W

hat parent hasn`t told their

child, 'II at frst you don`t
succeed, try, try again? And while
determination is an admirable
trait, there`s a fne line between
determination and slavish devo-
tion to a really bad idea that never
had a chance oI success. Although
perhaps despair.com`s 'demotiva-
tional poster says it best: 'Perse-
verance the courage to ignore
the obvious wisdom oI turning
back.
No single organization succeeds
more at Iailure than governmen-
tal institutions. Take an idea like
socialism, slap a new label on it,
and oII they go on their merry
way leaving a rose-petal trail oI
millions, iI not billions, oI our tax
dollarsand yet utterly convinced
oI their superiority and determina-
tion: 'Oh, but this time we`ll make
it work!
In this particular case, I`m talk-
ing about socialized medicine in
the Iorm oI the CCOsCoordi-
nated Care Organizations.
Socialism crashed and burned
in the Iormer Soviet empire with
such an almighty thud that most
modern economists by and large
have declared the Iree market sys-
tem the clear winner over centrally
planned economies. I say 'most
because while even Keynesians
economists will grudgingly admit
the superiority oI a market system,
they stubbornly cling to govern-
ment-driven economies. Here too
note that they admit the superior-
ity oI 'a market system and not
'the free-market system because
the question comes down to 'how
Iree should the market be? It`s
an important distinction because
you`ll sometimes hear very Iar leIt
economists praise market systems
and, iI you`re not
paying close atten-
tion, you might actu-
ally think that they`re
agreeing with you.
Just remember a
little saying oI mine:
simply because
they`re speaking, it
doesn`t mean they`re
trying to communi-
cate.
A progressive, Ior
instance, may talk
W/
with earnest reverence about 'the
market system. But the type
oI market they`re envisioning
is something along the lines oI
carbon credit trading. These kinds
oI markets are usually invented
with the aid oI complex computer
models, oIten originate Irom game
theory, and are designed Ior a spe-
cifc and usually artifcial purpose,
wherein there would not otherwise
be a call Ior such a market. In
other words, participation is man-
dated. And these markets can, in
Iact, be wildly successIulmon-
etarily and academically speaking.
A Iree-market system has cer-
tain characteristics. A Iree-market
system recognizes individual
Ireedom, private property, and
the principle oI limited govern-
mentand government interIer-
ence (much more appropriate than
'intervention, which implies an
ability to fx a situation) should be
limited to punish rule breakers and
insure a level playing feld. Most
importantly, Ior Iree markets to
work, participants mustby def-
nition have Iree choice among
various options and all buying and
selling decisions must be vol-
untary as well as the Ireedom to
choose whether or not to partici-
pate at all.
This is why Iree-markets suc-
ceed: when buyers are Iree to
exchange money Ior goods or
service Irom sellers, each side
believes they are better oII aIter
the exchange.
A consumer buys a loaI oI bread
Ior a dollar and is in a better
position to Ieed their Iamily. The
exchange has value to the buyer.
The seller sold an item Ior a dollar
that cost them 30 cents to make,
giving them an ability to pay their
workers and produce more bread
Ior more customers. And iI the
seller hires smart employees, they
can fnd ways to reduce their costs
even more, giving them increased
profts or to lower their price ac-
cordingly to attract more buyers.
All oI this is driven by price
and value. Buyers seek the lowest
price Ior the highest value while
sellers compete with each other
on price and perceived value:
quality, convenience, design, ease
oI use, trust, and so on. It`s in
this way that Iree markets are so
exceptionally able to determine
the most accurate price Ior goods
or services and price determina-
tion arises Irom within the market
rather than being imposed Irom
without by non-participants. This
is an immensely important point
to understand, because without an
eIIective means to determine price
and value, markets Iail. Consum-
ers will pay infated prices while
sellers will be unable to determine
value Ior their customers.
