members of our society. If I may digress a bit, one of larger problems I have with the welfare state is how quickly and easily the definition of "needy" gets expanded to include a very large number of people. You expand Medicare to serve anyone who wants it, and then when the governor merely tightens the eligibility requirements, to try to focus more resources on those who truly deserve it, he gets ripped for destroying families — regardless of whether that actually happened. So, yes, I clearly favor substantial reductions in the welfare state at the state and federal levels.

But that is not really an issue here, because everyone can agree that the patients at Bellefontaine clearly deserve state care if their own families are unable to provide it. And I don’t mean financially unable — the level and difficulty of care required for many of these patients is beyond what most families can perform. The state has a role in providing for these citizens, and the question is whether the state or the private sector should actually perform the job.

As for these patients who require lower levels of care, I don’t see anything wrong with allowing qualified private facilities, with appropriate state oversight, to provide that care. And I certainly see nothing wrong with firing 125 employees who are no longer needed because the patients have been moved. However, for the remaining 160 or so patients who need the greatest level of attention, the state should continue to provide the highest level of care possible. Only after private facilities have proven they can handle the most demanding patients, which may never happen, should the state consider moving them out of Bellefontaine. Until then, resources must be directed to provide for those patients.

Now, I look foward to discussing the SCHIP program and wondering why the hell families at 300 percent of the poverty level deserve to have the taxpayers pay for their kids’ health care, so I can return to being a tightwad.

And the Slippery Slope Award of the Day Goes To …

Posted on by Nicholas Loyal

Missouri Sen. Scott Rupp, for his recently introduced bill that seeks to end cyberbullying in the wake of the tragic "MySpace suicide" of Megan Meier, the Dardenne Prairie girl who hanged herself after being the target of hateful messages on the popular social networking website.

First, the details of this case are harrowing, and should provide an excellent cautionary tale to parents in the age of Web 2.0. Now, more than ever, it is essential that attention be paid to what children do and have access to online (the Washington Post has an excellent discussion about this topic).

The problem I have with Sen. Rupp’s bill, though, is that it sets a dangerous precedent for online regulation. The Internet is an entity that has grown and changed lives largely because of anonymity. This anonymity brings freedom in cyberspace, allows a shield of privacy to protect users from having their lives put on display for the entire world, and protects online residents from the actions of others. After all, a law that punishes a "cyberbully" could be applied to the wrong user of a guilty account, because it’s difficult — if not impossible, in many cases — to prove whether a given users was the one at the keyboard, or whether it was a bystander unaware of the harm being done.

Sen. Rupp’s bill has the good intention of attempting to right a new and unfamiliar wrong, but I cannot agree with his remedy. The Internet may be the greatest common good that the modern economy has ever seen, and any attempt to manage it with a political agenda will bring far more harm than benefit.

There’s No Free Lunch – Even in Banking

Posted on by Sarah Brodsky

In the latest proof that foolishness knows no party, Bill Clinton and Arnold Schwarzenegger have teamed up to write about payday loans in the Wall Street Journal:

Imagine the economic and social benefits of putting more than $8 billion in the hands of low- and middle-income Americans. That is the amount millions of people now spend each year at check-cashing outlets, payday lenders and pawnshops on basic financial services that most Americans receive for free — or very little cost — at their local bank or credit union.

The high interest rates charged on payday loans reflect how much riskier those loans are than the typical transactions higher-income people handle at full-service banks. When a mainstream bank lends money, the borrower is typically someone who has deposited money there and who has a relationship with the bank. Payday lenders don’t have that security.

Payday lenders’ high charges and fees reflect a cost, and that cost won’t go away just because people switch to full-service banks. Someone has to pay for risky loans, and if the lenders don’t, someone else — probably taxpayers — will have to. Or, as a result of usury laws, poor people won’t be able to borrow money at all.

Clinton and Schwarzenegger suggest that their plan won’t be costly because it will just encourage people to use cheap services that are already there. But switching risky loans from one kind of bank to another won’t make the cost go away.

Poor people can escape payday loans if they earn more than they spend, save enough to deposit money in an account, gain financial literacy and form relationships with mainstream banks. That’s a worthwhile goal, but we can’t achieve it with a quick fix.

Star Headline Whets Appetite

Posted on by David Stokes

The Kansas City Star has a preview of tonight’s State of the Union speech, which I will tune in to only by default, because nothing else is on — if I watch at all. That bit of honestly aside, some parts of it have my tongue wagging, although I have no faith whatsoever that these things will pass Congress — and I have to ask why the President didn’t attempt to do these things earlier in his administration:

Offering modest new plans, Bush proposed a $300 million "Pell Grants
for Kids" program to help poor children in struggling public schools
pay for the cost of attending a private school or a better public
school outside their district.

I love this idea, although as I think about it I don’t know how much I like it as a Federal program…

Bush also was to urge elimination of 150 federal programs that [White House counselor Ed] Gillespie called "wasteful or bloated."

