The Other People's Money Syndrome (or OPMS)

[sirs]

"The bottom line on this is the left screams for health care programs as long as they aren't the ones paying them. "

Bt's comment in one of our threads, couldn't be truer.  And combined with the fervor over Universal Health Care, this op-ed I came across hit's quite a few shots out of the park

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The lure of other people's money
STEVEN GREENHUT
Sr. editorial writer and columnist
The Orange County Register

Watching how my kids spend money, I'm constantly reminded of something rather obvious, but still instructive: They are far less profligate with their own cash than they are with mine. What's 40 bucks for a concert if it comes right out of Dad's wallet? But that same concert is far less of a must-see event if they've got to spring for it out of their own piggy banks. My kids would explain this economic principle with one word: "Duh."

People are much more careful with their own resources than with others' resources or with those resources that are publicly owned. Nevertheless, the general public, and politicians in particular, forget how this lesson applies to everyday life.

Is it surprising that health care costs keep going up the more that people rely on third parties to pay for the bills? When someone else pays, we become far less concerned about what such a service might cost.

The Other People's Money syndrome is even more pronounced when it comes to government officials spending cash out of the vast pool of taxpayer-funded resources. Politicians have no disincentive to spending OPM. They buy votes from various well-organized constituencies (e.g., public-sector unions, farmers, benefit-seeking corporations, transit riders). H.L. Mencken said that every election is "an advance auction of stolen goods." And so government gets bigger and more free-wheeling in its spending.

We've reached the point where even wastes of hundreds of millions of dollars induce more shrugs than outrage.

Here are examples, from just a few days' of newspaper reading.

?  The Orange County Transportation Authority put the kibosh on its billion-dollar-plus CenterLine light-rail proposal after a political backlash took place. Rail isn't a horrible idea per se, but the enormous cost in no way could justify the handful of riders who would have used it, especially in a spread-out suburban county where there isn't much suburb-to-inner-city commuting. But the Irvine City Council still holds hopes that transit will one day push people out of their cars and off the freeways. Tuesday it approved its own system that is meant to jump-start the countywide rail proposal. Irvine Councilman Larry Agran gloated Tuesday that the five-mile-long rail line connecting the Great Pork? itself a massive boondoggle and waste of prime public assets ? with the Irvine Spectrum and Irvine train station is "the backbone of a system we need to build upon." This tiny system, by the way, will cost $280 million in tax funds, plus another $7 million a year to operate. And these things always have cost overruns.

"They'd be better off not spending any of this money," Charles Lave, a UCI professor emeritus of economics, told a Register reporter before the vote. He accused the council of behaving "like teenagers" who are looking for ways to spend all their money. But, then again, the current political system is set up in a way that encourages every politician to behave, financially, like a teenager. (Irvine council members also are still giddy over a costly orange balloon that people can float in above the not-quite-park, which makes them more like schoolchildren than teenagers, but I digress.)

?  Another local elected body, the Garden Grove  City Council, for years has acted not just like any teenager, but like one who has broken into the liquor cabinet. The best way to understand Garden Grove is to watch the movie, "The Music Man," in which a huckster comes to River City and sells the local rubes a bill of goods. Garden Grove's council members are the rubes ? desperate to put their city on the map, and to lure the kind of destination project that will solve their self-inflicted financial problems.

In 2006, council members were excited at an $8 billion plan by a Korean businessman to put a theme park, hotel and shopping mall in the heart of town. "One developer proposed a replica of the London Bridge across a faux river," reported the Los Angeles Times. "Another pitched Music City RiverWalk, a music-themed entertainment complex, and Middle Eastern investors proposed a cultural center for the late King Hussein of Jordan." Then there was the theme-park idea, which would have been built on a nice middle-class neighborhood that would have been cleared away by eminent domain. And city officials continue to dream about luring an Indian casino  onto Harbor Boulevard. Most of these projects would be backed with large doses of tax dollars and tax give-backs.

Even a consultant hired by the city recognized the silliness in Garden Grove, but officials will not be dissuaded from their boondoggles. The Register reported last week that "a city-hired consultant's recommendation to slow down on pursuing a casino and to explore more realistic ideas for theme parks in its resort area may not necessarily dissuade officials from doing just that." The taxpayer-funded consultant told the city to quit with the big-score ideas and focus instead on luring Wal-Mart, hotel development and other "less ambitious ideas." The city could have saved a lot of tax money by simply reading my columns and Register editorials. But Garden Grove officials have a vision, and they have Garden Grove residents' tax dollars to squander.

?  Why should city councils act responsibly when such wastrel behavior goes on at all levels, from the presidency to Congress to the state Legislature to the governor? A great recent example: Gov. Arnold Schwarzenegger's administration, the San Jose Mercury News reported last week, "sunk more than $17 million into a state fleet of cars and trucks designed to be environmentally friendly. So far, the 1,138 'flex-fuel' vehicles have traveled a collective 10 million miles and burned more than 413,202 gallons of gas. But not one drop has been high-grade ethanol ? the fuel that promised to turn the passenger fleet into clean driving machines. That's because the vehicles have no access to ethanol pumping stations." Those won't come on line until 2009!

