Nor does Obama believe in fostering competition in other health insurance realms -- such as existing government health insurance programs. John Goodman, head of the National Center for Policy Analysis, suggests letting Americans now enrolled in Medicare, Medicaid and the State Children's Health Insurance Program (SCHIP) select a voucher to buy private coverage if they want. Don't hold your breath waiting for the administration to push that idea.
Supporters of the "public option" think it can achieve efficiencies allowing it to underprice existing insurers. But efficiency is to government programs what barbecue sauce is to an ice-cream sundae: not a typical component. Nor is there any reason to think Washington can administer health insurance with appreciably lower overhead than private companies.
Medicare supposedly does so, but that is partly because it doesn't have to engage in marketing to attract customers, which this program would. It also spends less than private companies combating fraud and unwarranted treatments -- a type of monitoring that spends dollars while saving more.
As the Congressional Budget Office has pointed out, "The traditional fee-for-service Medicare program does relatively little to manage benefits, which tends to reduce its administrative costs but may raise its overall spending relative to a more tightly managed approach." False economies are one reason Medicare has done a poor job of controlling costs.
But a public program of the sort Democrats propose doesn't have to control costs, because in a pinch it can count on the government to keep it in business. Competition is healthy, but how are private companies supposed to compete with an operation that can tap the Treasury?
Students of the Obama economic policy will also note a curious consistency in its approach to economic issues. Some problems, like the near-collapse of General Motors and Chrysler, came about because competition worked very well at serving consumers and punishing poorly run companies. Some problems, such as high health insurance premiums, came about because competition allegedly didn't work so well. In both cases, the administration proposes the same solution: more federal spending and a bigger federal role.
Will introducing a government-run insurance program work? After all, that Nigerian financial scam works. Just not necessarily the way you hope.
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