Obama Attacks “Illogical” Opposition to Public Plan
Very little about American health care is logical.
I didn’t watch today’s press conference, but reading back over the transcript I liked this discourse on the public plan, in which Obama was letting his Vulcan side show:
OBAMA: Now, the public plan, I think, is an important tool to discipline insurance companies. What we’ve said is, under our proposal, let’s have a system, the same way that federal employees do, same way that members of Congress do, where we call it an exchange, but you can call it a marketplace, where, essentially, you’ve got a whole bunch of different plans….As one of those options, for us to be able to say, here’s a public option that’s not profit-driven, that can keep down administrative costs, and that provides you good, quality care for a reasonable price as one of the options for you to choose, I think that makes sense.
QUESTION: Wouldn’t that drive private insurance out of business?
OBAMA: Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care; if they tell us that they’re offering a good deal, then why is it that the government, which they say can’t run anything, suddenly is going to drive them out of business? That’s not logical.
Now, the — I think that there’s going to be some healthy debates in Congress about the shape that this takes. I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly that over time they can’t compete with the government just printing money, so there are going to be some I think legitimate debates to be had about how this private plan takes shape. But just conceptually, the notion that all these insurance companies who say they’re giving consumers the best possible deal, if they can’t compete against a public plan as one option, with consumers making the decision what’s the best deal, that defies logic, which is why I think you’ve seen in the polling data overwhelming support for a public plan.
Meanwhile, Ryan Grim reports that Chuck Schumer and Kent Conrad are working to blur the differences between a “public option” and a “co-op.” Ezra Klein says the compromise they’re looking at would basically amount to a public option. Under the circumstances, I think this would be a good moment for the President and leaders in the House of Representatives to step up their advocacy of a public option and criticism of the co-op concept. The way the Senate works, at least as I understand it, is that a certain number of Senators there are very in love with a “centrist” self-presentation and will insist on acquiring some kind of “major concession” from liberals before voting for a bill. The question then become, what kind of “major concession” is, in fact, minor.
Unfortunately, during the stimulus debate the Senate “centrists” actually did enormous harm to the country by curtailing aid to state government. But if these Schumer-Conrad talks progress, the “concession” they wring could more-or-less amount to just relabeling the public option as a “co-op” that would nonetheless have the essential characteristics of a public plan. On the policy merits, the issue is all buried in the details of exactly how the public plan or co-op or whatever operates. But in the political logic of the Senate, perceptions and labels matter much more. It’s not logic, but it’s life.
56 Responses to “Obama Attacks “Illogical” Opposition to Public Plan”
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June 23rd, 2009 at 4:11 pm
Conservatives: A public health care plan will be a disaster! Going to the doctor will be like waiting in the line at the DMV. Petty bureaucrats will deny you medical care just to save a few dollars. You’ll be assigned low-bidder doctors. The wait list for necessary treatments will be months long. It will be a nightmare.
There’s no way the private sector can compete with THAT!
June 23rd, 2009 at 4:12 pm
Obama really is quite good at framing debates and marginalizing his opponents.
June 23rd, 2009 at 4:17 pm
I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly that over time they can’t compete with the government just printing money, so there are going to be some I think legitimate debates to be had about how this private plan takes shape.
Did Obama really pull an Yglesias?
June 23rd, 2009 at 4:21 pm
Did Obama really pull an Yglesias?
Yes, but to be fair, if you made strict transcripts of everyone’s extemporaneous speech, we would all be Yglesiases. It is doing it in writing, for something that gets published and is at least somewhat widely read, that takes a special someone.
June 23rd, 2009 at 4:24 pm
The way the Senate works, at least as I understand it, is that a certain number of Senators there are very in love with a “centrist” self-presentation and will insist on acquiring some kind of “major concession” from liberals]
How many “centrist” Senators are there who need a “major concession?” Anybody know?
What I’m getting at is, can’t some of them be reasoned with to do the right thing on the initial legislation, and then take their public stance against socialism after the bill leaves conference, when (so I’m told) only a simple majority is needed?
