Wednesday, October 7, 2009

Public option-good thing?

As Al Gore loves to say,the debate is over.Will the public option force people to drop their private insurance healthcare?No.Will the public option result in employers dropping their private healthcare plan in favor of the public option?Yes.

The means aren't important,it's the end result.This is similar to the "save or create" strategy of Obama to muddy the waters.Or go furthur back to "what is the meaning of is" in the Clinton era.

Simple economics,nothing complicated.If the government produces a healthcare option that has a cheaper monthly premium,of course people and companies will go to it in droves.The government has no profit motive,no stockholders to answer to,in short no reason to compete on a level playing surface.So yes,the private healthcare industry will be destroyed as is the goal.

If this public option is so good,why not expand it into other areas?How about baseball?If we had a publicly owned team,salaries,trades and seat prices could be drastically lowered.So,let's have a public option sports team in each of the major sports to artificially lower ticket prices for all.

The sky is the limit here.We could list off any number of industries where we believe prices are too high,or even salaries.In theory,having a government run option in each one would provide the checks and balances to keep everyone honest and lower prices and salaries to the minimum.Do you buy that?

You could argue that's it's unconstitutional for the government to be in business and you'd be right.

You could argue that any government run program has always resulted in higher prices,bloat,corruption,losses and wasting of taxpayer dollars and you'd be right.

You could argue that anytime the government competes with private industry that the free markets suffer and you'd be right.Critics would argue that in some industries such as the USPS is already competing with FedEx and UPS.However,this is not an apples to apples comparison.

The healthcare debate has other factors as well.Politics play a huge role in this debate so it's not just a matter of reducing costs by introducing a cheaper competitor.I suppose the core issue in this argument is the role of the profit motive.

The critics will claim the profit motive is a negative leading to the exhorbitant salaries.Proponents claim the profit motive is what leads to lower prices as companies must compete or be run out of town.Tough to argue that one.If you're priced higher than your competitors,you will fail.Value and quality and service will offset this to a degree,but not without limits.A Rolex is certainly preferred to a Timex,but only to a certain price point.

The problem is allowing an option in which the competitor has virtually unlimited resources and doesn't have to make a profit.This is the government,of course,and a normal business can't compete with that.It's like going to Vegas with the guarantee of having your losses re-imbursed no matter what.Who wouldn't spend foolishly?

So,the debate is over on the merits.The public option is purely a political issue and anti-business.Still not convinced the public option is a good thing?What if we did a similar thing with education?Aren't cost too high?Let's put out teaching positions to the lowest salaries.Wouldn't some people be willing to teach for much less than what our current teachers make?Sure,they would.But would you sacrifice your quality of education to save money?

Need more?How about your water bill?Seems awfully high for what falls from the sky for free.Why not put that out for lower bids?Would you have any concerns about safety or the quality of the water if companies were forced to lower prices to compete with a competitor that has no worries of making a profit?

The only way the free market works is if all of the competitors play on a level playing field.Take a closer look at Tort reform,restrictions on purchasing insurance across state lines and other artificial price hikes if you want to lower costs.Separate the market issues from the politics and you'll get your wish.More to come...

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