What’s wrong with a government option?

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I just had an interesting conversation with someone about the proposed government healthcare option. The problem with private insurance companies is that they are mostly concerned with profits, he said. A government provider could be trusted to put people first. Like much of what the left tells us, this sounds reasonable if you don’t give it much thought, but nothing could be further from the truth.

Before I address his concern, it’s worth noting that government entities cannot compete fairly in the private sector anyway because they have bully power that private companies don’t. It’s impossible to create and maintain a level playing field because public organizations can more directly influence taxes, regulations, and various government giveaways. Consider how the government is already propping up a “semi-public” firm, General Motors, with capital for financing cars, “Cash for Clunkers,” tax credits, and talk of environmental regulations that will inevitably favor GM’s new product development efforts. This should be enough to win the argument, but let’s return to the original contention just in case.

Yes, private insurance companies are interested in profits. But the idea that they can generate financial returns without serving their customers is illogical. Can a grocery store maximize profits by raising prices and cutting service? Perhaps it can for a short time, but certainly not for very long, and neither can an insurance company. There are differences between grocery stores and insurance companies, but the same principle holds true for all private enterprises. Successful companies, by definition, are successful because they provide value to their customers.

Government entities are fraught with conflicts of interest. Bureaucrats must consider the interests of those receiving a service, those paying for it, lobbyists representing those providing it, politicians who control the flow of tax dollars, and even the voting public. By their very nature, public organizations require central planners to make market decisions that affect these constituencies. In a free market, this is done more efficiently because all of the players—doctors, hospitals, patients, insurance companies—pursue their own interests instead of relying on government to sort everything out. Healthcare is heavily regulated and might be considered as a less-than-free market, however. Healthcare reform should remove government barriers that restrict natural market activity instead of adding to them. The idea is to shift the healthcare market toward open competition, not government control.

Differences between public and private organizations are best illustrated when you consider what happens when revenues fall short of expenses. In the private sector, failing companies must find ways to cut costs and/or improve their products and services. If they don’t, they will dissolve while more efficient (and more deserving) competitors survive. Private sector revenues come directly from customers, who vote with the wallets. When government entities are faced with “budget shortfalls,” their constituencies coalesce to demand more money, and they often get it. Funding for poverty, education, and other social concerns continue to rise every year, but we are constantly told that the existing programs need more resources to “finish the job.” Ultimately, failure is weeded out in the private sector, but often rewarded in the public sector.

You might not be in love with your health insurance company, but at least it has a clear obligation to you, and it’s solvent. Government agencies like those that administer Medicare and Social Security are facing eminent collapse if reforms are not instituted in the coming years. Rest assured that these and most other government programs will survive, as politicians and bureaucrats decide who pays more and who get’s cut. If we get a government healthcare option, it will survive too, regardless of how it functions or how much it costs. This part of the Obama proposal is likely to be the most damaging to healthcare quality and the most difficult to undo…if it passes.

2 Comments

2 Comments

  1. Nutmeg State Conservative  •  Sep 18, 2009 @2:59 PM

    Right on! I always amazes me where the confidence in government running anything comes from when the evidence is all around that the simply cannot. And you are right that the government does not compete, it dominates because it just needs to regulate competition out of the market and raise taxes to cover its failures.
    It is so simple and fundamental that it is scary liberals don’t see this!!

  2. jeff  •  Sep 18, 2009 @7:57 PM

    the problem with gov’t is that there is no ACCOUNTABILITY!! nobody is watching to see that all the shlubs actually do some work instead of twiddling their thumbs or surfing the internet for porn…here in CA we have a huge fatcat bureaucracy at the Dept. of Fish and Game where they sit in cubicles all day but we have a severe shortage of actual DFG Wardens in the field actually doing the work…the higher ups in politics(mostly from the lib party, but not all) stash their friends and cronies in these agencies and they get $100,000+ per year salaries and nobody knows what in the hell they actually do….same thing for the Los Angeles county school district – a huge bloated bureaucracy with 100′s of unnecessary “consultant” types making $100,000+ a year and nobody knows what they do….and even though the number of schoolchildren is declining rapidly(even with the illegals) the L.A. school district is STILL BUILDING NEW SCHOOLS!! thats the problem with gov’t as the taxpayers are busy working and don’t have time to watch these crooks…most gov’t types are failures in the real world(private sector)- they couldn’t hack it – so what they try to do is build their would-be “businesses” at taxpayer expense…