The Public Plan Option and the Big Government Conservatives

We all know that there are basic philosophical differences between liberals and conservatives. Liberals believe that the government can be used to improve the lives of ordinary people. Conservatives, on the other hand, believe that the government should redistribute money to the wealthy. This philosophical difference has come through very clearly in the debate over giving people the option to buy into a publicly run health insurance plan.

Since the conservatives are not honest enough to own up to their true principles in this case, it is worth briefly recapping the argument they put up as a cover. The conservatives claim that if people are given the option to buy into a public plan, then so many people will choose to do so, that it will drive the private plans out of business. The country will then be stuck with only a government-run insurer and patients will have no choice. This will be bad news, because the government can't do a good job providing the American people with health insurance.

The logic of this one is more than a bit difficult to follow. We are supposed to be worried because people will freely choose to go with a government-run insurance system that is badly run and inefficient rather than private insurers. Do the conservatives think that we cannot trust people to make their own choices about health insurance? Is this yet another case of nanny-state conservatives who want to step in to prevent people from making choices that they think are bad for them?

But, wait. The conservatives argue that the public plan will be subsidized by the government. This means that it won't be fair competition; the government plan will enjoy subsidies that will allow it to charge less than private insurers, therefore, people will buy into the public plan rather than private insurers.

This is a little better than the conservatives' stupid-patient theory, but not much. First, if the government-run plan is really as bad as the conservatives want us to believe, then it would take some pretty large subsidies to allow it to compete with those clever boys running private insurance plans. People will not fly an airline that doesn't get them to their destination or buy a computer that does not work.

If a government-run insurance plan is really a bad plan, then it will simply go out of business unless there are truly massive subsidies. To get people to buy into the bad public plan rather than the high quality private plans, we would probably have to give them subsidies of at least $1,000 per person. After all, health care is important to people.

This brings us to the conservatives' stupid-voter theory. There is nothing in any of the plans on the table that provides any subsidy whatsoever to the public plan. So, at the moment, subsidies are nowhere in sight. However, the conservatives argue that somehow, somewhere, Congress will slip in subsidies to the tune of at least $200 billion a year ($2 trillion over a 10-year budget horizon) to support a public plan that provides bad insurance.

Where would the $200 billion a year come from? Would Congress raise taxes by this amount and the public would just go along because it thinks it is important to subsidize its bad public plan? Alternatively, would they just let the deficit explode?

Again, this is a possibility, but in spite of all the rhetoric about the fiscal irresponsibility of Congress, it generally has kept deficits within reason, except to finance wars and to deal with the economic disaster created by rich bankers. There really is no precedent for Congress running up huge deficits to fund a bloated social program, especially one that is presumably unpopular because it provides bad coverage. The conservatives' story here is not a slippery slope scenario, but rather a huge, hidden grand canyon. Yes, it could be there; we just have no evidence for it.

Yet, it gets even worse. Even when we have the huge public plan that has displaced the private competition because of its huge subsidies, there is still the possibility that new competition will come up in the future. In other words, if we have this hopelessly inefficient bureaucratic monster of a health care system that is killing off our loved ones, why wouldn't some clever entrepreneurial type set up a new well-run private plan to offer a real alternative? Certainly, there are many people who would be willing to pay far more than $1,000 a year extra to get decent insurance rather than the monster portrayed by conservatives. In short, even if the big bad public plan managed to use huge taxpayer subsidies to drive out the competition, this would just be a temporary situation. In a dynamic market, new insurers will step in to fill the gap, unless the conservative vision also has Congress outlawing competition altogether at some future date.

Of course, at this point, we are dealing with something entirely fictional that has nothing to do with any proposal currently being debated. The bottom line is that the conservative position is that there are people getting rich running private insurance companies and they want to protect this situation long into the future.

 

 

Comments

[cadawa]

You mean a "hugely inefficient bureaucratic monster that kills off our relatives" like Medicare.
Medicare is ten times more efficient than any private company. Any competition that can make money by being more efficient than Medicare and still pay CEO's and shareholders that doesn't kill off your relatives more rapidly than the current system isn't going to happen.

