Via the Herald:
Private investors will soon be given the opportunity to invest in mental health services, Government confirmed this morning.
Finance Minister Bill English and Health Minister Jonathan Coleman have announced plans for New Zealand’s first social bond, which will focus on the mental health sector.
The Labour Party described the new policy as an untested experiment which used New Zealand’s most vulnerable people as “guinea pigs”.
Social bonds allow Government to contract out services and funding to non-government or private organisations, with agreed targets and timeframes.
If the targets are met, Government pays back the investors, and also pays a return on their investment. The return depended on the level of results, up to an agreed maximum.
“The Government is focused on achieving better results for individuals and families in highest need,” Finance Minister Bill English said in a statement.
“Where we succeed, there are opportunities to help people fulfil their potential, a chance to break inter-generational cycles of dependency and, in the long term, potential savings for taxpayers.
“So social bonds are a consistent fit with our wider social investment approach which aims to better understand both the drivers and risks of social dysfunction and where we can have the greatest impact in improving people’s lives.”
The thinking behind this policy comes from a branch of economics called public choice theory; it’s still influential on the right and the logic goes like this: What if all those social workers and doctors and carers and psychiatric nurses in the state-funded mental health sector are all rational, selfish individuals? They have no incentive to actually help their patients recover from their illnesses and re-enter the workforce, because their income is reliant on the mentally ill remaining ill and requiring ongoing care! If they cure all their patients then they’re out of a job! Why not then, turn to the limitless ingenuity of the market and instead of leaving the care of the mentally ill to a bunch of corrupt, fat-cat doctors and social workers, incentivise our wealth-creating business leaders and executives to simply cure severe schizophrenics and manic-depressives, somehow, so they can re-enter the workforce as happy productive citizens!
The flaw, as usual, is the assumption that everyone thinks like economists and that people become mental health workers for the enormous profits, rather than motives of, say, compassion or humanity. And again, as usual, there’s magical thinking around the role of the market and our business class. Sure, businesses that win tenders for these services could work hard and find a way to cure all their clients, but what they’re more likely to do is hire lobbyists and lawyers, find a way to game the system and make a lot of money while inflicting misery on a bunch of very vulnerable people.