Well, this administration has ratcheted up its spending of taxpayer dollars to record levels. When California recalled Gov. Gray Davis, the total budget was $104 billion. Under "fiscally responsible" Schwarzenegger, that amount is now $143 billion. Plus, Schwarzenegger has become a master at floating debt to pay for his current priorities. The administration recently went to an appeals court to argue that the state should be allowed to float up to $2 billion in bonds to pay for ongoing pension obligations, without a vote of the people, despite the state constitution's clear requirement that any debt spending above $300,000 must be approved by a two-thirds vote of the Legislature and a majority statewide vote.

The court rebuked Schwarzenspender, and his legalistic argument why a vote wasn't necessary. Had the governor prevailed, then Katy bar the doors ? government could run up debt without any limitation at all. As it is, the public is not much of a check on debt spending. California voters routinely vote for bond measures, figuring that it's no big deal to spend now and pay later.

That's not so hard to figure, given the laws of nature and economics. The public doesn't mind spending Other People's Money, either, even if those other people happen to be their grandkids.

The Lure of other people's $

[sirs]

The Orange Grove: Spending others' vs. your own money
Expectations of medical care vary depending on who's paying the bill.
By MICHAEL GLUECK and THOMAS DAMIANI

Wouldn't it be nice if you could spend your own money on the medical care you want ? not on what other people think you should get? When the bureaucrats get involved ? watch out.

Here are four basic scenarios for providing medical care, distinguished from each other by who's paying and who's getting the benefit.

Scenario 1: Spending your own money on things for you: In this scenario, you choose what goods or services you want for yourself. You can shop for the medical care that you believe provides the best value, which means selecting your doctors and, with their guidance and advice, selecting a course of treatment. The decisions are between you and your doctor, and you pay the doctor for the services rendered. It's the "old fashioned" doctor-patient relationship. If you believe you are getting too little care or paying too much, you go elsewhere. Costs may be subsidized by employers, insurance companies or government agencies but the decisions are yours.

Scenario 2: Spending your own money on things for others: Here, you choose what goods or services you want to provide for someone else. Selecting and providing medical care for minor children and medical or assisted-living care for elderly relatives fall into this category. Your choices may not provide exactly what the recipients would choose for themselves but they reflect what you believe to be the best value. Costs may be subsidized as in Scenario 1.

Scenario 3: Spending other people's money on things for you: In this scenario, you generally choose the medical care for yourself that is mostly paid for by someone else, typically your employer. People fail to appreciate the real costs since a large percentage of the insurance premiums are paid by the employer, and the total premium is frequently not even known to the employee. There is little or no cost to the patient for visiting a doctor, therefore there is no incentive for judicious, cost-efficient use of the medical system. People expect only the best of care and are disappointed if constraints are imposed. The doctor-patient relationship is compromised.

To combat overuse and to control costs, insurance companies set allowable costs. This often means there is no differentiation between a procedure performed by a newly licensed doctor and the same procedure performed by a world-renowned specialist. Bureaucracies are created to monitor and judge the doctor's treatment even though the bureaucrats have never examined the patient.

Scenario 4: Spending other people's money on things for others: Someone else decides how to spend money that is not theirs on goods and services for someone else. Variations of universal health care, which fall into this scenario, typically require that the power of taxation be used to take money from people to be spent on medical care for someone else. Rules are made that limit choice. These systems neither permit flexibility for the unique aspects of an individual nor allow the patient to be a key decision maker in his own treatment.

So it seems to us simple souls that, in terms of medical care, Scenario 1 is the best and most efficient use of your money, and Scenario 4 the worst.

This four-scenario concept is not original: Libertarians have long recognized that these principles apply to many entitlement and regulatory programs, including Social Security.

Unfortunately in city, county, state and federal governments, systems funded by versions of Scenario 4 prevail much too often. Elite political officials think they are better equipped to determine what is good for you than are you. They believe government mandates are superior to offering rational arguments that convince a majority of citizens to freely adopt their objectives. Frequently distortion and propaganda is used to justify their mandates.

Finally, most of the 535 elected members of Congress are Scenario 4 personalities even though they are part of a government that was intended to be by the people, for the people and of the people.

Something to seriously think about.


OPMS

[Plane]

How do you feel about reduced taxes on saveings devoted to health care?

[sirs]

How do you feel about reduced taxes on saveings devoted to health care?

I'm all in favor of reduced taxes, given the burden of taxation we're currently under.  Obviously, the more money people can keep, provides them more freedom to apply those monies towards what they deem necessary vs desiring.  They can apply their savings from reduced taxes to their own Health care bank even.......BUT, that means they are using their own money, which means they're likely to be more thoughtful as to when they should use it.  Which is how it ought to be

When it's someone else's money however, there is no disincentive.  And what's worse, there's an evergrowing pervasive mindset that it's their right to have said care, ........of course, payed for by someone else.  It doesn't get much more greedy than that     

[Plane]

I concurr.


http://www.treas.gov/offices/public-affairs/hsa/