If Private Health Insurance Is So Awesome, Why Would It Lose a Competition With Gov't Health Care?

by: David Sirota

Thu Mar 05, 2009 at 10:54

If government is so awful, so inefficient and so supposedly hated by the country as Republicans so often insist, how are those same Republicans insisting that Americans would overwhelmingly opt to be covered by a government-run health care program, if given the choice?

McConnell suggested there were areas in which Republicans won't compromise, particularly the creation of a new public insurance program to compete with private insurers.

"Forcing free market plans to compete with these government-run programs would create an unlevel playing field and inevitably doom true competition," the letter stated.

If the "free market" is as marvelously awesome as the GOP says, shouldn't it have absolutely no problem winning a health-care competition with "government-run programs?" Or does this little-talked-about hypocrisy in the Republicans' argument expose a brazen corruption? Does it show that the GOP is totally bought off by the private health insurance industry that Americans despise?

I'd say the latter. The GOP sees polls showing the public supports the concept of government-sponsored health care (and loves government programs like Medicare) - that is, the party knows that if given the choice, many Americans would choose a government-run program over private health insurance. But because the party is so owned and operated by the private health insurance industry, it is willing to effectively undermine its entire macro-argument about the supremacy of the free market so as to shill for its moneyed benefactors.  

David Sirota :: If Private Health Insurance Is So Awesome, Why Would It Lose a Competition With Gov't Health Care?

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if only it were just the GOP (4.00 / 8)
that was totally bought off by the private health insurance industry that Americans despise.

Join the Iowa progressive community at Bleeding Heartland.

Ain't that the truth (4.00 / 2)
Those politicians get it coming and going. Man, they get a sweet deal! Campaign cash from the private insurers and a government run health insurance system to take care of their boo boos.

"It sounds wrong...
     ...but its right."

[ Parent ]
Great Frame! (4.00 / 3)
It will be fun watching the "Free Marketeers" spin and twist on this frame.  

"Righties have no idea what we lefties think, because they never listen to us. They listen to the straw lefties that live in their own heads, and then they explain to each other what we think."  - Barbara O'Brien

it's pretty obvious (0.00 / 0)
Private industry is never going to be happy competing with government-subsidized alternatives, because the subsidized alternatives appear to be cheaper.  Unlike private industry programs whose costs are clear, government programs true costs are hidden because some unknown portion is paid by our taxes.  

Of course, it very well may be that the government run program is better and/or cheaper.  But so long as it appears cheaper, people will prefer it.  That's just human nature.

But according to free market theory... (4.00 / 1)
all consumers are rational actors.  Private insurers will have every opportunity to provide information about how inefficient the public insurance option really is, and voila! Public insurance will wither for lack of customers.

So says free market capitalist theory.

In reality, I don't disagree with your assessment (not sure I agree, but just withholding judgment for now), but your argument only further discredits the free market theory itself.  Either consumers (to use their term) are rational actors or they aren't.  If this is the argument posed as a defense, then they are arguing that consumers can't make rational decisions about what is in their own best interest, and thus, free market theory is only further undermined.

[ Parent ]
yup (0.00 / 0)
I'm totally with you -- anyone who thinks that people are rational actors has never met a person.

[ Parent ]
I am not sure if private industry programs costs are clear at all... (4.00 / 1)
Unless you are an individual buying your own insurance or you work in a company's HR department where they make these decisions, people don't have a clue what their insurance really costs.  Most businesses subsidize and negotiate the costs.  If you work for a larger company you might benefit from the larger pool size you are in, while in a small company you might see a good chunk of your compensation paying for a crappy plan that still makes you pay hundreds or thousands out of pocket each year.

This opacity is the advantage that private insurers have now.  Even now most people who are covered by their work will be wary of change even if it really is cheaper, especially with the media lining up behind the private insurers.  If insurance had no employment component we would have had a single payer system decades ago, because everyone would have been very aware of the costs and would have balked at being ripped off (or just out-and-out denied coverage) by the private insurers.  

