Government Size and (Non)Corruption

By Michael Dorf

Last week brought news that doctors receiving very large Medicare reimbursements made very large campaign contributions to Democratic campaigns and PACs, and that in turn they may have received special consideration to avoid punishment. I haven't checked out the rightwingoverse reaction to the story, but it wouldn't surprise me if it went something like this: Aha! This sort of thing shows that government-funded health insurance is rife with fraud and therefore people (like those left-wing crazies at Dorf on Law) who argue for Medicare for All would simply drive up the price of health care.

Well, okay, they probably aren't mentioning DoL expressly, but I would be surprised if that's not the general reaction. Here I want to take it seriously.

My first reaction is that this is chiefly a corruption problem, rather than a government spending program. Supreme Court decisions like Citizens United, and now McCutcheon, hold that wealthy individuals and corporations have a First Amendment right to use their wealth to influence government policy--including government policy that enables these individuals and corporations to accumulate greater (or to protect existing) wealth. I don't know whether the doctors discussed in the Times article broke any laws, but if they did, that was probably due to ineptitude rather than necessity: Our system of campaign finance permits just about anything short of an express quid pro quo, so that a well-advised donor can purchase just about all of the influence he or it wants to purchase without breaking the law.

But wait. Some small-government conservatives say that the opportunities for corruption are chiefly a product of big government. According to this argument, if we had merely a watchman state, there would be little to be gained in the way of government contracts or regulation avoidance by bribery, legal or illegal.

Although frequently offered as an axiom, that's actually an empirical claim that we can test rather easily by comparing data about social spending and corruption. And when we do so, it turns out that the claim is false.

Consider that Denmark had the second highest social spending per capita as a fraction of GDP and tied for the lowest level of corruption.  In general, high rates of (public) social spending tend to correspond with low corruption, and vice-versa--although the relation is hardly linear. Culture, politics, and other factors appear to be the main determinants of corruption.

So the data confirm my initial reaction. The corruption story (assuming that's what it is) certainly does not indict single-payer health insurance. The Supreme Court is a more likely suspect.