Saturday, January 14, 2012

Cost savings – Penny-wise, pound-foolish?

Wisconsin has a cost-cutting commission of some kind in operation. One of the recommendations was that schools could save $177 million by getting cheaper health insurance.

But what is the true cost of cheaper health insurance? Do employees pay more for premiums? If so, won't they want higher wages to offset their increased costs? Do employees pay more health care costs out of pocket? If so, will they be less willing to get needed medical care? If they get less medical care, will they be taking more sick days? If they take more sick days, will costs of staffing the schools go up or the effectiveness of staff go down? So, will the savings from cheaper health insurance be more than offset by higher costs elsewhere?

If any government wants to reduce costs, I have a couple of suggestions. Let's take away computers from police cars. Even assuming they cost as little as $1,000 each and if we have 1,000 police cars across the state, that would be one million dollars in savings. Let's stop using full-size especially equipped sedans for police cars. Let's replace them with Tatas from India. Instead of $30,000 plus sedans we could replace the police cars with $3,000 mini-cars. Gosh, if we have 1,000 police cars across the state, that would be a savings of 27 million dollars! Wow! Of course, what would be the cost of less effective law enforcement? I bet it would exceed 28 million dollars.

I have a better suggestion. Legislatures should write fewer and simpler bills. Then they could spend more time considering the costs and benefits to all of their constituents rather a select noisy or high-paying few. I think this would really make our 18th century politicians proud.