[trotskylives]

Yeah, its really tough to compete with an organization that has over 60 Billion a year in fraud claims:

http://fieldnotes.msnbc.msn.com/archive/2007/12/05/495910.aspx

Would you give a CEO a billion dollar bonus if he saved you 59 billion? You would probably say no.

Business owners watch their money a lot better than the government watches your money.

[Get Involved]

Here is the middle ground I think the debate about the public option has missed...a charter. Create a 5 year or 10 year charter for the Government health insurance option, which will allow everyone to observe what actual savings (if any) can be provided to all healthcare users with the government in direct competition with private insurers. Observe if the public option actually provides the means to have near universal coverage, and observe if the public insurance option can sustain itself on its own budget without additional subsidies from the government. The Congressional Budget Office could validate the data reported from the government sponsored option. If the government option does not meet these goals in a 5 or 10 year (or some arbitrary term) charter, then by law its charter would simply expire, and users of the government option will be referred to the already in place health exchange to choose a private health insurance option. Speculation would no longer be required to decisively determine whether the government option is bankrupting the country (increasing the long-term deficit), or putting private insurers out of business - unless that proves to be true. I believe a charter is the middle ground that could break the impasse in the current debate.
Test, then verify actual results.

[luziannagirl]

I know a young man in his 20's, working a variety of hourly-paid non-salaried food service jobs including waitering and bar-tending, while he attends college and pursues a career in the film industry. Tips are where he makes his money.

There are no benefits included in these jobs---no paid vacation, no paid sick days, no health care, no dental, no pension, no retirement, no credit union, no Frequent Flier miles, no nothing.

He isn't starving, but makes nowhere near enough to afford even the most reasonably priced private health insurance policy. If he doesn't go to work, he doesn't get paid.

He now has Swine Flu, most likely caught from a co-worker at one of the restaurants where he works.
He stayed in bed two days with fever, nursed by friends and co-workers, but he's going back to work today, with a runny nose, still coughing. Because if he doesn't work...well, you know the rest.

So, reckon any of that will occur to the well-heeled well-insured restaurant patrons when they contract Swine Flu from this worker who can't afford to take a week off work to fully recover and not be contagious?

Nah... our profit-based health care system isn't broken. Just the breaks of the game, right?

Well...tell that to the family of the previously healthy 19-year old Louisiana girl who died of Swine Flu just last week.

[NetWeasel]

I currently have health insurance through Blue Cross/Blue Shield. In this State, a for-profit company.

That means that, by definition, what I'm getting does not cost as much as what I'm paying.

If the Government Health Plan (Public Option) did EXACTLY what BS/BS is doing in relation to premiums and payments, except for being non-profit, my rates would then be lower.
And I would get the same exact services.

[Bernique]

Yes, in a word, NetWeasel. Medicare for All would be even more cost-effective, because the risk pool would be so much larger.

[NetWeasel]

70-72% in favor of a "public option" being available.

25-28% admitting to being a Republican.

Venn diagram, anyone?

[luziannagirl]

Sure, I'll take a Venn.

Don't think you'll find many takers on the right, though, since they'd first have to spend time and effort explaining what that is and how to use it to their constituen­cy....excu­se me...congregation.

[BruceJoffe]

Insightful, cogent argument, Dean.
I hope it gets wide distribution.

[North Star06]

"The conservatives claim that if people are given the option to buy into a public plan, then so many people will choose to do so, that it will drive the private plans out of business."

Theres a novel idea, id like to see them all the health insurance companies wither away.Good damn riddance.

[SharlyFarley]

Funny, all those republicans screaming about "Spending!"...You'd think a republican would understand the difference between spending and investing. But then, only investments in rich people count to republicans.

[Billl]

President Obama should allow what he calls, “governments’ unfair advantages”, to be used for consumers of health care and taxpayers to lower costs while providing health care for free to everyone choosing to use a sales tax funded civilian VA style public health care system.

Instead the President is allowing the health care industry to use “governments’ unfair advantages” to increase their profits by forcing consumers and employers to involuntarily spend money to purchase insurance and services from providers that have the most expensive cost structure in the world, without the best patient outcome results.

