A nutty notion about waste - absurdity of Bill Clinton's proposal that the federal government can manage health insurance billing claims more efficiently than private industry - Column

0 Comments | Insight on the News, Nov 15, 1993 | by Thomas DiLorenzo

President Clinton claims his nationalized health care scheme will make the health insurance industry less bureaucratic. Specifically, he says his plan will eliminate wasteful duplication that eliminates from the existence of too many insurance companies, each of which has its own forms for processing claims.

To reduce the paperwork burden, the administration proposes to involve the federal bureaucracy more directly in hospital billing claims. That supposedly will save taxpayers and consumers tens of billions of dollars each year.

Let's get this straight: The federal bureaucracy is going to save us money because of its zeal for efficiency and its distaste for wasteful paperwork. In reality, government is the source of the paperwork problem that plagues the private sector, not the solution.

More than 15 years ago former Sen. Thomas McIntyre of New Hampshire calculated that the paperwork generated annually in Washington would fill Yankee Stadium 51 times. Given that regulation has grown enormously since then, hundreds of additional stadiums would be needed to contain all the paper today.

Just about everything service station owners do is monitored by the government through paperwork. Banks are buried in a blizzard of forms. Oil companies must file hundreds of reports each year with more than 50 federal agencies. The National Federation of Independent Business says its members spend at least 20 percent of their time complying with paperwork demands of the federal bureaucracy, and it's getting worse all the time.

During the past year Microsoft Corp. was forced to supply tons of paperwork to the Federal Trade Commission, which investigated the company for more than a year and then gave up. Unfortunately for Microsoft and its customers, the Antitrust Division of the Justice Department took the case after the FTC dropped it and now will conduct its own witchhunt with its own demands for more paperwork.

Small manufacturers must fill out "census reports" for the FTC, listing their sales, assets, liabilities and other proprietary information. If they fail to comply, the FTC can bring criminal charges against them. The biggest bureaucracy in Washington, the Environmental Protection Agency, has similar powers. Thanks to the Clean Air Act Amendments of 1990, the burden of proof is on businesspeople to prove that they filled out the regulatory forms correctly. If the EPA thinks otherwise, they can face a felony with multiple-year jail terms.

Some economists have estimated that the federal government's paperwork requirements cost more than $150 billion annually in forgone productivity, not to mention stress and aggravation. Anyone who has read the IRS's "simple" instructions knows that even that figure probably is a gross underestimate of the true costs.

Government bureaucrats flood the private sector with paperwork because they and their congressional and executive branch allies want to legislate and regulate our lives and redistribute our income, but they don't want to pay for the enforcement of those schemes out of their own budgets. That would detract from the amounts they can spend on their own salaries and perks.

Vice President Albert Gore's reinventing government report is full of examples of costly and unnecessary federal paperwork. Yet now the administration is saying that more government regulation will reduce paperwork in the health care industry. That idea ranks up there with going on a chocolate diet to lose weight or with Labor Secretary Robert Reich's recent proposal to help the poor by raising (and indexing) the minimum wage.

The very notion that putting the federal bureaucracy in charge of administering health insurance claims will reduce paperwork is a gross insult to the intelligence of the American public.

Thomas DiLorenzo is an adjunct scholar at the Cato Institute and an economics professor in the Sellinger School of Business and Management at Loyola College in Baltimore.