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On The Real Health Care Front: Bye Bye Tenet


At some point in the regulatory process, the business being regulated decides that the regulator – federal, state or municipal – exerts such control over the business or property that “ownership” reverts from the nominal owner to the regulator. At this point, the business begins to look for the exit sign.

Karl Marx and his students, among them “A” student V. I. Lenin, may have thought it was necessary for the proletariat to wrest ownership from capitalists so that their ill-conceived profits might revert to the proletariat. That is the central doctrine of The Communist Manifesto, with its stirring opening: “Workers of the world unite; you have nothing to lose but your chains, and a world to win.” Mr. Marx may have been a poor economist, but he was a superb ideological terrorist.

It turns out the Marxists were wrong: It is not necessary for the proletariat  -- in reality, the fascist state -- to seize the means of production so they might “own” property and businesses once directed by greedy capitalists who, following the revolution, would be dispossessed of their property by the state – i.e. the Communist Party – and sent packing to the Gulag.

None of this was necessary. There is a “Third Way” to “seize the means of production,” through the regulation of contracts, while leaving nominal ownership in the hands of capitalists.


By way of illustration, let’s suppose you are considering buying a house. You intend to make improvements on it. The walls are purple. Your wife had vowed to divorce you if the walls are not painted off-white, and so you make a note on your “to do” list. Other things must be done to improve the house before the both of you move in.  The terracing is such that mowing grass might be too much a chore, so you plan to plant bushes and flowers – your wife LOVES flowers – on the terraced part of your property. An inspector has told you that a new roof is necessary. You plan expensive alterations in the interior of the house; the bedroom must be enlarged, the kitchen remodeled. All these changes must occur within a certain time frame. Your mortgage already has been approved by a bank, and you have arranged financing for the intended changes.

A few weeks before you are due to move in, there is a fascist knock on your door.  Herr Otto, the state regulator, riding crop in hand, tells you 1) You cannot repaint the walls according to your wife’s specs because regulators have determined that all houses, new or remodeled, must have purple walls; 2) the roof must be replaced by a steel corrugated roof containing solar panels; 3) the grass cannot be removed for ecological reasons that do not seem convincing to you; and 4) all other intended improvements must be certified, on pain of serious penalty, by Herr Otto, your state’s regulatory enforcer.

Now then, the question before the House is not -- should you decline to complete the purchase of the house; you would be a fool to do so.  Nor is the question before the House – should you accede to the regulator’s enforcement actions? You cannot refuse and purchase the property; if you are unobliging, fascist Herr Otto is authorized to repossess the purchased property on behalf of the proletariat he represents.

No, the only question before the House is: Who will really own the property once the regulators have been satisfied – you, the prospective title holder, or the regulatory state that henceforth may determine EVERYTHING you do with “your” property?

This is not one of those “How many angels may fit on the head of a pin?” conundrums.  Beyond a certain point, use is ownership, and ownership is use. If the use of a business or property may be determined by a regulator, ownership reverts to the regulator in proportion to the quantity and quality of the regulations the state imposes on the nominal “owner” of the property or business. If we acknowledge that the whole purpose of a car is to take me from point A to point B, and if the state should regulate the use of my car so that I cannot drive it beyond ten miles of my property, in what sense may it be said that I “own” – have fee use of -- the car?

Owing to onerous regulations, Tenet has withdrawn from a deal to purchase and run for profit five of Connecticut’s economically ailing hospitals. The Connecticut hospitals facing economic difficulties are: Waterbury, St. Mary's, Bristol, Manchester Memorial, and Rockville General. Waterbury Hospital, underwater and drowning in red ink, is gasping for air.  The straw that broke Tenet’s back was a late ruling by the state’s Office of Health Care Access, which proposed “setting strict controls over staffing, services and pricing as a condition of approving Tenet's application to buy Waterbury Hospital and convert it from a non-profit to a for-profit institution,” according to a story in CTMirror. Those regulations are union sops.

Tenet quickly issued its response to the ruling:

“We respect the role the state regulators have in providing guidance and oversight to the healthcare industry, and understand the responsibility they take in discharging their duties. Nonetheless, the extensive list of proposed conditions to be imposed on the Waterbury Hospital transaction, which is only the first of four transactions for which we've made applications, has led us to conclude that the approach to regulatory oversight in Connecticut would not enable Tenet to operate the hospitals successfully for the benefit of all stakeholders."

The usual culprits washed their hands of the matter. House Speaker Brendan Sharkey of Hamden and incoming Senate President Pro Tem Martin Looney of New Haven both claimed they had no notice of the ruling that broke the camel’s back.

Of course they didn’t.

