« Pop Keynesianism | Main | Paul Krugman: Obama’s Trust Problem »

Friday, August 21, 2009

"Public Auction Option Shouldn't be a Deal Breaker"

Tim Duy recommends this piece on public-private competition. The argument, based upon the outcome of public-private competition in electrical power and worker's compensation insurance, is that there is no reason to fear a public option for health care:

Public option shouldn’t be deal breaker for reform, by Jack Roberts, Guest Viewpoint, Register Guard: Recent reports that the Obama administration may (or may not) be backing away from a public option for health care reform are likely to raise the decibel level of the debate even higher. Unfortunately, the result may be to reduce further the chances of getting health care reform passed at all. ...

To a great extent, this is reminiscent of the great debate in the 1930s over public vs. private power... Nowhere was this debate more contentious than in Oregon.

Public power advocates believed that private utilities were strangling the economy and robbing ratepayers, while opponents insisted that public power was a sure route to socialism. Sound familiar? The only thing both sides seem to agree on was that one system or the other must prevail and that public and private power could not coexist.

Jump ahead 70 years. Here in Lane County, most people receive their electrical power from municipal utilities, cooperatives or a people’s utility district. Private utilities such as Portland General Electric and Pacific Power serve most of the rest of the state.

Today, we may use euphemisms such as “consumer-owned” and “investor-owned” utilities, but it is still the same public vs. private power distinction. ...[T]here is actually little difference in the way public and private utilities operate. The reason is that both public and private utilities are funded by their ratepayers. Public utilities are not subsidized by general tax dollars, as private power advocates once feared. ...

There is little reason to believe that a public health insurance option would operate much differently from private health insurance companies, either. Already there are nonprofit health insurance companies that operate more or less like their for-profit competitors. Their incentive to hold down costs ... is no less than a for-profit company’s. After all, their top management still wants to keep its jobs and be compensated for good performance, too.

Probably the best example of how a public health insurance option could operate is Oregon’s experience with a quasi-public worker’s compensation insurance company, the State Accident Insurance Fund...

True, its principal private sector competitor, Liberty Northwest, complains about unfair competition... Yet in a state that requires businesses to carry worker’s compensation insurance, SAIF serves as a critical provider of affordable workers’ comp coverage for thousands of Oregon companies, large and small. ...[M]ost Oregonians don’t regard SAIF as representing a government takeover of workers’ compensation, much less a harbinger of socialism. ...

Yet Oregon’s workers’ comp system is not so clearly better than the 25 states that have no equivalent to SAIF as to render their mandatory workers’ compensation laws worthless or unworkable. The fact is that mandatory workers’ compensation laws were a major step forward..., with or without a public option for providing worker’s comp insurance.

Adopting universal health care coverage will be equally revolutionary in its effect on our society, whether it initially includes a mandatory public option, and whatever the precise form that option originally takes.

The real key to health insurance reform is to prevent insurance companies from excluding people from coverage or charging higher premiums based on a person’s pre-existing health condition, and then to mandate coverage for everyone. ...

    Posted by on Friday, August 21, 2009 at 12:24 AM in Economics, Health Care, Policy | Permalink  Comments (25)

    Auction Option Shouldn't be a Deal Breaker" - Economist's View" addthis:url="https://economistsview.typepad.com/economistsview/2009/08/public-auction-shouldnt-be-a-deal-breaker.html">


    Comments

    Feed You can follow this conversation by subscribing to the comment feed for this post.