June 23rd, 2009 at 4:26 pm
Government, or rather Congress, can enter be competitive i any business venture they join. But, the very definition of competitive means no up front and no long term subsidies from the tax payer.
If Obama claims Congress can be competitive, then Obama is a liar if Congress does not start by making Medicare and other health programs more efficient.
June 23rd, 2009 at 4:26 pm
A co-op or a “co-opt”? Maybe both?
June 23rd, 2009 at 4:35 pm
It’s really quite funny that left-wingers like Matthew and Obama see quite clearly that the explicit and implicit subsidies given to financial services companies by the federal government inherently distort conpetition, but when it comes to health care, they go “huh? subsidy? where?”
It’s almost like they are being deliberately obtuse.
Obviously, there is no such thing as true competition between private companies and a public option when one of the options is heavily subsidized by the federal government.
June 23rd, 2009 at 4:42 pm
…but when it comes to health care, they go “huh? subsidy? where?”
It’s almost like they are being deliberately obtuse.
from the President’s answer:
I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly that over time they can’t compete with the government just printing money, so there are going to be some I think legitimate debates to be had about how this private plan takes shape.
I’m sorry Al, but isn’t it you who is being deliberately obtuse? Or did you just skim the text?
June 23rd, 2009 at 4:42 pm
Er.. WRONG Vulcan photo. Here’s the right one:
http://www.flickr.com/photos/30539771@N00/398083741/
June 23rd, 2009 at 4:43 pm
Or maybe this:
http://sevenofnine.cherrytaco.com/Star_Trek_Images/Voyager_Images/Tuvok_LiveLongandProsper.jpg
June 23rd, 2009 at 4:46 pm
Or here — telling Joe Biden to shut the fuck up and using the Vulcan Mind Meld to make the order stick:
http://www.theboxset.com/images/reviewcaptures/2437capture_startrek-voyager-2_06.jpg
June 23rd, 2009 at 4:47 pm
Is Yglesias a nerd or a geek?
And if Al had listened to the press conference (which he clearly did not), he would know that Obama addressed the government subsidy issue and suggested that the public option should be paid for with premiums–not necessarily taxes. It’s almost as if deliberately paying attention teaches us things.
June 23rd, 2009 at 4:47 pm
I’m sorry Al, but isn’t it you who is being deliberately obtuse?
No, in typical Obama fashion, he noted the point, and then didn’t say anything about it.
June 23rd, 2009 at 4:49 pm
And here, Vulcan Obama is seen talking with Secretary of State Hillary:
http://sevenofnine.cherrytaco.com/Star_Trek_Images/Voyager_Images/Seven_Borg%20Drone_with%20Tuvok_Scorpion%202.jpg
June 23rd, 2009 at 4:51 pm
There’s an interesting jujitsu argument that Byron Dorgan set up the co-op plan in committee, pretty much knowing that the GOP would stamp all over it and show that they’re not interested in bipartisan anything on this, thus handing the baton over to Schumer. I’m not convinced by this, but it’s worth thinking about it.
June 23rd, 2009 at 4:53 pm
QUESTION: Wouldn’t that drive private insurance out of business?
Yep, just the same way the the public Post Office has driven the private FedEx out of business, and the public police force has driven private security firms out of business….uh, wait.
June 23rd, 2009 at 4:54 pm
Yes, but this is made infinitely easier by the fact that Republicans are really quite good producing incoherent arguments.
June 23rd, 2009 at 4:54 pm
No, in typical Obama fashion, he noted the point, and then didn’t say anything about it.
Al, if he “noted the point,” then he wasn’t being obtuse — but perhaps not thorough enough for you.
June 23rd, 2009 at 5:01 pm
I’ve always been bothered by the disappointing lack of private retirement investment vehicles available to Americans. I wonder if we’d have more options if it weren’t for that pesky old age pension program that our government offers. What’s that called again?
