Health Care Reform: What's wrong with a "public option," you ask?

On one of the Sunday morning news shows I heard economist Paul Krugman make the argument that a "public option" provided by the government is needed to reform health care. 73% of people in Iowa are covered by the same insurance provider. We need competition. We need a public option. 

He's half-right. A lack of competition is part of the problem; however, not in the way that he would lead you to believe. There are approximately 300 health care providers in the US. Adding one more will somehow magically create competition? The problem with this theory is that it neglects to consider the way that health care is administered. 

In a past life, I worked in Advanced Technology for a major dental company. During my tenure I came into contact with a man named Brian Hill. Brian is the former owner of a dental company, stage 3 oral cancer survivor, and founder of the Oral Cancer Foundation. When he was diagnosed, he wanted to get the best treatment possible. Although he was a California resident, he found that the premier facility for oral cancer treatment was located in Texas. His insurance company told him that treatment there would not be covered since it was out of network. He was insured by a major insurance provider, Blue Shield I believe. There's Blue Shield in Texas, so this shouldn't be a problem, right? WRONG. So he had to pay out-of-pocket. Fortunately he had the ability to do this; not everyone is so lucky. 

Ever wonder why health insurance is so much more expensive than car insurance or renter's insurance? One of the reasons is because you can shop around. If you live in California, you can get a policy for your car from a company in Texas. Health insurance doesn't really work that way. HMO's (a government creation) and PPO's have a government-enabled monopoly on health care and a huge lobbying influence in Washington; they wouldn't want something like a little competition to affect their bottom line.

But a public option will keep the insurance companies honest, you say? Health Secretary Kathleen Sebelius recently said “The president feels that having a public option side by side, same playing field, same rules, will give Americans choice and will help lower costs for everybody. And that’s a good thing.”

The problem is that a public option provided by the government would by definition not be playing by the same rules. Private companies are beholden to the bottom line; in the free market, if a company is not profitable it goes the way of the dinosaur. The government is not in the business of making a profit and has essentially unlimited resources (aka our tax dollars) so they do not have the same limitations. The government could charge a price far lower than the market would normally bear because of this. This would drive private insurance companies out of business, as the consumer will obviously opt for the lowest price, all things being equal. 

At this point I hope that you can see that a public option is merely an attempt to backdoor socialized healthcare. Maybe you are all for this. Understand though that socialized healthcare is not FREE healthcare. When you eliminate competition from the market place, you lose the ability to keep prices down and thus rationing care is the only option to keep down cost. It's economics 101...if you short the supply and demand remains the same, price will inevitably go up.