Government Won't Allow Fair Competition

Proponents of socialized medicine learned an important lesson from the 1993 failure of Clinton Care, and recognize that they must hide their agenda in the rhetoric of market competition. Government is not going to take over insurance, they say; it merely wants to compete. 

In a letter to Senator Kennedy, President Obama touched on these points when he said, "I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest." How can the economic right, as believers in the superiority of free markets, oppose a little competition? The answer is: quite easily, as there is no such thing as fair competition when government is involved.

The left delights in reminding us that government is a necessary umpire - a neutral arbiter that monitors economic participants.  So why does anyone suppose it would be a good thing for those same umpires to grab a bat and take a swing?  Does anyone really believe an umpire would enforce an honest strike-zone if they also were standing at the plate, trying to hit a home run?  What proponents of government provided health insurance ignore is that the objectives and responsibilities of the private and public spheres differ in such a way as to make competition between the two wholly impractical.  With its additional power as rule-maker, it is delusional to believe that government could compete fairly without stacking the deck in its own favor.

It just so happens that the deck has already been stacked against private insurers.  Governments at all levels have saddled insurance providers with reams of coverage mandates. Depending on the state, insurance providers are forced to include coverage of everything from chiropractors to massage therapists.  These forced coverage rules reduce consumer choice and increase cost.  Under these rules, those who live responsibly are often forced to subsidize those who take greater risks with their health.  For example, states may require alcoholism coverage even if the individual has never drank a drop in their life.  The same is true of smoking-cessation programs or drug abuse treatment.  As is typical of government, these mandates are ever growing.  The Council for Affordable Health Insurance, which tracks the number of mandates throughout the states, finds over 2,000 across the country today.  No wonder many who can afford insurance choose not to get any.

Many states also already require providers to accept all applicants.  These "guaranteed issue" rules allow consumers to avoid purchasing insurance until they are already sick, defeating entirely the purpose of pooling risk.  The correct market response to this is to charge a higher premium for those who wait to get coverage until after they have gotten sick, yet many governments restrict this ability as well. Further disrupting the market are state licensing laws, which are often used as a barrier to out of state competition.  This means that a person living in New Jersey wouldn't necessarily be able to purchase insurance from a provider in New York, even if it offered better coverage for less. Fat chance that a government insurance option would be similarly disadvantaged.

There's really only two reasons to explain why proponents of a government option feel it is necessary or desirable.  One is that they hope to provide the government option with some sort of market advantage, either through tax payer subsidies or favoritism via rule making, such as special exemptions from the regulations crippling private insurance.  If they don't plan to do either of these then there's no reason their model, whatever the details turn out to entail, can't be created in the private market by liberal businessmen and philanthropists.

The other explanation for their proposal assumes more nefarious motives.  Because private insurers are already hand-cuffed by government regulation, the predictable result of providing a "government option" will be a single-payer system. Speaking before the AMA, President Obama explicitly denied that this was his intention:

Let me also say that -- let me also address an illegitimate concern that's being put forward by those who are claiming that a public option is somehow a Trojan horse for a single-payer system.

Now, I'll be honest. There are countries where a single-payer system works pretty well. But I believe -- and I've even some flak from members of my own party for this belief -- that it's important for our reform efforts to build on our traditions here in the United States.

So when you hear the naysayers claim that I'm trying to bring about government-run health care, know this: They're not telling the truth.

Back in 2003 a more honest Obama sang a different tune, proudly declaring that he "happen[s] to be a proponent of a single-payer, universal health care plan." He then cautioned that it could only be adopted once Democrats had taken back the White House and Congress.  Stage one accomplished, and it's looking more and more like the "government option" is stage two.
Proponents of socialized medicine learned an important lesson from the 1993 failure of Clinton Care, and recognize that they must hide their agenda in the rhetoric of market competition. Government is not going to take over insurance, they say; it merely wants to compete. 

In a letter to Senator Kennedy, President Obama touched on these points when he said, "I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans. This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest." How can the economic right, as believers in the superiority of free markets, oppose a little competition? The answer is: quite easily, as there is no such thing as fair competition when government is involved.

The left delights in reminding us that government is a necessary umpire - a neutral arbiter that monitors economic participants.  So why does anyone suppose it would be a good thing for those same umpires to grab a bat and take a swing?  Does anyone really believe an umpire would enforce an honest strike-zone if they also were standing at the plate, trying to hit a home run?  What proponents of government provided health insurance ignore is that the objectives and responsibilities of the private and public spheres differ in such a way as to make competition between the two wholly impractical.  With its additional power as rule-maker, it is delusional to believe that government could compete fairly without stacking the deck in its own favor.

It just so happens that the deck has already been stacked against private insurers.  Governments at all levels have saddled insurance providers with reams of coverage mandates. Depending on the state, insurance providers are forced to include coverage of everything from chiropractors to massage therapists.  These forced coverage rules reduce consumer choice and increase cost.  Under these rules, those who live responsibly are often forced to subsidize those who take greater risks with their health.  For example, states may require alcoholism coverage even if the individual has never drank a drop in their life.  The same is true of smoking-cessation programs or drug abuse treatment.  As is typical of government, these mandates are ever growing.  The Council for Affordable Health Insurance, which tracks the number of mandates throughout the states, finds over 2,000 across the country today.  No wonder many who can afford insurance choose not to get any.

Many states also already require providers to accept all applicants.  These "guaranteed issue" rules allow consumers to avoid purchasing insurance until they are already sick, defeating entirely the purpose of pooling risk.  The correct market response to this is to charge a higher premium for those who wait to get coverage until after they have gotten sick, yet many governments restrict this ability as well. Further disrupting the market are state licensing laws, which are often used as a barrier to out of state competition.  This means that a person living in New Jersey wouldn't necessarily be able to purchase insurance from a provider in New York, even if it offered better coverage for less. Fat chance that a government insurance option would be similarly disadvantaged.

There's really only two reasons to explain why proponents of a government option feel it is necessary or desirable.  One is that they hope to provide the government option with some sort of market advantage, either through tax payer subsidies or favoritism via rule making, such as special exemptions from the regulations crippling private insurance.  If they don't plan to do either of these then there's no reason their model, whatever the details turn out to entail, can't be created in the private market by liberal businessmen and philanthropists.

The other explanation for their proposal assumes more nefarious motives.  Because private insurers are already hand-cuffed by government regulation, the predictable result of providing a "government option" will be a single-payer system. Speaking before the AMA, President Obama explicitly denied that this was his intention:

Let me also say that -- let me also address an illegitimate concern that's being put forward by those who are claiming that a public option is somehow a Trojan horse for a single-payer system.

Now, I'll be honest. There are countries where a single-payer system works pretty well. But I believe -- and I've even some flak from members of my own party for this belief -- that it's important for our reform efforts to build on our traditions here in the United States.

So when you hear the naysayers claim that I'm trying to bring about government-run health care, know this: They're not telling the truth.

Back in 2003 a more honest Obama sang a different tune, proudly declaring that he "happen[s] to be a proponent of a single-payer, universal health care plan." He then cautioned that it could only be adopted once Democrats had taken back the White House and Congress.  Stage one accomplished, and it's looking more and more like the "government option" is stage two.