Competition, the Public Option, and the Healthcare Industry

While private plans would most likely have much better customer service, the government plan would be dictating prices and would be cheaper [The Case for Postal-Style Healthcare, usnews.com].

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While private plans would most likely have much better customer service, the government plan would be dictating prices and would be cheaper [The Case for Postal-Style Healthcare, usnews.com]. That is the competitive advantage, but it is truly insidious. Doctors in this system would become disenchanted government workers with no incentive to excel. After the mounds of regulation and paperwork—see Medicare and Medicaid—and throw in the loss of financial incentive and the quality of people going into medicine would fall off the map. Having the government dictate what you can be paid and how you will practice would turn off anyone with a decent IQ. Why would anyone train for 10 or 12 years, incur massive student debt, and then go work for the government at mandated reduced rates.

Comment by Tim Holroyd of VA

Great article, Rick Newman. I think private interests are against a universal healthcare plan in the same way they are against a universal mail service. Private enterprises don't want competition from any government-run business. That's how the banks and airlines got deregulated, because private enterprise got their way with their friends in politics...and we all know how successful that has been. Why not use Medicare as a great model? The only problem with Medicare is the unscrupulous doctors who bill Medicare with unnecessary or fraudulent charges. It is in the same way the Defense Department can rip off the monies appropriated to them. The abuses are what are so objectionable, not the program. People services guaranteed by the government make for a better standard of living because it creates competition with private enterprise and this is a good thing...a very good thing.

Comment by Lori of FL

The biggest problem with the argument that private insurers should be able to compete with a public option is that the public option would pay doctors and hospitals 20, 30, or even 40 percent less than the private insurers. The public plan could be up to 40 percent less efficient and still offer prices below what the private market could offer. The private market would collapse. The article is interesting and a nice counter point of view. However, the discussions about the collapse of the private market aren't Chicken Little exaggerations. The issues would snowball as doctors and hospitals tried to recoup some of the shortfalls from public option payments from private insurers on the business they still had. The gap would further increase, and health insurers would be out of business. A public option could be required to pay hospitals and doctors at prevailing private market rates. However, I think that would only work initially. Eventually, legislation would be put forth to make an exception to this rule and payments would revert to Medicare or even Medicaid levels.

Comment by Ross of CO

The problem with the argument is that private companies are not allowed to compete with the USPS for first-class mail. The USPS is a monopoly that the government will not allow competition with. So that model transferred to the healthcare system will result in another monopoly that the government will not allow competition in. This country is doomed if the government sets up another monopoly.

Comment by Nick of TN

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