RE: Privatization Works

[Lisa Furia <Lfuria@earthlink.net>]

Privatization brings up some interesting philosophical issues.

For example, when a private entity is charged with administering
a publicly funded benefit, what body would be charged with regulation?
When Medicare risk contracts were established between the Fed and
Managed Care Companies (MCOs), there were some very good initial
results.  Once the low-hanging fruit was picked, however, some very
venerable companies -- indeed the best in the busienss including
United HealthCare and Aetna -- incurred major losses and attempted
to obtain rate adjustments from HCFA.  When HCFA did not concede
to these requests, the for-profit entities did what they rightfully
should have which was take care of their shareholders by cutting
losses and thus shedding Medicare-eligible enrollees.

WHen private companies are involved, they will always be most
accountable to their shareholders.  Logic holds that they must be
good to the "customer" in order to ultimately keep shareholders
happy, but, as the recent Medicare HMO issue has illustrated, this
is not always the case.  Indeed, to manage the crisis, HCFA and
these companies had to expend significant resources to deal with
the displaced.

What does this mean for SS?

Lisa