Public Option

A survey of the modern, industrialized world does not yield the “single payer” health care system as the only effective one. In Germany and France, for example, private insurance competes right along side of Government plans quite well. So what is the big deal being made here in the US?

To begin with in the rest of the modern world, health care is a right and not a “for profit” business. It follows from that basic assumption that “private” insurers are highly regulated and run as non-profits. Of course these companies make a profit but the amount is quite small. So let’s fast forward to the US.

The “public options” is so threatening here for one reason and one reason alone. Insurance companies and the shareholders who own them see the probability that their fat salaries and stock dividends and capital gains will disappear overnight. To these people this is wealth destruction.

In a way there is a touch of fairness to this concern. Why should this group of people suffer losses? Even when the President says that with free enterprise there should be competition, and there is no reason why private insurers could not compete.  There is a little tongue in cheek in that claim. While for sure private insurers could compete, but if they chose to compete by matching prices, their fat profits would disappear and so would the demand for their stock. Hence wealth destruction.

The so-called “public option” instead of a direct switch to “single payer” would allow a transition for private insurers. They could offer coverage above or different from some basic level (available to everyone) and possibly earn their desired profit levels. Not likely, however. Another approach might be for the Government (all of us) to buy out these private insurers, say at their capitalized value. (Each shareholder would receive the stock price at some designated day). The Government could then undertake an IPO and return the company to private investors as a “non-profit” insurer.

While this would undoubtably be costly, it would cut the Gordian Knot and get the country quickly to a reduced cost health care system.

Explore posts in the same categories: Barack Obama, Democratic Party, Economics, Germany, Healthcare, National Agenda, Politics, Republican Party

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