In the 1940s, Friedrich Hayek
said prices refect the percep-
tions oI large numbers oI indi-
vidual players within a market:
'Economic calculation cannot be
reduced to a set oI equations.
because the knowledge underly-
ing such calculations is the sum
oI countless perceptions oI indi-
viduals in the market. This is the
advantage oI natural markets over
centrally planned markets where
prices are at the whim and specu-
lation oI a Iew bureaucrats rather
than thousands or even millions oI
individuals all making buying and
selling decisions.
So how does all oI this apply to
Oregon`s Coordinated Care Or-
ganizations? Easy. They violate
nearly every Iree-market principle.
First oII, don`t let any Repub-
lican claim they didn`t know this
was going to happen. Paragraph 1,
Section 1, oI Oregon`s HB 3650,
which 29 of 3 Republicans in
the House voted Ior (all but Jim
Weidner), reads: 'It is the inten-
tion oI the Legislative Assembly
to achieve the goals oI universal
access to an adequate level oI high
quality health care at an aIIord-
able cost (emphasis mine). Right
there, it`s clear the intent oI this
legislation is universal health care.
Socialized medicine.
Second, no selI-respecting 'fs-
cal conservative should have
voted to institute a monopoly and
yet Section 22 oI SB1580 specih-
cally waives antitrust laws Ior the
CCOs, giving them a complete
monopoly within their geographic
boundaries. You can imagine what
this will do Ior price and innova-
tion.
Perhaps even more interesting
interesting in the sense that many
Iormerly willing participants are
about to get a rude wake-up call
the CCOs are designed to do away
with competition. According to
Andis Robeznieks, writing in the
May 7th issue oI Moaern Health-
care, by law and by agreement
iI one company within the CCO
discovers a means to lower their
costs, they are manaatea to share
thateven with their competitors.
Trade secrets will be a thing oI the
past.
'II at First You Don`t Succeed, Fail, Fail Again by Mark Anderson. Copyright 2013 Page 2 of 4
II we weren`t playing with
peoples` lives, this would be al-
most laughable. On the one hand,
the designers want to save money
while on the other removing the
best means by which to achieve it.
Now, instead oI countless numbers
oI transactions driving the most
accurate price, as pointed out by
Hayek, you`ll have bureaucrats
with calculators simply guessing.
Even iI CCOs miraculously
'pencil out on paper (which is
actually easy enough to do when
dealing with government money
simply by hiding the actual costs),
we`re going to lose value. As
described in my June 2012 North-
west Connection article, there is
going to be a bevy oI lowpaid,
low-skilled, Community Health-
care Workers (CHWs) between
you and your doctor. The basic
belieI is that you can see these
CHWs Iar less expensively than
you can to see your doctor. Inci-
dentally, these CHWs are not new.
Prior to the passage oI Obamacare,
they`ve been tried elsewhere
andyou guessed itIailed.
According to a study by Marti-
nez et al. in the American Journal
of Public Health, despite numer-
ous eIIorts to integrate CHW pro-
grams into the health care delivery
system, they have been unable to
secure long-term Iunding to do so,
indicating that consumers haven`t
perceived them as having any
value.
My Iamily has already witnessed
what this will do to actual care.
My 89-year-old Iather-in-law, who
is blind and lives in assisted living,
recently had surgery on his Ioot.
As part oI his recovery he has to
wear a stiII rubber boot to immo-
bilize it that was to be treated like
a cast, even though it was remov-
able. The surgeon Iaxed orders
to this extent to his care Iacility.
His surgery was on a Tuesday and
by that Friday, his boot had been
removed no less than three times,
and staII had repeatedly put a sock
on his Ioot, causing his suture to
bleed and disheveling the bandage
wrappings, causing Iurther dis-
comIort.
He was also so heavily drugged
that he didn`t know where he was
and didn`t recognize my wiIe
when she arrived to take him Ior a
checkup and yet staII was bliss-
Iully unaware oI his conIusion and
was simply shoveling cereal into
his mouth.
The doctor then sent over a
second, more IorceIul note that
read, 'DO NOT remove his shoe
Ior any reason! (emphasis theirs).
'But it didn`t say not to put a sock
on, staII said when we asked why
they had been removing the boot
aIter receiving the second order,
even though to do so meant they
had to remove the boot.
