Victor Davis Hanson has an excellent article on today's National Review Online regarding Obama and the 'Noble Lie.' He really nails the President's
"style" of governing.
Monday, June 29, 2009
Sunday, June 28, 2009
The government health care "option."
A reporter suggested to President Obama last week that the government healthcare "option" would crowd private health insurers out of the market, creating a single-payer (i.e. government only)system. The President emphatically denied this, calling this conclusion "illogical," and further stating that he did not understand why anyone would expect such a result. There are two compelling answers to the President's denial, one of which has been fairly widely reported, while the other has been largely ignored.
The reported answer, which makes a lot of sense, is that private employers, seeking to remain competitive, will simply stop providing health coverage to their employees, "dumping" them onto the government in order to cut costs. I do not doubt that many employers will do just that. Even if an employer does not want to take that step, General Motors and Chrysler have demonstrated that a company cannot concede significant cost advantages to its competitors and hope to survive (absent a government bailout of course).
But there is a second, equally compelling, reason, which I have not seen discussed, why the government "option" will probably become the only game in town when you seek to obtain health insurance: the government doesn't have to operate at a profit. In fact, it almost never does. That's why the federal government can keep Amtrak operating ad infinitum. The government didn't have to drive the private railroads out of that market; it was (and is) unprofitable, so the railroads were happy to let the government have it.
But the government can drive private companies out of any market, including the insurance market, precisely because the government doesn't play by the same rules. For example, the Tennessee Valley Authority drove a number of electrical utility companies (including Wendell Wilkie's company) out of business in a significant portion of the Southeast United States. Amity Shlaes recounts this history in The Forgotten Man. Even if you think this was a good result, it demonstrates the government's power to take over any market it chooses, because private companies have to operate at a profit, and the government does not.
Moreover, the government can dictate to doctors and other health care providers what it will pay for medical services to a degree that private health insurers cannot. The government already does this with Medicare, and healthcare providers can either accept below-market reimbursement or forego Medicare patients altogether. The government will have significantly more leverage if it radically expands government-provided healthcare via the proposed new program.
If you can't fight city hall, you definitely cannot fight the federal government. I fear a single-payer system would be inevitable.
The reported answer, which makes a lot of sense, is that private employers, seeking to remain competitive, will simply stop providing health coverage to their employees, "dumping" them onto the government in order to cut costs. I do not doubt that many employers will do just that. Even if an employer does not want to take that step, General Motors and Chrysler have demonstrated that a company cannot concede significant cost advantages to its competitors and hope to survive (absent a government bailout of course).
But there is a second, equally compelling, reason, which I have not seen discussed, why the government "option" will probably become the only game in town when you seek to obtain health insurance: the government doesn't have to operate at a profit. In fact, it almost never does. That's why the federal government can keep Amtrak operating ad infinitum. The government didn't have to drive the private railroads out of that market; it was (and is) unprofitable, so the railroads were happy to let the government have it.
But the government can drive private companies out of any market, including the insurance market, precisely because the government doesn't play by the same rules. For example, the Tennessee Valley Authority drove a number of electrical utility companies (including Wendell Wilkie's company) out of business in a significant portion of the Southeast United States. Amity Shlaes recounts this history in The Forgotten Man. Even if you think this was a good result, it demonstrates the government's power to take over any market it chooses, because private companies have to operate at a profit, and the government does not.
Moreover, the government can dictate to doctors and other health care providers what it will pay for medical services to a degree that private health insurers cannot. The government already does this with Medicare, and healthcare providers can either accept below-market reimbursement or forego Medicare patients altogether. The government will have significantly more leverage if it radically expands government-provided healthcare via the proposed new program.
If you can't fight city hall, you definitely cannot fight the federal government. I fear a single-payer system would be inevitable.
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