Frequently Asked Questions (FAQs)

Q1. Why do we need a new position on privatization?

Isn’t the LWVUS current position adequate?

A1 The current position is open to more than one interpretation, and it’s silent on moving from private to publicly-managed services. For example, does “public health” refer to all health care, or just to publicly-funded programs? Currently, the position just considers what can move from public to private, not vice versa.

Therefore, the new position articulates the basis for

• considering health care more generally a public good
• converting privatized services that are not serving the public good to publicly-managed services.

There’s a little more, but that’s the core.

Q2. Why does Vermont consider the topic of Privatization in health care so important?

In brief, privatized healthcare tends to cost more and yield worse results compared to public healthcare. We deserve better. Incentives in privatized healthcare are not set up to provide it. 

The current LWVUS Position on Privatization says a “public good” worthy of protection by League advocacy applies to the: electoral process, justice system, military, public safety, public health, education, transportation, environmental protection, and programs that protect and provide basic human needs.

Finding that health care overall fits many definitions of a “public good,” the Vermont Update explicitly adds health care to public health — so that League members can advocate to protect all health care services, entities, or organizations from privatization that is not in the public interest. A widespread corporate practice that harms the public good is seen, for example, when services are not provided in areas that won’t create profits for investors–leaving much of the country in “health care deserts.”  A public program would provide services to meet medical needs, and budget to cover them. 

Governments are incentivized to prioritize health and public welfare. For-profit organizations, both traditional corporations and private equity firms, are incentivized to prioritize profit. An increasing amount of the $4.5 trillion the U.S. spends on health care goes to corporate owners and investors rather than health care patients and providers.  Estimates of private equity’s share alone are $1 trillion. 

Vermont’s Concurrence suggests a way to put patient needs before profits when the public good demands. It also adds consequences for profit-seeking organizations who prioritize profits over health.

Q3. Do you propose that the Vermont update should replace the LWVUS position?

A3. No, the current position remains in force. We can’t eliminate a position, but we can add elements. Think of the update as a supplement to the current position, one that LWVUS may adopt in whole or in part.

Q4. Is the proposed update intended to add to the LWVUS Health Care Position under “Social Policy” or the Privatization position under “Representative Government”?

A4. The intent is to update the current LWVUS Position on Privatization. The proposed update will not affect the LWVUS Health Care Position. This is because the Position on Health Care does not address health care commercialization by for-profit entities. The privatization position includes healthcare among other public goods, providing the basis for supporting bills opposing commercialization.

The Vermont study was motivated by concerns relating to health care, but relies on the existing LWVUS position to allow advocacy for all the public goods already covered by it.

Q5.  Is it your position that there should be no private options available at all?

A5.  Not at all.

For health care, we would expect private clinicians (doctors, nurse practitioners, physical therapists, nutritionists, etc.) to be in clinician-owned private practices, either soloists or group practices but owned by the clinicians, not owned by for-profit corporations.  Alternatively, if state law allows, they might be employed by a non-profit, such as a non-profit hospital, if the non-profit is acting as a mission-driven non-profit that returns “excess revenues” to working on their mission.  Some states have “corporate practice of medicine laws” that, for reasons of conflict of interest, do not allow employment of physicians by any corporations, including hospitals, but some allow them to be employed by some non-profit corporations.

There might also be private non-profit corporations that provide health care-related goods and services, but our position focuses on providing a basis to advocate against for-profit ownership or administration of health care goods and services.  Any time you invoke the name of the League, you must be sure your action does not conflict with any League position, or with League values.  So if a health care good is currently being privately delivered, even if it is for-profit, if it is accessible to those who need it and affordable for the individual and the public funding source (if there is public funding), then your board would need to consider the purpose and potential outcome of advocacy to de-privatize the product, and whether that advocacy is appropriate.

In our study, we determined that health care does not follow free market principles and should not have the profit motive impairing access to health care, so Leagues should be empowered to advocate against policies that allow profit from health care.  We did not study whether other public goods and services should only be non-profit.  Our study did bring us to the conclusion that for public goods, if they are not meeting the criteria set out in the current Position on Privatization, as outlined in Impact on Issues on page 67-68, then we should be able to advocate for de-privatizing.

Q6. Without definitions, and descriptions of the process for taking control of currently and historically private health services, would we be inadvertently manipulated into supporting a move that was unintended?

For example, couldn’t an administration (state or federal) that is unfriendly to women’s reproductive health services–which are currently delivered and have always been through the private sector–introduces a state or federal bill accusing such services of “failing to deliver” using bogus criteria–the waiting times for appointments are too long, the prices are not transparent, etc. They could argue that the LWV agrees (!), due to the League’s new deprivatization concurrence.   

A6. The criteria in the Privatization position focuses on administration of services funded by taxpayer dollars that are privatized by contract. Usually in that contract for transfer of administration (and sometimes ownership of infrastructure/delivery), the private equity investors commit to providing equivalent quality and quantity of services and lower-cost, compared to their delivery by the public agency.  When the benefits of the privatization fail to materialize, this clause allows Leagues to advocate for accountability, even de-privatization.

As one might point out, entities that are historically private health services are not bound by specific terms in a contract, and thus may not have a clear-cut criterion for failing to deliver.

However, the VT study also considered whether the same criteria in the position–for turning something public over to private hands–also apply for a service being provided privately (without a specific contract). That is, if they don’t meet the criteria in the position of transparency, accountability, ensuring the public good etc, lawmakers may want to make laws to put those services into a public program, and this position update would allow League members to support them if they wanted to.  (The study is not yet published. We will have to consult it later–as soon as we can.)

Q7.  What are the criteria for “failing to deliver”?

A7.  Criteria that speak to this are found in the current LWVUS position: The VT position operationalizes what had only been envisioned; the US position clearly provides consequences for failing to live up to the considerations–namely that “the services or assets will be returned to the government.”

There are 2 sources of such criteria in the current LWVUS position:

• the first paragraph says in order to privatize a service, one must confirm that “transparency, accountability, and preservation of the common good are ensured”. 
• The second is a bulleted list of “considerations [that] apply to most decisions to transfer public services, assets, and functions to the private sector.  They very specifically mention “a provision and a process” [to ensure their return to the government if the contractor fails to perform]:

from: page 68 of Impact on Issues

• Ongoing and timely communication with stakeholders and the public. 
• Statement of the circumstances as they exist and what is to be gained. 
• Definition of the quality, level, and cost of service expected. 
• Assessment of the private market— whether there are providers to assure competitive pricing and delivery (in some cases there may not be multiple providers if a service is so specialized (e.g., high-tech, airports). 
• Cost-benefit analyses evaluating short- and long-term costs of privatization, including the ongoing costs of contract administration and oversight. 
• An understanding of the impact on customers, the broader community, environment, and public employees. 
• An open, competitive bidding process with clearly defined criteria to be used in selecting a contractor. 
• A provision and process to ensure the services or assets will be returned to the government if a contractor fails to perform. 
• A data-driven selection of private entities whose goals, purposes, and means are not incompatible with the public well-being. 
• The careful negotiation and drafting of the controlling privatization contract. 
• Adequate oversight and periodic performance monitoring of the privatized services by the government entity to ensure that the private entity is complying with all relevant laws and regulations, contract terms and conditions, and ethical standards, including public disclosure and comment.

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