Why a Public Option is Unnecessary

The debate over health care reform in the United States hinges on many decisions. One of the most important as expressed by this administration is the idea of creating competition for current insurance providers. The best way to do this is with a government-run option that people can pay into that functions the same way as a private group. The name for this idea depends of who you ask, but for our purposes we’ll call it the public option.
The pros and cons are simple per se. If you’re a private insurance provider who’s been needlessly overcharging people for services or otherwise netting huge profits, you may see that taper off a bit if the public option succeeds in insuring people for less.
This sounds great to people who aren’t in insurance, which likely accounts for a larger chunk of the voting populace than the former group.
The question underneath, however, is how can congress do this without seriously undermining the autonomy that largely impacts ethical decisions in this area.
Sure, if you believe that insurance companies really are evil and siphoning billions from people’s paychecks only to deny them their care, or in cahoots with doctors to encourage more services rather than better care, you may be right. But as addressed on this Minnesota Public Radio program by Cigna’s VP of public policy G. William Hoagland, many large health care groups have agreed that changes are needed and will be enacted concerning the cost of medical care, the billing system, the issue of pre-existing conditions, and the mass of uninsured.
So how then can government compete?
In according importance to the public option, even President Obama has agreed to certain conditions about a public option: it must break even financially, and it must do so without being afforded special privileges. No forcing special deals on providers, no adding the national deficit to support the public option.
Where does that leave the government in terms of business?
In a New York Times article from August of this year, Richard Thaler, professor of economics at the University of Chicago’s Booth School of Business, draws an interesting, but clearly relevant analogy about another government run business that hasn’t been run so well.
That’s right, the U.S. Postal Service. As Thaler points out, yes it’s great for sending a letter to Grandma, but in the business realm when one needs something to get from one place to another overnight, they’re more likely to count on one of the private options (UPS or FedEx).
Thaler also points out that the Post Office routinely runs a deficit, as it is now, and is pressed to close offices in rural areas or eliminate weekend deliveries. The cuts are only prevented by pressure from large groups such as postal employees and those who rely on those small offices.
Thaler goes so far as to attribute government failure in business ventures as opposed to those achieved by private firms to lack of innovation. Perhaps this is true, perhaps not. Either way without intention, it provides strong evidence for the elimination of a government-run public option.
The issues the administration have posited, and people have accepted, that this plan could potentially solved are best solved without adding another large institution to the US Government’s payroll.

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