National health plans competing with the private sector

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John Graham of the Pacific Research Institute makes a great point in an email today:

One key item on President Obama’s health care agenda is to “establish a National Health Insurance Exchange with a range of private insurance options as well as a new public plan based on benefits available to members of Congress that will allow individuals and small businesses to buy affordable health coverage.” The chairmen of five congressional committees have all agreed that there should be a government-run plan that competes against private health insurers and is available to all Americans. Senators Kennedy and Baucus; and Representatives George Miller, Henry Waxman, and Charles Rangel, have been engaged in secret negotiations to hammer out a deal.

They are seeking to impose “discipline” on the market. As if government understands this when delivering a service. Think Amtrak.

Charlie Baker at Let’s Talk Health Care notes his three quarrels:

First, there is an undeniable law of unintended consequences when the public sector gets into any market in a big way. Medicare and Medicaid – while worthy and important – have had enormous – and often negative – influence on the way the health care delivery system in this country has developed…

Second, there’s really no such thing as a “level playing field” associated with this sort of thing. Private sector organizations need to break even, and they have to fund all of the costs of providing a service to their customers out of the revenue they collect. The federal government taxes everyone to fund its operations, spreads the costs of that operation all over its own organization, doesn’t really have to balance its budget, and if it runs out of money, it can either print more, raise taxes, or cut something else….

Third, the feds can set provider prices at pretty much any level they like, while private organizations need to reach a mutually agreeable number….

These are all spot on but think about Graham’s very basic point:

If the government offers the same plan nationwide, why not let private insurers and individuals the same freedom?