Dare to dream for this to actually happen. Again, why wasn’t this proposed earlier in this administration?

The president will issue an executive order Tuesday ordering federal
agencies to ignore "earmarks" that aren’t explicitly enacted into law,
erasing a common practice in which lawmakers’ projects are outlined in
nonbinding documents that accompany legislation. The move is aimed at
making doubly sure that lawmakers have the opportunity to strike
earmarks during floor debates.

However, Bush’s plan leaves untouched the more than 11,700 earmarks totaling $16.9 billion that Congress approved last year.

If the earmarks from last year are not legally required to be spent, then why on earth is the money going to be spent? Who cares when they were passed? I guess it’s better late than never, but this is awfully damned late.

This is the type of thing one can get very excited about — but this is just a speech, not a piece of legislation. When the latter succeeds in doing these things, then I will get REALLY excited.

Great Ideas Abound for Kansas City’s School District

Posted on by Dave Roland

The Kansas City School District is (once again) stumbling down the path (recently blazed by the Saint Louis School District) toward unaccreditation. Because of the district’s continuing struggles, Superintendent Anthony Amato — who was earning a cool $220,000 per year — has been pressured into stepping down into a "consulting role."

So now that the district is in the market for its 10th superintendent in 30 years, to whom could the Kansas City schools look for "interim" leadership? None other than Dr. John Martin, the deputy superintendent who helped oversee the Saint Louis schools’ descent into unaccreditation. To be fair, my knowledge of Dr. Martin is largely limited to his heated opposition to charter schools, and he surely cannot be blamed for the sorry state the Saint Louis school system was in when he arrived. But if his presence as an administrator has done anything to help that district, I am not aware of it. Martin will reportedly receive compensation on the order of "$20,000 a month" in his new position.

Really, Kansas City School District? There were no other potential interim superintendents out there who, say, hadn’t recently failed to help a district avoid loss of accreditation?

For the sake of the children in those failing schools, I certainly hope that Dr. Martin proves to be more effective in Kansas City than he was in Saint Louis. But if I were a parent in that district, I would be very concerned about this choice of interim superintendent.

Media Round-Up for Kansas City Light-Rail Release

Posted on by David Stokes

The Show-Me Institute’s study on light rail proposals for Kansas City certainly received a good deal of attention yesterday. Many in the KC media, but certainly not all, seemed to focus on the crime aspect of the study, which was a small part of the overall study. Our editor, Eric, previously posted a rebuttal to some of the criticisms of Randal O’Toole’s use of crime stats. I am going to leave that aside, as there are much more important reasons why Kansas City should give very serious thought to reconsider moving forward with light rail, such as the small proportion of jobs downtown in comparison to other downtowns, and the fact that the much-desired new development along light rail lines almost never occurs without additional subsidies. Yes, when I ride MetroLink, I feel very safe — but, then again, I am a total badass …

A quick note to commentators and blog posters everywhere: It is not sufficient to say that Randal O’Toole is simply opposed to light rail, and as such this study should be discounted. You have to actually read the study and then document where you think he may be wrong. So far, after reading various blog comments and news articles, I have not seen anyone do the latter.

So here goes the media roundup, if you are interested — as I am sure you are. The Kansas City Star published a solid article on the study, and linked to the full document as well, so readers can judge the arguments on their own — which we appreciate. Randal O’Toole and Crosby Kemper appeared live on two radio shows yesterday. The podcast of the "Chris Stigall Show" on KCMO AM 710 is here, and we’ll provide a link to the "Shanin and Parks Show" interview on KMBZ AM 980 when we have it.

I can only find one streaming video online for the TV station interviews. The video of the NBC Action News report is embedded here. Two TV stations, Fox 4 and KMBC-9, only have the online text versions of their stories online. KCTV-5 also appeared at the press conference, but I can’t locate the story on their website. We appreciate the coverage from all of these stations!

We will link to additional stories about the study as they appear. We are pleased to be a part of the discussion about this issue in Kansas City. Our primary goal was to give the people of Kansas City additional information about the other options they have for mass transit. If they choose to pay the higher taxes that will be required to move ahead with light rail, that is entirely up to them.

Eminent Domain at the All-Star Game

Posted on by Nicholas Loyal

A front-page story in this morning’s Post-Dispatch details the delays that have plagued the Ballpark Village development in downtown St. Louis. At the center of the trouble, ironically, is a rather familiar name (emphasis added):

[Director of Development Chase Martin] attributed the delay to negotiations with Clayton-based Centene Corp.
after the company announced in September it would relocate its
headquarters to the Ballpark Village site.

This being the same Centene that wowed downtown officials in September with the announcement that they would be moving their headquarters and employees into the city to anchor the new development. This also being the same Centene that, four months prior, lost a judgment at the Missouri Supreme Court that prevented them from seizing "blighted" land in downtown Clayton through the power of eminent domain.

Any chance those two were related?

