New national report questions privatized government services like those in Kansas

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? At a time when the state of Kansas’ privatized child welfare programs are coming under heightened scrutiny, a new national report says privatization generally leads to lower quality services, especially for the poor and people of color.

The report, by the Washington, D.C., think tank In the Public Interest, says that privatization, especially at the state and local level, is threatening the very mission of programs that provide public goods and services.

“Private companies have left social safety net programs in tatters,” the report states. “Many workers employed by government contractors have plunged further into poverty because of declining wages and benefits. And as private interests continue to siphon money away from public services, the dismantling of public goods not only perpetuates pervasive economic inequality, but also contributes to increasing racial segregation.”

In the Public Interest describes itself as a research and policy center whose goal is to “ensure that government contracts and agreements and related public policies increase transparency, accountability, efficiency, and shared prosperity and opportunity through the provision of quality public goods, services, and assets.”

Over the last 20 years, Kansas has gone further than many other states in privatizing social safety net services for the poor and underprivileged.

In 1997, during former Republican Gov. Bill Graves’ administration, Kansas became the first state in the country to hand over virtually all of its child welfare services, including foster care and child adoption programs, to outside contractors.

More recently, in 2012, Gov. Sam Brownback’s administration fully privatized its Medicaid program, turning over responsibility for paying claims and managing patient care to three for-profit insurance companies and changing the name of the program to KanCare.

And in 2013, the Brownback administration outsourced its child support enforcement program to private contractors.

All of those moves have been controversial to varying degrees, but none more so than foster care and adoption, which is now the subject of an ongoing Legislative Post Audit review, which is due to be released in February.

Concerns about privatized child welfare services also came up Sept. 30 when the State Finance Council, a group made up of the governor and legislative leaders, approved paying $100,000 as partial settlement to the family of a 4-year-old boy who was killed while in custody of the state’s foster care system.

Senate Democratic Leader Anthony Hensley, of Topeka, said after that meeting that he opposed privatizing child welfare services during the Graves administration, “because this is the type of thing that I think the government should be responsible for … and this is a perfect example of why I believe I was right in opposing the privatization of our child welfare system.”

According to In the Public Interest’s report, such tragedies are not uncommon under privatized child welfare programs, and the negative consequences of privatization fall disproportionately on the poor and people of color.

“Researchers have found that Native American, African American, and Latino children in certain states are, compared with white children, removed from families at higher rates once identified by child protective services,” the report states, citing a 2011 study in the journal Protecting Children. “Children of color also stay in foster care for longer periods, experience more placement moves, and exit the foster care system without permanence, while their parents receive fewer services.”

ITPI executive director Donald Cohen said the fundamental problem with privatization is that it’s based on the promise of cutting costs. And while some contractors may be able to perform the job at a lower cost than government, he said, public agencies still need people to monitor the contractor to make sure the job is being done right.

“They always say they can save money by doing it,” Cohen said during a telephone interview. “But agencies never increase their monitoring staff, because it’s all about saving money. If you don’t watch, bad things happen. When you contract to paint your house, if you’re not watching a little bit, bad things happen.”

“It’s not all crookedness,” he said. “It may be corruption or it may be incompetence. It may be unintended events. There’s no shortcut to doing high quality stuff in services. It costs money. It requires expertise.”

Cohen also noted that monitoring the performance of an outside contractor is often more difficult than monitoring the state’s own employees.

“The distance between the person doing the purchasing — which is who is accountable to the public and basically responsible for the outcomes — the distance between that person and the person providing the service is now longer because there are intermediaries,” he said.

And the distance gets even greater under models like the one Kansas uses, where two major contractors provide services in different regions of the state, and those contractors then subcontract with more than a dozen local-area subcontractors.

Privatization still has its advocates in Kansas, especially within the Brownback administration which says KanCare — the privatization of Medicaid through managed care plans run by private insurance companies — marked a significant improvement to the state’s Medicaid system.

Prior to KanCare, much of the Kansas Medicaid program was already privatized. Pregnant women, children and families, who make up the bulk of the Medicaid population but only a fraction of its cost, were enrolled in managed care plans administered by private insurance companies.

KanCare extended that model to the remaining Medicaid population, primarily the elderly and disabled, who make up a smaller share of the population but account for a much larger share of the overall cost.

“The previous system was a one-size-fits-all system which did not provide people with a choice of plans and services available to them under KanCare,” Lt. Gov. Jeff Colyer said in an email statement. “There are more than a dozen states following our lead and implementing KanCare type reforms with good reason.”

Brownback’s spokeswoman, Eileen Hawley, argued that KanCare has slowed the rapidly spiraling cost of Medicaid while providing patients with better care.

“Each individual with a complex condition under KanCare has a care coordinator who makes sure they are getting the full care they need whether it is medical, mental health or home-based care,” she said.

But even the supporters of privatization in Kansas concede that it still requires vigorous monitoring and oversight by the agencies that outsource public services.

In 2015, the conservative Wichita-based think tank Kansas Policy Institute and the libertarian think tank Reason published a paper on the benefits of privatization that included a list of “best practices.” Among them were suggestions to focus on “best value” rather than “low bid” contracting, and ensuring accountability through “rigorous monitoring and performance evaluation.”

“Governments should never sign a contract then walk away,” the report said. “The public sector role does not end with privatization, but rather shifts to a position in which public managers are responsible for ensuring that their private partners live up to their contractual commitments.”