June 23rd, 2009 at 5:05 pm
Al, if he “noted the point,” then he wasn’t being obtuse — but perhaps not thorough enough for you.
Same thing.
Obama was saying that, theoretically (”conceptually”), an unsubsidized public option should not be worrisome because it’s just a bit more competition. But the entire objection to the public option is that it would be subsidized (explicitly or implicitly) by the taxpayers. Obama’s theory will never be reality; he deliberately avoided discussing the reality of the situation, which is that the public option will be subsidized by the taxpayers — after all, if it wasn’t subsidized, it wouldn’t be any different than Blue Cross, Harvard/Pilgrim, or any of the other dozens of existing non-profit health plans out there.
June 23rd, 2009 at 5:17 pm
after all, if it wasn’t subsidized, it wouldn’t be any different than Blue Cross, Harvard/Pilgrim, or any of the other dozens of existing non-profit health plans out there.
This, of course, is nonsense. It would be different in scale, probably administrative costs, marketing costs, and so on.
June 23rd, 2009 at 5:18 pm
I think there are a few conditions that would put a public plan on equal footing with private ones…
1) make it self-supporting (not subsidized), and protect it from being raided to patch holes in the regular budget the way social security is;
2) allow it to earn a small profit. In Sweden, most road construction is done by private firms (paid by either the government or private developers). However, they found that the private firms didn’t want to tackle the difficult jobs out in the boonies. So they allowed the state agency to compete for jobs, and assigned a reasonable profit margin so that competition would be fair. For health care, this profit could be used to fund projects related to health care but not service provision, such as education, research, grants for sidewalk construction, ride services for the disabled to get to medical appointments, etc.
June 23rd, 2009 at 5:48 pm
I actually don’t see how any public plan could turn a profit unless the wealthy paid more than the middle class, in which case it would be a kind of subsidy.
But in any case, I find it hard to believe that Al and the like can make crazed claims about how awful it will be to be on a public plan and then go around claiming that it will drive supposedly better-run insurance companies out of business. As if the existence of private insurance companies is providing us with some kind of greater good we should be thankful to have.
June 23rd, 2009 at 5:55 pm
Al wants to conveniently ignore the fact that Medicare administrative costs are an order of magnitude lower than private insurers. Why? Because they don’t spend so much of their time playing games to avoid payment. My wife has thought about setting up a private medical practice, but would need to hire a full time staff person just to harass insurance companies into paying.
June 23rd, 2009 at 5:58 pm
This, of course, is nonsense. It would be different in scale, probably administrative costs, marketing costs, and so on.
Why would it be different than other non-profits in any of these cases?
Blue Cross covers 100 million Americans – how would the public option get bigger in scale than that immediately?
Why would the public option have less administrative or marketing costs? It still needs to administer coverage, like every other plan. And how is it supposed to get sufficient scale without marketing?
Your point fails across the board.
June 23rd, 2009 at 6:04 pm
Anyone who cares whether or not there is adequate competition between private and public plans has already drunk the neoliberal koolaid.
The issue is what is the best way to provide the best possible health care most effectively – and that is obviously a single payer plan. Proven without doubt.
The public should be under no obligation to provide employment to insurance execs to the detriment of their own welfare.
June 23rd, 2009 at 6:11 pm
Al wants to conveniently ignore the fact that Medicare administrative costs are an order of magnitude lower than private insurers. Why?
Because Medicare’s administrative costs, as usually calculated, don’t include things like the unit collecting premiums (otherwise known as the IRS), the unit for raising capital (otherwise known as the Treasury Department), the unit providing physical space (otherwise known as GSA), and corporate governance and management (otherwise known as Congress and the Center for Medicare and Medicaid Studies).
Is the proposal for the taxpayers to subsidize the public option by providing the IRS, Treasury Department, GSA, and other government services to the public plan free of charge?
