Public-plan proponents have feigned ignorance of how such an option would crowd out the public market. The answer is simple: a public plan would be a political, not a market, entity. Its justification is premised on a belief that the insurance market is not competitive and that insurers price oligopolistically, retaining excessive profits. Even if this were true, the public plan would have no way of knowing when it had priced away its more efficient market competitors’ oligopolistic profits. It would not know that it had destroyed these “inefficient” profits until it had lowered its premium prices to a level too low for private insurers to match. Or, as a flowchart:
It is inevitable that the government will stack the deck in favor of its own offering. Even if it is not openly subsidized, the public plan will almost certainly be able to outsource expensive administrative duties to government bureaucracies with their own operating budgets. It will likely have powers to impose its prices on providers that its private competitors will not. And it is absurd to think that the government would simply allow its plan to disappear if it failed to operate within its budget. The public plan’s political structure and mandate to drive down prices blindly guarantees that a bailout will be needed sooner rather than later.
said
Wallace Forman
@ 1:14 PM.
Comments (2)
Matthew Yglesias gives a pretty standard defense of a public health care plan:
A public option that strives to achieve public goals—quality care at an affordable price—will challenge private industry to do a better job. Then competition between plans will drive improvements in quality and efficiency. Without a public option, the risk is that private plans will compete by trying to screen out sick patients. That’s a viable root to private sector profits, but it does nothing to improve quality or control costs.
Yglesias treats “quality and efficiency” and “screening out sick patients” as mutually exclusive routes to profit. But they are not. The free market is not simply satisfied with one source of profit to the neglect of others. Firms will try to cut both kinds of costs – the costs of treating the sick and the costs of treatment in general. They make more money that way.
A public plan does not solve the dilemma of paying for sick policy holders. If the private market prices them out into the public plan, the public plan will be forced to pay for its higher average patient costs through premiums or subsidies. When the public plan raises premiums, the healthy will flee to cheaper private plans, perpetuating the cycle. When it subsidizes the treatment of the sick, it does not “control” costs (in fact, a subsidy incentivizes more consumption of health care, increasing overall costs), it justs forcibly redistributes them.
If there is truly no competition in the health care market (a possible explanation for “buried treasure” health care profits – all we have to do is start digging), the most likely culprit is the maze of state regulations that segment the national market and shackle insurers with mandates. The actual solution to this problem is to break down state barriers and reduce the number of regulations and mandates – but this answer does not lead to a redistributive system, so progressives will ignore it.
said
Wallace Forman
@ 12:51 PM.
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David Kopel of Volokh points to this troubling poll in the National Journal:
 |
 |
 Excluding it would be a deal-breaker: 72.2% |
 I want it, but inclusion is not essential: 27.8% |
 I oppose it, but exclusion is not essential: 0% |
| Including it would be a deal-breaker: 0% |
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 Excluding it would be a deal-breaker: 8.3% |
| I want it, but inclusion is not essential: 0% |
 I oppose it, but exclusion is not essential: 25% |
 Including it would be a deal-breaker: 58.3% |
 Unsure (volunteered): 8.3% |
|
Only 58.3% of conservative bloggers consider a public plan to be a “deal-breaker”? I’m a little bit unclear what that phrase is supposed to mean, but I assume it indicates a proposal so noxious that conservatives would simply refuse to cooperate with its passage.
Here’s a quote from a conservative who is “opposed” but doesn’t consider it a deal-breaker:
“Public insurance can be available for those who want/need it, but it should in no way take away choices from individuals for private insurance.” D.S. Hube, The Colossus Of Rhodey
A public plan is socialized medicine by inches. It is probably impossible to guarantee both that public insurance be available and that it not interfere with private choice “in any way”. Either the public plan will be allowed to go bankrupt if it runs out of money (and won’t be available), or it will be subsidized and price out the private market (limiting choice). As Kopel explains:
“The government insurance program would inevitably benefit from taxpayer subsidies, making it less expensive, in the short run, than independent plans. Over time, the independent plans would be driven out of business, and even before then, many employers would force their employees into the government program. As private competition is eliminated, the imposition of Canadian-style rationing becomes feasible.” David Kopel, The Volokh Conspiracy
I’m not sure that conservatives understand what they are up against. They need to be opposed to this, and united in their opposition, if they want to have any chance of stopping the redistributive state’s next advance.
said
Wallace Forman
@ 7:19 PM.
Comments (0)
