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Privatization Update: Schools, Prisons, Mental Health -- and What States are Doing to Hold Contractors Accountable

Given the central role of private contractors in delivering public services, this Dispatch continues our series of Privatization Updates (see November's edition). Today we focus on current privatization debates in the education, prison and mental health sectors -- and what states are doing to increase accountability for contractors.

"Gentleman's Agreement" Drives Health Care Costs in Massachusetts, Highlights Need for "Public Plan" Option in Health Reforms

In 2000, the CEOs of the largest hospital system and largest insurance company in Massachusetts shook hands on a plan to manipulate the health care market and ensure each other greater profits and market-share, an extensive report by the Boston Globe has revealed.  Under the wink-and-a-nod handshake deal, Blue Cross insurance agreed to raise reimbursement rates to Partners HealthCare - the largest hospital system and private employer in the state - in exchange for Partners' insistence that other insurers pay them at least the same rates paid by Blue Cross.

Health Care for All: Policy Options for 2009

Download a copy of the report in PDF format here.  View the HTML version of the report here.

OVERVIEW

Putting the health care industry on the defensive by moving reforms that increase transparency, oversight, and accountability highlights health care costs and the industry's self-interested opposition to change.  The US health care system underwrites some of the most profitable industries in the world; either through complicit arrangements between the industry and government, as in the new Medicare drug benefit and Florida's recently enacted limited-benefit health plan, or through government inaction, as in poor public oversight of health insurance rates. Too large a sum of our taxes and health care spending ends up in industry profits and inefficient administration, rather than actual medical care.

In response, states can (1) reduce prescription drug costs through bulk-purchasing and countering the industry's abusive marketing influence; (2) bring accountability and oversight to health insurance rates; and (3) ensure non-profit hospitals, which provide 68% of all hospitals beds in the US, provide a real "community benefit" for their tax-exempt status.

A widely held belief is that the health care industry, specifically pharmaceutical companies, puts profits ahead of people. This anger can be channeled to bring transparency and accountability to the health care industry.

 

A chance to level the playing field

Everyone knows that individuals and small employers face crushing health insurance costs when they try to buy coverage on their own. But state legislators in Hartford are about to take a simple yet far-reaching step to address the problem.

By allowing municipalities and small businesses to buy into the group plan currently provided to state employees, the recently introduced Connecticut Healthcare Partnership would give working families the clout they need to negotiate a better deal for health insurance.