Obama’s notion of competition

From Randall Hoven:

The Public Option for Dummy Talk-Show Hosts

I would like to address this to those who are not socialists, but who think Obama’s health care plan sounds good. (I realize that would have to be a very small fraction of the public, perhaps no bigger than David Letterman himself. Letterman said, “I’m not a socialist, but it don’t sound that bad to me.”)

The central aspect of Obama’s “plan” is the “public option.” (The word “plan” is in quotes because Obama has no such plan written down. But he has insisted from the beginning that any plan he would approve would have to include a “public option” in some form.)

I think President Obama himself is best qualified to explain the need for a public option. Here is that explanation, as given to a joint session of Congress on September 9, 2009.

“Now, my health care proposal has also been attacked by some who oppose reform as a ‘government takeover’ of the entire health care system. As proof, critics point to a provision in our plan that allows the uninsured and small businesses to choose a publicly sponsored insurance option, administered by the government just like Medicaid or Medicare. (Applause.)

“So let me set the record straight here. My guiding principle is, and always has been, that consumers do better when there is choice and competition. That’s how the market works. (Applause.) Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company. And without competition, the price of insurance goes up and quality goes down.”

OK, so now we know what the “public option” is: “a publicly sponsored insurance option, administered by the government just like Medicaid or Medicare.”

We also know why Obama says we need it: “competition.” “That’s how the market works.” You know — lower costs, better quality.

Let us take Obama’s own examples in which the health insurance market is “five or fewer companies.” If there were a public option in those markets, the number of choices would increase by one. That 90% of Alabama that now has just one choice, would have two. The 75% of 34 states that have five or fewer choices, would now have six or fewer. Get it?

As a baseline cost number, all we have that is solid right now is the Congressional Budget Office’s analysis of the Affordable Health Choices Act (HR 3200), a bill under consideration in the House and supported by Obama. And the CBO said,

“Enacting the proposal would result in a net increase in federal budget deficits of about $1.0 trillion over the 2010-2019 period.”

So the estimate of the cost of Obama’s plan is one trillion dollars.

Now if what we want is competition, is there a better, or cheaper, way to get it?

As it turns out, the CBO has analyzed 115 options for federal health care reform. One of those options is called “Allow Individuals to Purchase Nongroup Health Insurance Coverage in Any State.”

“Under current law, issuers of individual health insurance must be licensed in the state in which they offer policies… This option would permit an insurance carrier to choose one state in which to become licensed… the carrier would be permitted to sell those policies in other states…”

Instead of costing a trillion dollars, or costing anything, the CBO estimates this option would save $7.4 billion over 2010-2019 and reduce the number of uninsured by 400,000 people by 2014.

No trillion dollar price tag. No new bureaucracy. No new czar. Just a change in the law to allow people to buy and sell a legal product, at a mutually agreed price. Now that is how the market works.

And what about competition? I count over 250 plan providers on one web site alone, America’s Health Insurance Plans.

Instead of those deprived folks in 90% of Alabama who would have only two plans to choose from if we get a “public option”, they would have over 250 plans to choose from if we simply allow the selling of health insurance across state lines.

Let me put it in terms David Letterman might understand. Plan A costs one trillion dollars and increases the number of competing plans by one. Plan B saves $7.4B and increases the number of competing plans by over 250.

However, David Axelrod, Obama’s chief policy advisor, dismissed this “Plan B.” He said it would be “disruptive” to have such cross-state competition.

“That is not endemic to the kind of reforms we’re proposing … We’re not into a symbolic expedition here.”

(For those who might be confused, “endemic” means “prevalent in or peculiar to a particular locality, region, or people” according to the Yahoo/American Heritage online dictionary. Hope that clears it up for you. Oops, since I reached for a dictionary, that must mean I’m stretching.)

Does it not seem curious to you that the one and only health insurance plan that the Obama administration would allow to cross state lines would be the “public option”?

Does it not also seem curious to you that the Communist Party would insist on the “public option” because it would increase competition since “that’s the way the market works”? Since when did the CPUSA promote competition and the market?

If I didn’t know better, I would say the Obama plan is not to increase competition, but to make sure the public option has as few competitors as possible. If the competition were eliminated, all that would remain would be an option “administered by the government just like Medicaid or Medicare.” That would be, um, a single-payer, government-run, system.

Medicare, by the way, is expected to be bankrupt by 2017.


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