HOOSIERS DISCOVER THE COST OF PRIVATIZATION

It was a proud day for the governor. In December 2006, he stepped to the lectern, full of confidence: "No decision we've made," he told the assembled media, "is more clearly in the public interest."

It was a proud day for the governor. In December 2006, he stepped to the lectern, full of confidence: “No decision we’ve made,” he told the assembled media, “is more clearly in the public interest.”

Gosh, if that was his best decision, I’d hate to see one of his bad ones.

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He’s Mitch Danials, governor of Indiana and an ideological absolutist on the virtues of privatizing government, and he was announcing his hallmark plan to outsource that state’s administration of food stamps, Medicaid, and other welfare benefits for poor folks. No need for all those government case workers, Daniels declared, because the needs of welfare recipients can be better met the corporate way – with efficient computers and call centers.

IBM was given a $1.1-billion contract from the state to take charge. Taxpayers, boasted the governor, will reap “a billion dollars in savings,” while low-income families will enjoy the stellar service of the private sector.

Serving a public need, however, is not as easy as designing computer software. More than two years into the task, IBM’s stumbles and fumbles include lost paperwork, frustrating runarounds, poorly-trained staff, inadequate equipment, and rejection of qualified applicants. The rate of mishandled food-stamp cases, for example, has more than tripled since IBM took over.

To try to fix this mess, the state has now issued a list of 200 reforms that IBM must achieve, giving it until September to shape up. The changes include hiring additional staff and managers, which will eliminate much of the highly-touted “savings” that privatization was to bring. A state official says bluntly: “It’s possible we’d have to cancel the contract.”

The so-called “efficiencies” of privatization are actually only achieved by shortchanging service and eliminating the personal touch – and that’s no way to run a public program.

“IBM on notice over Ind. Welfare deal,” www.businessweek.com, July 7, 2009.

“State puts IBM on notice over welfare deal,” www.indystar.com, July 7, 2009.

“$1 B privatization deal at risk,” www.indystar.com, July 8, 2009.

“Battling the bastards is about as much fun as you can have with your clothes on.”

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