June 23rd, 2009 at 6:15 pm
I find it hard to believe that Al and the like can make crazed claims about how awful it will be to be on a public plan and then go around claiming that it will drive supposedly better-run insurance companies out of business. As if the existence of private insurance companies is providing us with some kind of greater good we should be thankful to have.
I didn’t say it would be “awful” to be on a public plan. I think it would provide perfectly acceptable care. I just think it would increase healthcare costs by driving private insurance out of business (due to the taxpayer subsidies it would receive) and thus reducing competition.
June 23rd, 2009 at 6:23 pm
[...] is Makin’ Some Sense By Tyler DiPietro Ezra Klein, Matt Yglesias and Paul Krugman all point that the president has managed to make some sense on one particular [...]
June 23rd, 2009 at 7:09 pm
“Because Medicare’s administrative costs, as usually calculated, don’t include things like…”
Yeah, but those administrative agencies already exist and are much more efficient than the private versions. They don’t need to be reinvented, only expanded. And it doesn’t need to be a subsidy. The IRS and GSA can charge for those services (and usually do, actually). But there is a huge category of administrative costs that only exists in the private sector. That’s the 20% of your premium that goes to paying people to deny you coverage. My problem with private insurance is that I end up paying at least five times what I pay to self insure. Obviously, a major health issue would make private insurance look better. But in that case, it’s still cheaper to fly to Thailand and pay cash than it is to pay the copays and deductibles from private insurance. And you get better treatment in Thailand anyway. When it comes down to it, medical treatment is just way too overpriced in America. We live in a global economy, and medicine should be globalized like everything else.
June 23rd, 2009 at 7:48 pm
But there is a huge category of administrative costs that only exists in the private sector. That’s the 20% of your premium that goes to paying people to deny you coverage.
Medicare doesn’t deny coverage for treatment? Hmmm, I just saw this the other day.
June 23rd, 2009 at 8:23 pm
[...] Original post: Matthew Yglesias » Obama Attacks “Illogical” Opposition to Public Plan [...]
June 23rd, 2009 at 8:25 pm
Al: All health insurance denies coverage for some treatments, that’s the whole point of insurance. If insurance plans weren’t selective in what they paid for, they’d be a giant pile of free money, not an insurance company. But there is a difference between adjusting coverage so as to get the best coverage bang for the premium buck and just weaseling out of policies by finding loopholes and technicalities. It’s a spectrum, but I think for-profit health care as it currently exists has a substantial amount of the latter.
June 23rd, 2009 at 8:42 pm
“Medicare doesn’t deny coverage for treatment? Hmmm, I just saw this the other day.”
Not on an individual basis. They simply approve or disapprove treatments, and it is done by a small review board with minimal overhead. Compare that to the massive phone banks necessary to deny coverage for standard treatments that Medicare already automatically approves. We are approaching the point where a patient spends more time on the phone with his insurance company than he’s allowed to stay in the hospital. And then he still has to pay for treatment treatment or take his insurance company to court. And those phone calls are more expensive because the Indians in Bangalore won’t compromise their ethics to deny someone health care over the phone. So they cut costs by having prisoners do it. I’m not joking. The way to cut costs is to simply cover or not cover treatments, rather than specific people. If you want something special, I’m sure the private plans can offer specialty plans for that. They already do. Somebody has to insure Tony Romo’s throwing arm, and I bet it’s not Medicare. And I bet that policy is a lot more complicated than most people’s. Mine would be, too. And maybe the public option could offer some extra plans for special situations for an extra fee. I’m willing to pay extra for insurance, whether public or private. I should be charged more because I’m in a special risk category from spinal cord and cranial injuries. That’s fair. But I need to know which treatments will be covered. And I need to know they’ll pay for it without going to court over pre-existing conditions. The current situation doesn’t allow that.
