Free Markets, Free People

The Public Option: When Competition Isn’t Really Competition

It is, instead, a prelude to monopoly.  That is the case with the “public option” in the health care reform desired by the left:

The problem is that government, by definition, isn’t just another economic player, and will always tend to want to control markets for its political purposes. That threatens economic as well as political liberty.

And that’s precisely what a government run entity in a private market will be directed by – politics and an outcome favorable to the goal of politics – the accumulation of power. So there’s a basic level of dishonesty going on here when those in support of a “public option” talk about “competition”. Rep. Paul Ryan calls Kathrina Vanden Heuval on just such a use:

What’s concerning about this debate with me is that you’re using capitalist rhetoric to try and move a plan that is inherently anti-market. The problem is that the facts tell us this: A public plan option quickly becomes a government-run monopoly.The actuaries are telling us is that in a few short years, the public plan option displaces the private sector, employers dump their employees on the public plan, and then they have no choices but the public plan. And so, lets not try to sell a government-run plan using free market rhetoric.

Redefining “competition” to mean nothing more than the introduction of another entity in the field is the ploy.  Relying on the economic ignorance of most Americans to carry it off is also part of the plan.

Instead competition is the battle of private entities with the same goal – market share and profit.  In a free market system that goal is attained through winning the preference and loyalty of customers for their product at an acceptable price for both consumer and producer. It is the existence of other producers and their products which keeps the other producers “honest”.   But the introduction of a government entity into such a market introduces a “competitor” which is only interested in one aspect of that competition – obtaining the preference and loyalty of customers. It has no interest or need to have that price acceptable to the producer since it doesn’t have to seek a profit to provide the product.  In fact, it can run a loss as long as it takes to clear the market of other “competitors”.  Such predatory pricing will be supported by whatever subsidies are necessary from the US Treasury.  It will end up distorting the market to the point that those who must have a profit to continue to serve their customers and produce their product (actually pay for it with money they earn) will leave the market.

That’s not “competition” by any stretch of anyone’s imagination. And, in fact, with the ability to absorb as much loss is necessary to drive private firms out means government will indeed, at some future point, enjoy a “single payer” monopoly. They’ll be the only game in town.  It seems that our government is unfriendly only to private monopolies, not public ones.

So, in summary, defenders of the public option are being blatantly disingenuous with their rhetoric and stated intent when they claim that the “public option” would introduce “competition” and keep insurance companies “honest”. In fact it won’t do that at all.  It will, instead,  evolve over time into a “market” in which the only insurance entity standing will be the government run one which will enjoy monopoly status and give the liberal left the “single payer” system it so badly wants to see enacted here.

~McQ

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4 Responses to The Public Option: When Competition Isn’t Really Competition

  • In the city with the sharpest business people in the country, with the longest tradition of commercial enterprise in America, the government of New York City successfully lost money in the gambling busines. For years Off-Track Betting managed to lose money (I think Giuliani somehow got it into the black), though many a fine Democratic hanger-on took home a paycheck.

    The mob is in the gambling business because aside from the rogue phenomenon know, I believe, as a “bettor’s year,” it’s virtually impossible to not make money at gambling.

    If government can turn a gambling enterprise into a loser, then it can turn health care into a gambling enterprise. Your body being the stakes.

    Postal workers with proctoscopes.

    One can imagine how much contempt health care workers will hold patients in when they feel like the government has their back.

  • I found your last couple of paragraphs a little confusing, but I get the point.

    The issue with the public plan is not that it doesn’t need to maintain a profit margin. Mutual insurance programs don’t really operate at a profit either. They’re dedicated to breaking even within a margin of safety. Any unspent profit is paid back to the policyholders. This works pretty well and is fine.

    The issue with a public plan is that the government will prop up the public plan with taxpayer funds. It can and will operate at a loss for long periods with few to no negative side-effects. The public plan will essentially have access to an additional revenue stream created by taxation that the private plans will not be able to match. If they can maintain a loss longer than the private firms, then they can essentially establish a monopoly through predatory pricing.

  • Here is proof of the public “option” being a trojan horse to create a single payer system. Joey Panto calls advocacy groups and uses one of his many alter egos to pose as supporters of their statist causes, and draws out their hidden agendas without much prompting. Here he gets a prominent universal healthcare advocacy group’s director (I wish he would reveal her name and her organization) to admit that their hidden agenda is a single payer system, elimination of fee for service, and public health benefits for illegal aliens.
    http://02e56fa.netsolhost.com/blog1/index.php/2009/09/21/first-post-of-the-new-era-pickle-1-advoc