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Open Letter to Congressman Ron Paul

Politics / US Politics Aug 25, 2007 - 01:38 AM GMT

By: Brian_Bloom

Politics

Sir,

Arising from a recent interview which I enjoyed with Pat Gorman of Wake Up America at Free Mark et News Network, your name has been brought to my attention many times in the past couple of weeks.


Here is a simple idea which might help get the USA back on the road to the benefits of Libertarian life as originally contemplated by the Founding Fathers.

I am using Health Services as an example, but the model should be logically applied to all Social Services, specifically including the Energy Industry.

“Private Enterprise Management” of Social (Public) Services should allow for Private Enterprise to manage costs , and Government to set prices based on open market tender.

This was done with a public bus service in Australia . The price of a bus ticket was stipulated as a “given” when the Government authority which wanted to privatise put out to tender the management of the Bus Routes.

The result: Price of bus tickets remained constant whilst “Head Office head count fell from over eight hundred to three. (That's “three” as in the single digit #  “3”). The winning tenderer made a fortune.

Next step should be that the Bus Routes should go back to tender and the winning bidder should be the company that bids the lowest price to charge for bus tickets. The price of bus tickets should then fall sharply whilst still enabling a reasonable profit to be made on a (now) sensible cost structure.

If you apply that same model to (say) the Health System, where you ask Private Enterprise to bid for the right to manage (say) hospitals, and the bids are based on the following drivers, then you may get your ratio of Health Services to GDP down from its current 19% to (say) 10% - 12% of GDP - which is more in line with countries like the UK:

How much will you charge patients for the following services? Lowest bid wins. Turnkey providers only may bid. However, they may subcontract to anyone, including overseas suppliers such as Teleradiology

  • Flat Price per occupied bed day (emergency and ICU )
  • Flat price per occupied bed day (acute)
  • Flat price per occupied bed day (chronic):
  • Ambulance
  • Operating Theatre usage
  • Equipment usage (specify equipment category. Eg: MRI, X-Ray, Anaesthesia M/C, heart monitoring, PCA, etc)
  • Professional services (surgery, etc)
  • Etc

If the Health Care Insurance industry was penalised at an escalating rate for exceeding a particular ratio of heath insurance rejections, then this particular scam would be stopped dead in its tracks.

Yes, I know that the USA currently has a Private Enterprise managed health system, but Private Enterprise is managing both price and costs. On top of this, they are not providing the appropriate quality of service because they are oriented to maximising profits in an area of social service where the end customer (sick patient) should be healed, not raped. Yes, I know that the doctors are neurotic about quality issues. That's fine. Let them stay focussed on quality issues – but within the competitive bidding process.  Logically, quality will not deteriorate. It will rise as will be explained below.

So, as a two step process:

  1. Buy the entire health care infrastructure back after you have determined how much its worth. (Yes, it may involve trillions of dollars. Relax. It will involve book-keeping entries)
  2. Sell it back to the Private Sector on the above tender basis for services to be provided, and at market related price for assets, where the cost of infrastructure is amortised (if purchased by Private Enterprise) or leased (if rented by Private Enterprise)

Step 2 should in fact be Step 1 in the time line. Get Private Enterprise to bid on each piece of infrastructure and choose the winner. Then buy the infrastructure at that “highest market bid” and immediately sell it to the winner at that same price. No one can complain if you force a purchase at market price. Logically, if the current owner is the most efficient operator, he will be the winning tender in buying it back. If not, he doesn't deserve to keep it.

Once every five to ten years, put the services contracts out to tender again to get the lowest market price per bed day etc.

Thus, if Private Enterprise has to make a profit by ensuring its costs are minimised against externally fixed prices (which the market will determine); and if scamming will lead to increased costs as opposed to increased profits, bingo – you've solved the Health Service Industry problem. (No idea how long it will take. Maybe two terms as President)

This is not “Socialist Medicine”. This is true Open Mark et Competition by Private Enterprise.

Will the quality of medicine deteriorate? Why should it? If prices are fixed, and only costs are manageable, then patients will go to those service providers which provide the best quality at that price. If medical service providers get too cute in managing costs at the expense of quality, their revenue lines will fall because their occupancy rates will drop as patients support  the better quality service providers. Logically, quality should rise.