June 23rd, 2009 at 9:02 pm
As an aside to your link Al, I just have this: Did you expect the government not to prefer reaming you in the ass? Seriously though, their decision seems okay. It could have gone either way, and there will be appeals. But the technology can still be used privately. As it is, I’m firmly convinced of the desire to have an imaging technology that’s less invasive, especially in that case. I work in the medical device field, less invasive and faster is what we’re after. But I’m not sure it’s quite there yet. Just because it’s new doesn’t mean it’s better. Everyone wants the latest technology, and simply assume it’s better. And, on average, the new technologies are better. But sometimes an idea turns out to be wrong. Until you’ve done some live surgeries, you never really know. And trust me, we really do do every test we can think of to make sure it’s safe before we even think about using it on humans. But you can’t think of everything. Medicine will always have mistakes because it is practiced by humans.
June 23rd, 2009 at 9:05 pm
Blue Cross covers 100 million Americans
Blue Cross/Blue Shield in that sense is a federation of 39 independent and locally-operated insurance companies.
And how is it supposed to get sufficient scale without marketing?
Free publicity. Like we are doing right now, in fact.
Because Medicare’s administrative costs, as usually calculated, don’t include things like . . .
The marginal cost associated with those things is going to be very low.
June 23rd, 2009 at 9:27 pm
“Free publicity. Like we are doing right now, in fact.”
Actually the insurance companies are already doing the best publicity. My best friend is dealing with a nasty motorcycle accident. He already had a heart issue, but that wasn’t affected by the accident. Now that he’s recovering very well and having to deal with the insurance company, his heart medicine had to increase dosage. He has to lower his emotional stress, but the insurance company does nothing but provide the stress. He’s with the “Anything But This” plan.
June 23rd, 2009 at 9:33 pm
Because Medicare’s administrative costs, as usually calculated, don’t include things like
This is just silly. Of course Medicare pays these costs. In fact, they have higher accounting standards and transparency than private insurers. Sure, they don’t pay taxes…. because they don’t earn a profit, but the compliance costs are there’s.
This is also an appeal to ignorance. You are talking about costs that are still more efficient in Medicare than their private sector counterparts, but only amount to a very tiny proportion of overall costs.
It isn’t Medicare that receives the subsidy – Medicare Advantage provided a direct subsidy to private insurers just to compete with Medicare.
June 23rd, 2009 at 10:02 pm
Re: Medicare doesn’t deny coverage for treatment? Hmmm, I just saw this the other day.
This isn’t treatment, but a still-experimental diagnostic test. Should this test someday prove its utility and become widely accepted Medicare will cover it. In the meantime there exists another (older and widely accepted) way for this type of testing to be done on patients.
And there’s nothing remotely like the practice of retroactive recission of coverage in Medicare. Claim denials do happen in Medicare, but almost exclusively as a result of erroneous or incomplete claims, or deliberate fraud. Meducare is quite transparent up front about what it will not pay for, and providers know to avoid those procedures with Medicare patients. Medicare is not capricious about its claims processing (and is generally quite prompt with payment) so nasty surprises are rare. And there are in fact laws which protect Medicare patients financially in cases of provider-error on claims. The provider is required to clear up the problem with Medicare and cannot bill (let alone sue) the patient as a result of his clerical staff’s errors or incompetence.
June 23rd, 2009 at 10:31 pm
[...] Klein, Jon Cohn, and Matt Yglesias have already written about Obama’s initial answer on whether a well-designed public health [...]
June 23rd, 2009 at 10:34 pm
Al: in typical Obama fashion, he noted the point, and then didn’t say anything about it.
LMFAO. I’ve made a bunch of comments over the years about Republicans’ predilection for projecting their own faults onto their opponents, but this one takes the cake. Bookmarking for future reference…
June 23rd, 2009 at 10:38 pm
This is false. Cross service providers in the federal government usually act as fee for service providers and charge other government agencies for work done. Treasury and GSA are considered “Centers of Excellence”, which charge for their work. The only costs this would leave out would be Congress and the IRS.
June 23rd, 2009 at 10:39 pm
“This isn’t treatment, but a still-experimental diagnostic test. Should this test someday prove its utility and become widely accepted Medicare will cover it.”
