It is becoming clear that a major feature of the health care “reform” currently hatching in Wasington will be some kind of government-sponsored health insurance program. President Obama has been quoted, “If the private insurance companies have to compete with a public option, it will keep them honest and help keep prices down.” This is a massively stupid formulation. One is forced to wonder whether Obama’s lack of real-world experience has left him so naive as to utter such a thing without blushing, or if he cynically assumes that a broad swath of the electorate is stupid enough to swallow it.
Genuine competition requires that the competitors must make a profit to stay in business, but that they deliver goods or services efficiently and at a reasonable cost in order not to be priced out of the market.
Government, of course, does not need to make a profit. It is funded by tax dollars that are not usually derived directly from services provided, and that is why so many government entities degenerate into jobs programs which benefit those running them first, and their clients second, if at all. A government health insurance program will cost what bureaucrats and politicians decide, and if it is to compete with private insurers, the decision will be to price it more cheaply, thus driving the latter out of business sooner, more likely, than later.
At this point government will have essentially taken over the health care industry, approximately one-sixth of our economy. For the large majority of Americans who are satisfied with their health care that will mean a radical change from their current arrangement. Since the only real means government has to curb costs is to ration care, it does not need a cynic to assume that if you are happy with the medical care you now have, a portion of it will be taken from you and given to someone else, and the quality of it all will suffer as the medical industry is transformed into a massive government jobs program with the delivery of health care a low priority.
Fortunately, the American Medical Association has come to something like this conclusion and has come out against government-sponsored health insurance, although its doubts have been expressed in milder terms: “The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70% of Americans.”
Hopefully this stand by the AMA will stiffen the backbones of Republicans and moderate Democrats. There is a clear need for reform in the way health care is financed and delivered in America, but these reforms must be market, not government based. In any case, what we have now is clearly preferable to what federal takeover of medical insurance would lead to.