[ Parent ]
But the nature of taxation is such (0.00 / 0)
That health care can be funded progressively, which is to say, in greater proportion by those with great wealth.

So to people who aren't rich, it won't just look cheaper, it will actually be cheaper.

[ Parent ]
It isn't so obvious (0.00 / 0)
Private insurance costs are, in no way, clear.

Obviously what you're referring to is the notion that, under a "government" program, taxes will go to offset the amount paid by a given patient for their instance of care.  But to suggest that this is not the case with a "private" insurer is to create a false dichotomy.  "Private" insurers receive numerous cost-offsetting benefits from taxpayers, both explicitly to their industry and in the ways that all stable economic activity does.  Moreover, the profit for a few individuals which is extracted from the healthcare delivery process is a significant cost to the vast majority of U.S. citizens and should be seen that way.  If we compared that cost to what it would take to run an effective healthcare system without that "profit tax" then the bargain that is single-payer would be what is clear.

[ Parent ]
Right on, David... (4.00 / 2)
The stunning hypocrisy of conservative worship of the free market is exposed in one little sentence.  This is really a piece of work!

I agree with desmoinesdem that others are bought and paid to shill for the health insurance companies, but part of the battle to win the hearts of Americans to support single-payer is to expose the complete horseshit of the underlying "common sense" that the free market is always better, more efficient, and "competitive" than anything handled by government.  And this one sentence does that as effectively and concisely as anything to come along in years.

Nice catch.

we've already been down that path (0.00 / 0)
compare this with Federal Direct Student Loan Program, introduced by the Clinton administration as a lower cost (to taxpayers) option for delivering student loans.  It cuts out the lender subsidies, so the banks and guarantee agencies that support the banks sought extinguish it before it ever got off the ground.  Instead both the Direct Lending program and the one that uses commercial lenders, the Federal Family Education Loan Program (FFEL) were permitted to compete, even though Direct Lending saves the taxpayers billions.  During the Bush administration lending subsidies to commercial lenders were reduced, and John Boehner, in Sallie Mae's (I believe it was Sallie Mae) pocket, put up a very vocal fight to keep the money flowing to them.  I've read that the Obama administration is considering eliminating FFEL, but if that is the case, you'll know what to expect.  

"free" market? (4.00 / 3)
There can be no free market in necessaties. No one can refuse to buy food, energy, water, or medicine. We must all buy these things.... or die. I don't believe for profit business should be allowed in essential commodities. In private sector health care the insurance industry adds 30% for overhead and profit. In our (US) public paid health care systems, only 3% is needed above medical costs. The expolitation of essential commodities has led to the outrageous unerned profit currently contributing to strangeling our economy. Health care should be just the first essential service/commodity nationalized to protect the citizens from unfetered exploitation. It is not free enterprise if the consumer can not refuse to buy............... And, of cource the rape-public-cans are again cought in their web of lies.

Government by organized money is just as dangerous as government by organized mob..... FDR

This is the key point, and our side should be hammering it home over and over. (4.00 / 1)
Republicans:  The American people don't want government running their health care because we all know that government screws up everything it touches, but we can't let it compete with the private sector because it will drive the private sector out of business.

But, Republicans - if the private health insurance will lose the competition with screwed-up government health insurance WHAT THE FUCK DOES THAT SAY ABOUT THE PRIVATE HEALTH INSURANCE SYSTEM?

This is a can't lose argument and we should be making it at every conceivable opportunity.

sTiVo's rule: Just because YOU "wouldn't put it past 'em" doesn't prove that THEY did it.

sadly, not just the republicans in the pocket if insurers (0.00 / 0)
The determined and nearly unanimous effort by the Dem establishment to keep single payer from even being mentioned as a possibility is pretty disgusting too.  They're afraid that if the facts were given a full public airing the public would demand nothing less than the best.  So they are determined to keep that open discussion from happening.


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