Bingo! That’s really it. But there is a problem with the word ‘test.’ Let’s be honest, it’s an anal reaming. Colonoscopies are not exactly pleasant. Most patients don’t even want to talk about it. It’s not just a prick in the arm. So maybe you could understand why their is a desire for these procedures to be covered. But until it’s up to speed, it should be a special procedure.
June 23rd, 2009 at 11:30 pm
[...] More: Matthew Yglesias » Obama Attacks “Illogical” Opposition to Public Plan [...]
June 23rd, 2009 at 11:54 pm
Wrong.
It is logical because government programs, whether intended to be so or not, eventually become subsidized by the government (see Fannie and Freddie). When the public option becomes subsidized by the tax payer, either by design or later by politicians, it will force people to either take the public plan, or pay for health care twice; once through their taxes, and then again with their private choice.
The main point though, is that this is just the wrong way to tackle a problem that needs to be solved. There are much more straight forward ways to fix the problem.
Everybody seems to agree that the employer provided health care tax subsidy needs to be removed, but Democrats refuse to make it a part of their plan because McCain supported it in the election, and Obama campaigned against it.
June 24th, 2009 at 12:16 am
I agree with Ron- Why do we care about fair competition for the insurance companies? We need to provide the best health care to ALL our citizens at reasonable costs, not provide profits for a specific industry, especially one that refers to payments for services as “medical losses!”
There are some things that should be non-profit enterprises, and this is the biggest. The goal of a business is to make money, now and in the future. That shouldn’t be the goal of a health care system.
Obama talked about how the Public Option would “discipline” the insurance companies. He’s probably not thinking of the same kind of “discipline” that I am!
June 24th, 2009 at 12:28 am
There’s no evidence a public plan would need to be subsidized to exist. All of the evidence from the rest of the world and US Medicare shows it’s the private sector that usually demands subsidies to compete.
A public plan is important because this is the only way you are going to significantly lower costs. Private insurers don’t like it because they know such a plan has much lower overhead and provides coverage at a fraction of their costs.
This nonsense about the public plans getting unfair subsidies is BS that doesn’t even make any sense.
June 24th, 2009 at 2:19 am
“…will insist on acquiring some kind of “major concession” from liberals before voting for a bill. The question then become, what kind of “major concession” is, in fact, minor.”
Isn’t taking single payer “off the table” a major concession? Looking at Sen. Bacaus’ website, he took a lot of heat for doing that in his home state. I think the public consider single payer was a concession. They don’t have wiggle room.
Here’s why a public option would be more cost effective:
• Ronald A. Williams, Chair/ CEO, Aetna Inc., $23,045,834
• H. Edward Hanway, Chair/ CEO, Cigna Corp, $30.16 million
• David B. Snow, Jr, Chair/ CEO, Medco Health, $21.76 million
• Michael B. MCallister, CEO, Humana Inc, $20.06 million
• Stephen J. Hemsley, CEO, UnitedHealth Group, $13,164,529
• Angela F. Braly, President/ CEO, Wellpoint, $9,094,771
• Dale B. Wolf, CEO, Coventry Health Care, $20.86 million
• Jay M. Gellert, President/ CEO, Health Net, $16.65 million
• William C. Van Faasen, Chairman, Blue Cross Blue Shield of Massachusetts, $3 million plus $16.4 million in retirement benefits
• Charlie Baker, President/ CEO, Harvard Pilgrim Health Care, $1.5 million
• James Roosevelt, Jr., CEO, Tufts Associated Health Plans, $1.3 million
• Raymond McCaskey, CEO, Health Care Service Corp (Blue Cross Blue Shield), $10.3 million
• Daniel P. McCartney, CEO, Healthcare Services Group, Inc, $ 1,061,513
• Daniel Loepp, CEO, Blue Cross Blue Shield of Michigan, $1,657,555
• Todd S. Farha, CEO, WellCare Health Plans, $5,270,825
• Michael F. Neidorff, CEO, Centene Corp, $8,750,751
• Daniel Loepp, CEO, Blue Cross Blue Shield of Michigan, $1,657,555
• Todd S. Farha, CEO, WellCare Health Plans, $5,270,825
• Michael F. Neidorff, CEO, Centene Corp, $8,750,7
That’s just CEO pay, not bonuses and not board of directors.
