Listening to the radio tonight, I heard a senator say that the so called public option will “inject competition” into the marketplace, to drive down prices. If they are successful, we should have them inject extra competition everywhere. I, for one, would like cheaper microbrews.
Its too bad we don’t require our Congressional representatives to pass an economics test before we give them the authority that we do.
One cannot inject competition. To increase competition, you must instead remove barriers. Do that, and competition rushes in all by itself. If competition does not exist, it is because something is keeping it out.
In most of the country, there is in fact a lot of competition among health insurance companies. In some states though, there are only one or two companies writing most of the health insurance. Yet hardly anyone asks why this is the case.
The states that have few insurance companies writing policies are states that have a lot of rules that make the cost of coverage go way up – such as guaranteed issue rules.
The companies that do operate in those states are of course very well connected, politically. It is a see-saw, where the less free market you have, the more special interests, and political connections and money control the process.
If a public option passes, there are a couple ways it could go. The public option may not be chosen by the public, because it is not efficient and costs more. Or, the government option will be subsidized by tax dollars and will undercut private industry, eventually leading to a government take-over of healthcare.