Why a "Public Option" is needed from a fiscal conservative's point of view
Okay, I'll admit it right here and now...I am an avid Rush Limbaugh listener. In fact, I had better hurry up and write this post before he comes on at noon!
While Rush Limbaugh is undoubtedly right on many things, he is quite wrong when he says medical insurance companies and private health care providers will go out of business if a public option is adopted as part of Obama's overall Heath Care initiative.
The flaw in his argument is simple to see: On the one hand he complains bitterly about a public option that will allow millions of Americans to once again afford some kind of health care at little or no costs. In fact, the cost will be so low, big corporations such a Walmark will quickly dump their own costly employees' health coverage, presently at approximately $300 per month, and buy into the government's public option for approximately $25 per month -- no one ever said Walmat didn't have an eye for savings -- Walmart competitors will have little choice but to follow suit.
The final result of instituting a public option in Rush's eyes will be to simply exchange one private monopoly for a government monopoly, much like our public school system. And just as in our public school system, as in any structural monopoly, Rush is quick to point out, costs will always rise while services will always decline -- it's inevitable. It will happen in any structural monopoly. Medical costs will continue to rise. There will be rationing. There will be long waits. There will be inefficiencies, with vast amount of corruption. Government health care will be no more efficient than the government post office or the public school system, only far, far more costly.
The problem here is, Rush never equates the two. Public health care will be so bad, in fact, it will insure private health care insurance and private health care providers will have plenty of paying customer around for a very long, long time to come.
Is this fair? Probably not. But it will accomplish two things: It will provide some kind of health care for millions of Americans who presently can't afford any, and, as our past experience has shown us with the Public Health Service, it will lower cost through structural competition -- something our our public school system could use a little of at the moment.
Come to think of it, it is ironic. While Obama is promoting structural competition to solve our public health care crisis, he is busy shutting it down in our public school system. Go figure!
Ups! Got to go now.
ex animo
davidfarrar
What they should have done was offered Medicare reform as the basis a public option as a way to save a system that republican and democratic voters alike support fully.
Reform private insurance and reform our public system, using mostly revenue-neutral regulations to begin with. In fact, mandated benefits will ensure private companies start to compete on price and service, because they are only allowed to charge so much for a defined package of services. Kind of like the restrictions on private financing for government-backed loans.
I am actually pretty happy with how the debate is shaping up and am happy the moderate seem to have the upper hand right now. We won't get it done all at once, but I am quite sure we will get it done.
August 18, 2009 12:31 PM | Reply | Permalink
You can't mandate significant price controls in an open economic system. The economic system will always respond by either driving prices up elsewhere, or reduce services. The trick is to allow both public and private systems to compete against each other. Prices will still go up, of course; but they will go up more slowly then a single monopoly, public or private.
ex animo
davidfarrar
August 18, 2009 2:19 PM | Reply | Permalink
The price will automatically be set by mandating minimum standards of care. Again, like competition for government-backed student loans. The actual price paid and services offered at the different price points will be a product of market forces once we set a baseline that everyone has to follow.
August 18, 2009 2:28 PM | Reply | Permalink
And you don't think that will disportionately raise costs while lowering services, just like the government-backed student loan program?
ex animo
davidfarrar
August 18, 2009 3:24 PM | Reply | Permalink
The student loan programs don't work that way and they are chugging right along as they always have.
Not sure what you are referring to, but as far as health insurance goes, mandated benefits and stricter regulations will put every company on a level playing field. The frame for those benefits, as far as I can tell, will come from the nonprofit coops being created as a place for people without access to the safety in numbers that comes with groups benefits plans.
At that point, since benefits are mandated and the rules are all the same, the only place they can compete is on price and services for that price that are above the minimum required, since everyone will have at least that.
Not a perfect system by any stretch, but a vast improvement over the current set-up as far as I can tell without a huge amount of new spending attached to the proposal.
August 19, 2009 8:07 AM | Reply | Permalink