I doubt if anyone in Medicare or CMS takes home over a million (not including bonuses).
Insurance company’s have acted like investment firms for shareholders doing a little medical care on the side. I think private plans realize that.
Health insurance companies have taken a huge loss when it comes to their customer numbers because people can’t afford or don’t find value in their product. Mandating insurance is providing them with a guaranteed market, like a windfall or bail out.
Plan D also didn’t have a public option and that increased drug prices by 60% for everyone.
Congress doesn’t have that much wiggle room.
June 24th, 2009 at 5:03 am
aikanae: Thanks.
Wow. Look at that list. Crime pays, doesn’t it?
Just think, if the marginal tax rate was 50% on people making $5 million and up, we could raise $100 million for the public coffers from just these 19 traitorous clowns…er…CEO’s.
And they could still be Masters of the Universe. In fact, by my carefully worked out calculations, after taxes, they would maintain their position of being amongst the top .0000000001% of the richest people who have ever lived on the planet earth.
June 24th, 2009 at 6:04 am
“we could raise $100 million for the public coffers from just these 19 traitorous clowns…er…CEO’s.”
This is the mistake of Stalin. The system is the problem, not the people. You can hang anyone you want, but the system remains. These people made money because the system is set up that way. Don’t raise their taxes, just make their incentives work for us. If they make more money than God, good for them, but they should make it only if they help the rest of us. Change their incentives, and they’ll change their behavour.
June 24th, 2009 at 9:51 am
Stefan said:
QUESTION: Wouldn’t that drive private insurance out of business?
Yep, just the same way the the public Post Office has driven the private FedEx out of business…
Better that we know our history and facts before we make statements like these. The post in the US was once dominated by private companies, and the USPS was a poor competitor, with prices to the consumer being about 30% higher than the private option. Then the government decided to subsidize the post office with tax money, and they cut rates to drive the private companies out of business. That worked, and the taxpayer subsidized the mailer for years.
Now, anent UPS and FedEx, there are laws which do not allow them to compete with the post office at all. They are unable to use mailboxes, and are not allowed to provide a product that competes with first class mail. In fact, the Private Express Statutes state that any private competition to “first class mail,” or basically one to two day letter service must be priced at minimum $3 or twice the USPS rate, whichever is higher, and that it must have guaranteed delivery dates. Of course.
So, if you want to hold up the mail marketplace as an example of how well government competes with private business, and you want to forecast the health marketplace on this model, you are just making the argument that Mankiw et al did, and not the one Obama and Yglesias would like to see win. Of course, Mankiw is right here, and all cogent analysis points to exactly a USPS type of situation. Whether that, a single payer system, is preferred, is another issue.
-AM
June 24th, 2009 at 2:03 pm
Can someone explain to a poor Canadian, ignorant of the niceties of the politics of the Senate, how it is possible for this body, elected to express the will of its constituents, can ignore that fact that 72% of the American public is in favour of a public medical plan?
June 24th, 2009 at 4:20 pm
[...] which they say can’t run anything, suddenly is going to drive them out of business? That’s not logical,” the President said. Progressives have long argued that a public health insurance option is [...]
June 24th, 2009 at 8:59 pm
Employer group health insurance is tax free, and a portion of personal health expenses paid out of one’s income (including insurance) are tax deductible. Both of these are subsidies to private sector health insurance. A public option should get at least this much subsidy.
June 29th, 2009 at 4:41 pm
[...] this somewhat tongue-in-cheek post from Matt Yglesias brings us this excerpt from a Q&A session President Obama held on the [...]