The order also said to take him
oII Vicodin, a pain medicine. That
part oI the order read, 'Vicodin
causes conIusion. Give Motrin
Ior Ioot pain. Complaints due to
Vicodin and included a prescrip-
tion Ior Motrin. Most people can
fgure out this meant to stop the
Vicodin and give Motrin or at least
the doctor`s intent seems clear to
me (then again, I have a degree in
English).
And yet by the Iollowing Tues-
day, he was again so drugged out
he barely recognized me when I
picked him up Ior a return trip to
the doctor. StaII didn`t recognize
(or chose to ignore) his conIusion,
and simply dragged this blind man
with a sore Ioot down to breakIast
and plopped him in a chair. It turns
out staII had continued to give him
Vicodin because the order did not
specihcally state to discontinue the
Vicodin. So staII Iaxed a note to
the surgeon, 'May we please have
an order to D/C Vicodin 5/500 mg
due to Iamily states it makes him
conIused to which they received
a simple, 'D/C VICODIN (again,
emphasis theirs).
These low-paid staII members,
who have little iI any medical
training, are a model oI what we
can expect Irom CCO health care
navigators, peer wellness special-
ists, and the like. Fortunately Ior
us, my Iather-in-law is literally
three minutes away Irom us. I
shudder to think what would hap-
pen to him iI we weren`t constant-
ly in there to care Ior and deIend
him.
So now that both Obamacare
and the CCOs have been Iorced on
us, where do we go Irom here?
Opportunities abound. Already
cracks are showing in the CCOs.
AIter only three months in op-
eration, the Marion-Polk CCO is
being sued by the Salem Hospital.
According to James LoItus, Stay-
ton city councilor, Salem Hospital
was oIIered Iour payment options,
all oI which would have Iorced
them to lose money on CCO
patients. This is an opportunity:
counties would be wise to back
out now Irom a plan that has been
proven time and again destined
'II at First You Don`t Succeed, Fail, Fail Again by Mark Anderson. Copyright 2013 Page 3 of 4
to Iail, despite the rosy promises
Irom the Oregon Health Authority.
And while legislative Repub-
licans can`t by themselves do
anything about the CCOs (inci-
dentally, all Iour Republicans in
the house who lost their seats in
2012 voted Ior the CCOs), this is
an opportunity Ior Republicans to
build some trust in their oII years.
It would do them a world oI good
to admit they screwed up. How
reIreshing that would be! Who
hasn`t messed up something on
the job and yet it never seems to
occur to politicians to admit Iault.
Since the election, we`ve heard a
lot about 'reIorming the Repub-
licans, well, admitting Iault and
trying to fx a problem they cre-
ated would be a tornado`s worth oI
Iresh air. This would allow them
to spend the next two years repair-
ing the damage with votersand
rebuild trust. AIter all, no one will
believe your next promise iI you
haven`t apologized and rebuilt
trust Irom your last promise.
One other opportunity is that
as more oI the CCOs and CHWs
come online and Oregon continues
to lurch down a path that`s been
blazed by some oI the most spec-
tacular Iailures oI all time, there
will be plenty oI evidence oI the
CCOs` Iailure, which will swing
reasonable Democrats their way as
they too personally experience the
loss oI value.
But to take advantage, Repub-
licans need to be in a position to
take advantage. And that means
the course correction needs to
begin right now.
Mark Anaerson is co-owner of
GRIP Proauctions, an MBA, a
Doctorate of Business Aaministra-
tion canaiaate, ana the host of the
I Spy Radio Show, which is heara
Saturaays, 11-noon, on KYKN
(1430-AM) in the greater Salem
area or anywhere via www.kykn.
com ana on KAJO (1270-AM) in
Grants Pass on Sunaays, 78.00
p.m. or anywhere via www.kafo.
com. Poacasts are also avail-
able after the show airs via www.
ispyraaio.com. He can be reachea
at markispyraaio.com.)
'II at First You Don`t Succeed, Fail, Fail Again by Mark Anderson. Copyright 2013 Page 4 of 4