This model is not only applicable to the Health Services Industry. Here are a few other socially important services where the entire community will be adversely affected if Private Enterprise controls both price and cost:

  • Energy production
  • Energy distribution, if necessary. If Private Enterprise ran energy production, massive cost savings would be won (up to 25%) by doing away with centralised production. Price per KwH would fall.
  • Mass Transportation. (If the public does not support the public transport system under a scenario where its much cheaper to get from point A to point B using the public transport system, then the public can be deemed to have voted not to have such a system and its should be closed. Commuting by public transport should also allow for parking of vehicles at depots and stops along the way. Right now, that may be the limiting factor in using Public Transport)
  • Roads and Road Tolls
  • Harbours
  • Airports
  • Education
  • Other

Yes, professional indemnity is an issue and insurance costs are humungous. My suggestion: Do away with everyone's right to sue for malpractice. Let the aggrieved party lay a criminal charge. If found guilty, the person found guilty of malpractice will go to jail. If the jail sentence is sufficiently long, and the damage done is sufficiently serious, perhaps there could be a central fund to compensate victims. But there can be no out of court settlements. Only if the offenders land up behind bars can compensation be claimed. In the blink of an eye, scam artists (people suing frivolously) will fall by the wayside and doctors (and other service providers) will become genuinely concerned about providing good quality health (and other) services.

So, Congressman Paul, I put this to you: If you are truly a Libertarian, then what is contemplated above would be a wonderful outcome across all Public Services The quality of life of the average US citizen would rise, whilst Capitalism and Private Enterprise would be rewarded for efficiency of outcome rather than efficiency of scamming the system.

Have you got the courage to take on the lobby groups?

From where I am sitting it seems fairly safe to just ignore the lobby groups completely. Pretend they don't exist. The fact is that they don't really matter anymore anyway because, via the internet, you can talk directly to the voting public. “Viral Mark eting” is an incredibly powerful tool nowadays. Do a deal with Google and Yahoo and whoever else.

Finally, if the Lobby Groups don't matter anymore, their power will evaporate like morning mist in the sun.

It boils down to courage. Do you have it? If so, I am getting a sense that there will be an unstoppable groundswell of support for you and you can win this Presidential Election.

I wish all strength to one of the world's last remaining honest politicians.

Sincerely,

Brian Bloom

 

By Brian Bloom
www.beyondneanderthal.com

Since 1987, when Brian Bloom became involved in the Venture Capital Industry, he has been constantly on the lookout for alternative energy technologies to replace fossil fuels. He has recently completed the manuscript of a novel entitled Beyond Neanderthal which he is targeting to publish within six to nine months.

The novel has been drafted on three levels: As a vehicle for communication it tells the light hearted, romantic story of four heroes in search of alternative energy technologies which can fully replace Neanderthal Fire. On that level, its storyline and language have been crafted to be understood and enjoyed by everyone with a high school education.  The second level of the novel explores the intricacies of the processes involved and stimulates thinking about their development. None of the three new energy technologies which it introduces is yet on commercial radar. Gold, the element , (Au) will power one of them. On the third level, it examines why these technologies have not yet been commercialised. The answer: We've got our priorities wrong.

Beyond Neanderthal also provides a roughly quantified strategic plan to commercialise at least two of these technologies within a decade – across the planet.  In context of our incorrect priorities, this cannot be achieved by Private Enterprise. Tragically, Governments will not act unless there is pressure from voters. It is therefore necessary to generate a juggernaut tidal wave of that pressure. The cost will be ‘peppercorn' relative to what is being currently considered by some Governments. Together, these three technologies have the power to lift humanity to a new level of evolution. Within a decade, Carbon emissions will plummet but, as you will discover, they are an irrelevancy. Please register your interest to acquire a copy of this novel at www.beyondneanderthal.com . Please also inform all your friends and associates. The more people who read the novel, the greater will be the pressure for Governments to act.

Brian Bloom Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

John Campbell
25 Aug 07, 03:53
Libertarian?

You've got some very strange ideas of the meaning of libertarianism.


Graham Kelly
25 Aug 07, 06:21
worldwide health systems

Good ideas, Brian Bloom. But why FIX any prices? Let the market (patients) decide on who gives the best service, for the best (not necessarily cheapest) price. THEN they'd have a real free enterprise health system. In fact, the UK, Australia, NZ and Canada should do the same.