Government could form a sales tax funded civilian VA to provide free public health care to everyone choosing public care.

The public system would coexist with private systems that would operate without government funding, mandates, or interventions.

Affordable health care must have cost controls on both the way funding to pay for services is raised and administered, and the way care and hospital facilities are operated.

Nobody can collect the money to pay for health care as cheaply as the government can through a national sales tax and nobody can deliver high quality care and medications as cost effectively as the VA has for years.

Going back and forth between free public, and user purchased private care, would allow unlimited choices, ultimate freedom, and always free public care would be available when it is needed.

[BetteB]

It's not the health care industry Bill, it's the health care INSURANCE industry for-profit, but provide no actual health care, the one that has to stop getting more of our money from any subsidies or tax breaks. The ACTUAL health care industry, you know the nurses and technicians, doctors, pharmacy workers, those that care for others health by their actions, they are useful. The for-profit health care insurance industry is misusing US, and we have to put a stop to it.

A society that allows for-profit health care is a devolving society, and that which is devolving will eventually self-destruct. It is up to US to fix this. I was wondering where HP went off to yesterday when there was no HP daily email. I thought we had been shut-up, glad we weren't.
Love
Bette

[timalbright]

Now on youtube:
http://www.youtube.com/user/greenspaceguy

The government already has the funds to pay for universal health care and to reduce our carbon footprint.

The 50 million individuals with no health insurance are not just Americans; they are our relatives, neighbors, and friends. Just as the majority of us have no idea what it is like to live with a deadly disease or injury, we also cannot imagine what our lives would be like if we had to face such suffering and pain with no health insurance. We must stop using our mouths to fight and argue over which souls will be covered; we must put our hearts and minds together and find the funds to pay for their care. I wish for Congress to consider the following policy change. Comment at www.whitecollargreenspace.blogspot or send an email at whitecolla­rgreenspac­eguy@hotma­il.com
The Federal government leases or owns close to ½ billion square feet of office space. Overall these expensive facilities sit unused 60 to 70% of the time. By keeping buildings open an additional 4 or 5 hours each day, we could schedule 2 shifts of white collar workers, thus increasing our efficiency by 100% and reducing our carbon footprint by 50%. With the overhead for each of our 2 million Federal workers approaching $50,000 per year, the potential savings could be $25 to $50 billion per year. This could be used as the seed money to pay the cost of covering the currently uninsured...

[timalbright]

CorrectionL
www.whitecollargreenspace.blogspot.com

[ndbltwy]

The Public Option is DOA. Even if its included in the bill the Dems have watered it down so much it will be guaranteed to fail. Obama ran around the country for two years promising us a robust Public Option and now you can barely get him to say the words out loud. If Americans want real lasting reform in any program all progressives should ONLY work on campaign finance reform! Until we change the way campaigns are financed the American people will always get the short end of the stick. Nader was right there is no difference between the Dems and the GOP.

[kteachums]

I wish the President would have done something to prevent health insurance from going up. I'm a teacher and I just got my first paycheck beginning the year . Our health insurance went up and took what the President was giving up back in tax relief. I was sick when I saw my paycheck today. Somebody out there must be afraid of reform. In the next two years they will be getting their pockets full of wealth off of the poor working class. The rich get richer. Isn't that the way it works? There should be an immediate freeze on insurance premiums so people don't get ripped off. Even as we blog insurance companies are already plotting ways to scarf up millions before health care legislation is passed.

[liberalOrgonian]

One third of the cost or 30 % can be saved with a public health Insurance plan. Every day the insurance Industry spends approx a million dollars to stop any kind of public option. Where do you think they get that kind of money to buy off politicians?
Capitalism has us all realizing the cost of private Insurance is not unchecked. Rates will need to go down to be in competition with a public plan, a perfect example of capitalism . Hopefully, there will be a non profit private plan created to help citizens, rather than suck the blood out of those lucky enough to have Insurance.
I dislike the idea of supporting the Insurance industry which has dumped sick folks out of their programs, fight to keep money instead of paying claims,let people die, set prices so high, many can't dream of affording, and refuse to insure anyone with a illness. (those needing insurance the most).
Surely this public plan can't be much worse than the status quo.

