Trends

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"Fortunately," it continues, "private insurers are starting to develop and offer long-term care insurance with great enthusiasm." The task at hand, then,is to encourage this market response in order "to make private sector financing of such care more feasible and practical."

The NCF report-the product of a task force that included representatives from businesses, taxpayer groups, senior-citizen groups, insurers, and market oriented public-policy groups-is no theoretical treatise on the virtues of free enterprise but a nuts-and-bolts explanation of just how the market could meet people's needs in this area. The authors outline many policy options, including lifting restrictions on employers' offering retirement health-care benefits as part of company pension plans; introducing Individual Medical Accounts (analogous to Individual Retirement trends Accounts), which would encourage people to save during their working years for their retirement health-care needs; creating Health Care Savings Accounts that would give workers the option of substituting private insurance for Medicare; and removing the taxes that most states impose on insurance premiums.

Current demographic trends show that a higher proportion of the population will be elderly in the future and that these elderly will live longer-all of which will put an added strain on Medicare financing. And the Medicare payroll tax already places a heavy burden on today's workers. Allowing the private sector to develop, concludes the report, would facilitate "the 1980s worldwide trend away from bureaucracy and towards the market."

There's No Biz Like Privatization Biz

With the emergence of privatization as a real, live public-policy option, it was only a matter of time before a privatization industry sprang up, clamoring to provide public services more efficiently and less expensively than local government.

Well, time is up. A new New York-based firm, Municipal Development Corporation (MUNI), has become "a pioneer in the emerging growth industry of privatization," according to a research report by brokerage firm McKinley Allsopp, lead underwriter for MUNI's initial public offering. MUNI is unique in that it intends to offer the gamut of privatization services: from acquisition to development to operation of facilities including roads, bridges, water systems, and public buildings.

As MUNI's common-stock prospectus notes, "there are many entities which currently participate in one or more aspects of privatization... .However, [MUNI] believes that there are currently no other companies that have been specifically organized to undertake an entire privatization project in the manner contemplated by the Company. " The prospectus also predicts: "As the potential for profit through the privatization of entire projects is more widely perceived, a growing number of entrants into the field can be expected."

MUNI's first project is a wastewater treatment facility in Pasco County, Florida. But perhaps its most radical act has been to propose construction and maintenance of what would be the country's sole private toll road. The 10-mile road, in Loudon County, Virginia, would connect a toll road operated by Dulles Airport with a state highway. It would be owned and operated by MUNI, though the state would retain the power to set the rules of the road. (No 85-mile-an-hour speed limits, eight-year-old drivers, etc.)

Local officials say the road is badly needed to relieve commuter traffic on a parallel state road. But as muni president John D. Miller told the Washington Post, "With the incredible federal deficit, they're just not going to be able to throw money at road problems. With many projects...there's no need for the investment of public resources."

And there are other good reasons not to go that route. Virginia road construction schedules call for the state to build the 10-mile Dulles extension by the year 2000; MUNI claims it can do the job, privately, in just four years. MUNI officials have met with Virginia transportation bureaucrats, but they face a number of obstacles, not least of which is a state law forbidding private toll roads.

Whatever the outcome of the MUNI-Virginia negotiations, the privatization business seems here to stay. As the Post said of the toll-road discussions, "The fact that the idea could be plausibly suggested reveals how times are changing."

How to Unsnarl Air Traffic Jams

It's 10:15, your plane was supposed to take off at 9:00 and you're still cooling your heels in the airport. A baby is screaming, and the guy next to you keeps blowing smoke in your face. Finally, you get on board. And sit. For 45 minutes in the hot sun. The baby is still screaming-and you know how it feels. You take out the newspaper and read the headline: "Four dead as planes collide." What's going on here? Thanks to an inefficient airtransportation system, U.S. air travelers are wasting $500 million to $1 billion of their time a year (depending on whose estimates you believe) hanging around waiting for delayed planes. Meanwhile, the number of near-collisions in midair is at an all-time high, largely because of a shortage of qualified air traffic controllers that has persisted since the Department of Transportation fired striking union members in 1981-three years after airline deregulation and plummeting prices brought more and more air travelers aloft.

In response, the usual suspects are calling for reregulation of the airlines-despite estimates that deregulation has saved passengers at least $6 billion a year. (See Trends, Dec. 1986.) But the brewing crisis in air traffic may actually end up increasing freedom of the skies. Two proposals that would reduce government involvement in air-traffic control are now on the table, and one is a genuinely free-market response to today's problems.

The Air Transport Association (ATA), an airline-industry trade group, wants the Federal Aviation Administration (FAA) to spin off its air-traffic control operations into a federal corporation like Amtrak or the Postal Service. Funded by user fees, this quasi-independent entity would have its own source of revenue and would be exempt from civil service and procurement regulations. So it could more easily upgrade its equipment and workforce.

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