Andrew Douglas
25 Aug 07, 07:56
Ron Paul

I don't think you understand free markets or the influence of lobbyists. See, if the government set the price:

1. The market doesn't decide what the price of goods or services should be. Who's the market? Producers AND Consumers. When you take that out of the market's hands, prices are likely to be set at a price that is either unreasonably high (such as your example in Australia) or unreasonably low which causes poor quality of goods and services. Even if you re-bid the contracted price out every 5 years to adjust for market forces, that's 4 years and change slower than it the market itself should handle it.

2. If the government sets the price, say, for the cost of a prescription drug - who do you think will lobby congress to set that price higher than it should? Lobbyists for the big drug companies. Wherever the federal government has authority and power, you can bet lobbyists will be there to make sure their interests are served first and everyone else second. You aren't standing up to lobbyists by giving the government more control over the market - you are guaranteeing their future will be bright.

3. Ron Paul is the only one who, for the last 30 years has proven time and time again that corporate interests are secondary to the Constitution and that the federal government should be restricted in size and scope to what is clearly provided by the Constitution. If the federal government was down-sized to it's Constitutional levels, then lobbyists would become significantly less prevalent in policy. You have to reduce the power of the federal government in order to reduce the corruption that takes place now. You certainly don't radically increase the government's power by allowing it to dictate prices.

I'm glad you are interested in Ron Paul - he's an amazing candidate and if nothing else offers up a lot of interesting points for discussion that people really can learn from... but if I were you, I'd take the time to understand his positions instead of trying to dictate what positions he should take.


Nicholas Lineback
25 Aug 07, 09:21
Fascism

What you are describing is fascism. This is what the republican party has been trying to convince people that this is "free market" or "capitalism". It is not. This is the government imposing a monopoly. The real solution would be to have a true free market system in which only services that people are willing to pay market value for would exist. Thus, if people were not willing to pay for public transportation it would not exist.


Robert Moore
25 Aug 07, 09:56
British Engineering

I don't know about the rest of you but almost every Brit engineer that I know has a tendency to over-engineer most everthing. Keep it simple and let the free market and charity handle it.


John Howard
25 Aug 07, 12:33
Repeal, don't Fix

There are only two main problems that I see:

a) repeal all licensing - licensing does nothing but limit supply of providers - doctors are the primary champions of licensing because it limits their competition. Every human has a right to provide health care and every human has a right to choose their health care provider.

b) restore sanctity of contract - health care customers and providers have a right to enter into a contract that precludes after-the-fact law suits. The current system assumes that no contract (and in fact no human decision) is valid until at least 2 lawyers have made a living arguing about it after the fact.

Licensing and contempt-of-contract are the two key flaws that are moving us quickly to the point where only doctors can afford legal services and only lawyers can afford medical services. Until these two key irrationalities are removed, nothing will "fix" the system. So long as lawyers dominate government, and doctors remain a primary lobbying group, the irrationality will remain.


Chip Spangler
25 Aug 07, 19:35
Ron Paul's words on health care

Hi Brian!

Glad you're keeping an eye on Dr. Paul's campaign. Just thought I'd provide for you and your readers a few links to some articles/speeches that Dr. Ron Paul has written about health care in the United States, in case you're interested:

http://www.lewrockwell.com/paul/paul175.html

http://www.lewrockwell.com/paul/paul345.html

http://www.lewrockwell.com/paul/paul246.html

http://www.lewrockwell.com/paul/paul400.html

This is Dr. Paul's page from his campaign web site regarding health care issues:

http://www.ronpaul2008.com/issues/health-freedom/

I found your article interesting - one quick comment - the statement "the USA currently has a Private Enterprise managed health system" is not entirely accurate. I say this because while it's true that private companies are involved, there are numerous, NUMEROUS regulations that companies are required to follow. So while it is true that private companies are involved, it's not close to a "free market" and they're really not free to do things the way a free market might dictate.

I also agree that frivolous lawsuits are a serious problem (not just with health care but many other things too).

Have a great day!


Ron Holland
27 Aug 07, 15:29
Ron Paul is right!

Read and sign the Ron Paul Is Right – Abolish the Federal Reserve Petition at http://www.petitiononline.com/fed/petition.html


canada bus
07 Dec 09, 22:20
useful site

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