[trotskylives]

More from the Post Office:

"At this moment, the survival of the Postal Service - a venerable institution that is literally older than our country - hangs in the balance," he added.

Even if the agency succeeds in reaching its planned cost cuts of $5.9 billion, there could still be a $6 billion deficit in 2010, Potter told the House Oversight Subcommittee on the Federal Work Force and Postal Service.

"Without a change we will exhaust our cash resources," Potter said. "We can no longer afford business as usual."

http://www.cnsnews.com/public/content/article.aspx?RsrcID=45624

Will congress bail the post office out, (with fedex/ups tax money) or will it let them fail? Of course a bailout is coming, its too big to fail, much like the public option.

[Stephen Wahls]

They really need to file bankruptcy. Too big to fail is BS. After bankruptcy a company will come along and buy up the good parts and shed the dead weight. That's the way its supposed to work.

[trotskylives]

Not if the company is a government service, like the post office or the Public health option.

[upriser]

Ok, here we go. Over 70% of the American people in poll after poll are in favor of the public option. 72% of doctors favor a public option. four out of five Congressional committees have voted out a public option. A majority of Democrats in both houses of Congress favor a public option. The American Medical Association supports one of the house bills that voted for a public option. The President of the United States favors the public option. Therefore because a few Democratic Senators and Representatives, who are on the take from the insurance companies (who are really popular these days) oppose the public option, there will be no public option??????? Duh!! Methinks that if this happens, we will have replaced our democracy with a CORPOCRACY. And the Democrats will go down in flames next year and Obama will be a one-term President, for sure. I don't think this will happen, but I'm not positive.

[trotskylives]

I am not a conservative, and I am not sure about the conservative argument, but my argument is a bit different:
I am happy with the government taking my money and giving it to folks not as well off as myself for basic needs. HOWEVER, at the very least, the government should spend that money as efficiently as possible. That to me means giving poor folks the cash to buy products from for profit and nonprofit businesses, like we do with food stamps.

I care just as much as you do about people less fortunate then myself, I just dont trust the government to deliver services well unlike liberals.

Post office bailout
http://www.infowars.com/postal-service-asks-congress-for-bailout/

Is the post office going to disappear, or will it get its cash from congress? Please explain why you think the "public option", which is will be much more important than the post office, will not get a bailout? Of course it will be subsidized with a bailout.

My argument is that instead of spending precious money on a huge government bureaucracy, just increase the amount of private competition between insurance companies, and give people vouchers to get healthcare like we do with foodstamps. The government which will then collect 35% of all profits made from these transactions.

If you are going to take tax money and redistribute it, should you not at least make sure its spent well?

[MAUIMONKEY]

So you're giving up your Social Security and Medicare when you retire and investing your money in the stock market? Are private bureaucracies with a 30% overhead and the ability to deny you the product you have paid for, better for you? Knock yourself out, dude.

[econ101lab]

SS and Medicare are bankrupt. Unless you're already getting it, don't count on it...or at least nowhere near it's present form. I would gladly swap paying the gov't 7% of my income up to $79K, invest it myself, and promise to never take a dime from the Feds when I retire...which by the way was similar to what Bush asked for...taking a % of that tax and letting people invest it in savings accts. People would be SO much better off if that had been the case. SS pays back less than 1% per year. If citizens had been able to invest that money themselves in stocks, bonds, gold, even insurance, they wouldn't need to worry about retirement or health care premiums. Gov't is INEPT!

[trotskylives]

I would love to! Give me the choice, please!

I would even pay a tax of a couple of points to get my money, rather then having it gone into the fed government.

You know Medicare is going BK in 10 years, right? As an adult, you should stop believing in fairy tales politicians tell you and look at the numbers.

Numbers don't lie.

[trotskylives]

Also, please show me 30%? United Health is at 18%, and is still cheaper than the non profit in my state.