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What's the point of a public option?
Greg Mankiw's Blog ^ | Friday, June 5th 2009 | Greg Mankiw

Posted on 06/05/2009 8:40:14 AM PDT by LowCountryJoe

In the national debate over health insurance reform, a key issue is whether the government should offer a "public plan" to compete with private insurers. For example, in today's NY Times, Paul Krugman writes,

What’s still not settled, however, is whether regulation will be supplemented by competition, in the form of a public plan that Americans can buy into as an alternative to private insurance.

Now nobody is proposing that Americans be forced to get their insurance from the government. The “public option,” if it materializes, will be just that — an option Americans can choose. And the reason for providing this option was clearly laid out in Mr. Obama’s letter: It will give Americans “a better range of choices, make the health care market more competitive, and keep the insurance companies honest.”

It seems to me that this passage, like most discussion of the issue, leaves out the answer to the key question: Would the public plan have access to taxpayer funds unavailable to private plans?

If the answer is yes, then the public plan would not offer honest competition to private plans. The taxpayer subsidies would tilt the playing field in favor of the public plan. In this case, the whole idea of a public option seems to be a disingenuous route toward a single-payer system, which many on the left favor but recognize is a political nonstarter.


TOPICS:
KEYWORDS: gregmankiw; healthcare; mankiw; publicoption
This is the critical question to be asking from the statist nutjobs who say that we need a universal healthcare plan. We do? Why? When the 'premiums' for coverage have nothing to do with one's expected consumption of healthcare and everything to do with one's ability to pay for it. If the Left wants to squeeze out the profits made be the supposedly evil insurers, why not start up a non-profit health insurer? It's a great question to ask.

Unfortunately, Marx's [I also understand it's in the bible] from each according to his ability to each according to their needs is never more wished for (and evident) than taxpayer funded healthcare that most of the people in the U.S. seem to clamor for. To the point where it's sickening.

Correct URL to this blog entry is found here.

1 posted on 06/05/2009 8:40:14 AM PDT by LowCountryJoe
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To: LowCountryJoe

Government health care will eventually control avery aspect of the peoples lives. From the food you eat to the clothes you wear, to the car you drive. If you do anything that is unhealthy, they will deny health care.


2 posted on 06/05/2009 8:44:22 AM PDT by RC2
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To: LowCountryJoe
Would the public plan have access to taxpayer funds unavailable to private plans?

One factor wrecking Canada's health care system is precisely that public and private care operate on different sources - and n'er the twain shall meet. AFAIK: Yes, you can opt for private care - but if you do, once, at all, you lose all access to public (i.e.: taxpayer funded) care.

3 posted on 06/05/2009 8:44:22 AM PDT by ctdonath2 (John Galt was exiled.)
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To: RC2

That’s the real agenda behind “gov’t health care” - control over your behavior.


4 posted on 06/05/2009 8:45:23 AM PDT by MrB (Go Galt now, save Bowman for later)
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To: LowCountryJoe

“Now nobody is proposing that Americans be forced to get their insurance from the government.”

Funny he should say this. Is the government planning to nationalize insurance as well as health care?

But a LOT of leftists *are* proposing that Americans be forced get their health care from the government. So why did he say “insurance”?


5 posted on 06/05/2009 8:45:35 AM PDT by yefragetuwrabrumuy
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To: yefragetuwrabrumuy

Read “Liberty and Tyranny”.
Levin shows that FDR’s social security was intentionally framed to look like you were paying in, that you had a stake in the system, and that you were entitled to the benefits of it because you had that stake.

All fiction.


6 posted on 06/05/2009 8:46:59 AM PDT by MrB (Go Galt now, save Bowman for later)
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To: ctdonath2

And THIS is the out that the mega wealthy will use to make sure they’re not ensnared in the traps they set for the rest of us.

Seriously, the left and their supporters among the wealthy want to return to the feudal system. Nobility and peasants. A set of rules for each.


7 posted on 06/05/2009 8:48:19 AM PDT by MrB (Go Galt now, save Bowman for later)
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To: All
crap, I left out a bit from Mankiw's blog entry. here it is:

If the answer is no, then the public plan would need to stand on its own financially and, in essence, would be a private nonprofit plan. But then what's the point? If advocates of a public plan want to start a nonprofit company offering health insurance on better terms than existing insurance companies, nothing is stopping them from doing so right now. There is free entry into the market for health insurance. If a public plan without taxpayer support would succeed, so would a nonprofit insurance company. The fundamental viability of the enterprise does not depend on whether the employees are called "nonprofit administrators" or "civil servants."

The bottom line: If the goal is honest competition in the provision of health insurance, the public option cannot do much good but can potentially do much harm.


8 posted on 06/05/2009 8:52:42 AM PDT by LowCountryJoe (Do class-warfare and disdain of laissez-faire have their places in today's GOP?)
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To: MrB

MANY states REQUIRE proof of liability insurance coverage to obtain either a driver’s license or license plates.

The insurance companies participate in a mandatory state “assigned risk” pool to offer these policies to residents who cannot qualify for normal coverage. Premiums are set (and adjusted) to maintain the balance between total costs and total benefits paid.

And while this does contain the element of state coercion, it does keep the government out of actually being in the business - and it might be the best we could hope for.


9 posted on 06/05/2009 9:00:17 AM PDT by MainFrame65 (The US Senate: World's greatest PREVARICATIVE body!.)
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To: LowCountryJoe
What's the difference between government subsidized health care and government subsidized autos?

Also, we all know the regulatory and union environments for the private sector enterprises in both cases is going to be much harsher than what the government enterprise faces.

What the Hell, if we have to buy our cars from the government, we might as well nationalize the hospitals and doctors as well.

Any Freeper health care workers, you can bet on it, once health insurance is nationalized, they are going to go after your paychecks next. Compensation schedules will be slashed and the menu of approved therapies drastically restricted.

10 posted on 06/05/2009 9:20:17 AM PDT by Lonesome in Massachussets (AGWT is very robust with respect to data. All observations confirm it at the 100% confidence level.)
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