Waterbury Hospital, attempting to raise its head above the red ink, has said that layoffs are on the table. No matter, with a wink in the direction of unions, Mr. Sharkey commiserated, "People love to have their small, local community hospitals, but they are very expensive.''


And what if financial conditions at Waterbury Hospital worsen – as they will? Not to worry, Mr. Sharkey advised; in that case, he would support a taxpayer bailout of the hospital, the default position of all progressive legislators who, in words of Progressive President Barack Obama, “do stupid stuff.”


Comments

peter brush said…
Not to worry, Mr. Sharkey advised; in that case, he would support a taxpayer bailout of the hospital
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Right; our progressives fail to see the problem. On the one hand they say they are for the little guy against those whom FDR referred to as the "princes of property," on the other hand, like the party of Mussolini, they are good with government's working hand in hand with big corporations. The Dems brag about the takeover of General Motors, and Mal-loy (still?)boasts of his handouts to hedge fund operators. Here in Connecticut we go so far as to employ eminent domain to take the homes of individuals so that a private corporation may use, or promise to use, the land for "the general welfare."

The courts have recognized a problem, and devised the term "regulatory taking" when regulations have the effect of denying an owner of use. To my knowledge the attempt by the courts to effect any serious restrictions on the regulators has not been very successful. The denial of property rights has to be so complete that even class warriors like William Brennan would recognize it.
Speaking of Roosevelt, in his famous 1932 speech wherein he proclaims the need for "restrictions" on property, he seems to have thought that the politicians would recognize when regulation had gone to far. Yes, and the guys who started the French Revolution never thought their heads would roll.
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Every man has a right to life; and this means that he has also a right to make a comfortable living...

Every man has a right to his own property; which means a right to be assured, to the fullest extent attainable, in the safety of his savings. ... In all thought of property, this right is paramount; all other property rights must yield to it. If, in accord with this principle, we must restrict the operations of the speculator, the manipulator, even the financier, I believe we must accept the restriction as needful, not to hamper individualism but to protect it...

This implication is, briefly, that the responsible heads of finance and industry instead of acting each for himself, must work together to achieve the common end. They must, where necessary, sacrifice this or that private advantage; and in reciprocal self-denial must seek a general advantage. ... Whenever in the pursuit of this objective the lone wolf... whose hand is against every man’s, declines to join in achieving an end recognized as being for the public welfare, and threatens to drag the industry back to a state of anarchy, the government may properly be asked to apply restraint. Likewise, should the group ever use its collective power contrary to public welfare, the government must be swift to enter and protect the public interest.
http://www.heritage.org/initiatives/first-principles/primary-sources/fdrs-commonwealth-club-address
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For example: in Pennsylvania Coal Co. v. Mahon (260 U.S. 393) Pennsylvania Coal owned the mineral rights in a property (as well as the right to surface support under Pennsylvania law), and Mahon owned the surface rights of that land. Relying on Pennsylvania statutory law, the surface owners wanted mining under their [surface] land stopped to prevent subsidence. The court agreed with the coal company and held that the state statute forbidding such mining was a taking of the coal company's property.

Thus, the Pennsylvania Coal Company suffered a 100% taking, because all of its property (the underground coal deposits) had been effectively extinguished by the regulation. It could no longer extract its own coal. On the other hand, under the more recent Penn Central approach, if one defines the "denominator" as the total property rights in a particular parcel (i.e., both surface and mineral rights), then there would be only a partial taking, because the mineral rights were only a part of the total rights in the property (even if those rights were distributed between two owners).
peter brush said…
The phrase "temporary dump" has a nice alliterative ring to it for which I congratulate the Wiki-Author.

In the late sixties/early seventies there came into existence not only the Puritanical Fascism that has prevailed in our strictly political realm. There was also a libertarian communalism taking the form of communes, "free" love, and rampant hitch-hiking. Perhaps wiki's are the contemporary manifestation of that latent societal urge.
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Kelo v. City of New London, 545 U.S. 469 (2005)[1] was a case decided by the Supreme Court of the United States involving the use of eminent domain to transfer land from one private owner to another private owner to further economic development. In a 5–4 decision, the Court held that the general benefits a community enjoyed from economic growth qualified private redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.

The case arose in the context of condemnation by the city of New London, Connecticut, of privately owned real property, so that it could be used as part of a “comprehensive redevelopment plan.” However, the private developer was unable to obtain financing and abandoned the redevelopment project, leaving the land as an empty lot, which was eventually turned into a temporary dump.[2]
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While a wiki is a type of content management system, it differs from a blog or most other such systems in that the content is created without any defined owner or leader, and wikis have little implicit structure, allowing structure to emerge according to the needs of the users.[2]

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