Now, however, negotiations between Centene, the Cardinals, the city, and Cordish Co. (the developer) are threatening to delay the project even further, to the point where completion is not expected until the beginning of the 2014 season, and officials are worried that the project may not even be under way when Busch Stadium hosts the Major League Baseball All-Star Game in July, 2009.

On one hand, this story brings up the positive side of what can happen when property owners stand up for their rights. Centene, which almost certainly would have built its new headquarters in Clayton had it been given the approval, will act as a major cornerstone in the continued revival of downtown St. Louis.

On the other hand, the last thing that I want to hear over the loudspeakers when I’m standing on the street outside the left-field fence during the Home Run Derby is Joe Morgan telling Chris Berman, "Hey, look at that big vacant lot across the street. That coulda been something really nice, but these people wouldn’t let a company build a building for some reason and they had to move and now it’s just a big ol’ pit. SWING AND A FLY!!!"

Let’s hope that doesn’t happen.

A Better Solution to Missouri’s Long-Term Nursing Home Care

Posted on by Justin Hauke

It’s disturbing to think of nursing home abuse. Many of us have elderly family members or friends living in assisted-living facilities and naturally turn to government regulation to protect them. But before passing new legislation, it’s important to determine whether the proposed regulations will actually have the desired effect of protecting Missouri’s elderly citizens. New regulations, no matter how well-intentioned, may actually serve to decrease the overall level of care in nursing homes, while increasing costs to levels that will force many seniors to forego nursing home care altogether.

Last month, the National Senior Citizens Law Center (NSCLC) hosted news conferences designed to bring attention to what they view as the dubious quality of many of Missouri’s nursing home contracts. In a new research report, the NSCLC argues that many of these contracts violate minimum care obligations required under the federal Nursing Home Reform Act, and similar state statutes. For example, some contracts limit facilities’ responsibility for their residents’ health or personal items, or require a resident’s family or friends to accept personal financial liability for long-term care (even when costs are covered by the state). Both requirements violate federal guidelines for health facilities treating Medicaid patients.

Although unscrupulous nursing home administrators undoubtedly exist, it’s not clear whether the evaders of existing law will be any more likely to comply under new laws, such as the ones the NSCLC is proposing. For example, Missouri passed legislation in 2003 designed to make it easier to report nursing home abuses, and increase the frequency of inspections. The law was well-intentioned, imposing high fees and in some cases prison sentences for non-compliance. Yet the NSCLC’s own findings suggest the legislation has done little to address exploitation in the industry or to remedy existing levels of inadequate care. Why should we expect new legislation to bring different results?

In fact, new legislation has the potential to worsen the current situation. “Minimum care” laws, such as those being proposed, generally have two negative effects: They mandate levels of service that may not be important to actual nursing home residents and their families, driving up overall nursing home costs; and they encourage many facilities to lower their standards to the “minimum state requirement,” adversely affecting the overall level of nursing home care. So before passing new laws, it’s important to determine whether these laws are likely to create “perverse” incentives that diminish, or even supplant, good intentions.

The St. Louis Business Journal reports that Saint Louis nursing home costs are the second-lowest in the country, averaging $42,877 annually. Nationally, the average annual figure is $65,200, with costs reaching as high as $191,385 in some states. These are not small fees, and many Missouri seniors already struggle to stretch their savings to cover nursing home payments for 10 or 15 years of potential care. New regulatory burdens are likely to push these costs even higher.

Consider legislation that would require greater financial disclosure from nursing homes, and allow for 24-hour on-site inspections. This would necessitate hiring additional staff members, driving up costs. As the cost of care increases, nursing homes that have gone the extra mile by providing better service than required may be forced to cut their level of care to the state minimum in order to maintain existing profit levels. In other words, rather than using higher fees to address patient health, facilities would have to devote the money to compliance with government regulations that may not have any affect on overall quality.

A better solution for protecting consumers would be to focus on educating families of nursing home residents about the terms of their contracts and their legal rights, rather than passing the buck to bureaucrats. Many violations highlighted by the NSCLC’s study are well-publicized issues among consumer advocacy groups. Some groups also offer pro-bono legal advice to help find contracts that properly meet a family’s individual needs. The state should work to enforce existing laws, which require facilities to fully disclose the terms of their contracts and inform consumers of their legal and financial rights.

I sympathize with the NSCLC’s desire to protect nursing home residents, but passing new legislation is not the answer. Promoting consumer advocacy and raising awareness is a worthwhile goal. It’s important to provide legal aid that helps ensure families enter nursing home contracts that properly reflect their needs. But mandating minimum levels of service will only increase costs that are already inflated, while spurring an overall decreased level of care. Missouri’s elderly citizens shouldn’t be unnecessarily priced out of adequate facilities in order to satisfy misdirected good intentions.

Justin P. Hauke is a policy analyst at the Show-Me Institute and a graduate student at Washington University’s Olin Business School.

 

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