Obamacare Myths


-Jarrett Skorup

Lately I’ve been hearing the same statement from President Obama and his administration and I’d like to clear up this myth.  The statement revolves around the idea that the president’s health care bill will merely give consumers more options with no detriment to private insurance companies.  The following exchange took place on the ABC news special with President Obama and is the latest example of this myth:

The president [argued] that in a Health Insurance Exchange, the public plan would be “one option among multiple options.”

The concern, Gibson articulated, is that such a plan wouldn’t be offered on a level playing field.

The president rebuffed that, arguing that “we can set up a public option where they’re collecting premiums just like any private insurer and doctors can collect rates,” but because the public plan will have lower administrative costs “we can keep them [private insurance companies] honest.”

Obama said he didn’t understand those advocates of the free market who constantly say the private sector can do things better and are yet worried about this plan.

“If that’s the case, no one will choose the public option,” the president said. He also suggested, however, that the private sector might not necessarily be better, point out that users of Medicare and Veterans Administration hospitals constantly rate “pretty high satisfaction.”

With all due respect Mr. President…you’re wrong.

It is an unlevel playing field because the government sets prices…at taxpayer expense.  Take the example of the post office: It’s true that UPS and Fed Ex can “compete”, and they’ve done so.  But recently, the Postal Service has instituted reforms like introducing a box with a flat fee to ship a certain amount anywhere.  This came in response to people almost exclusively shipping with private companies.  Cheaper prices  sound good, but undercutting UPS and Fed Ex prices while not being profitable means that taxpayers are the ones who pay the difference. 

If we have a government option “competing” with the private sector we are told this will make everyone better.  This only holds true, however, if the government option is run as a private company, i.e. with a profit incentive.  If the government could be run with a profit incentive (which is unlikely) this would all make more sense.

But if it was the case  that the government competed, made money, cut out bad programs, evaluated costs, etc., one must ask, why do we need to introduce it?  The private sector does all of those things on its own. 

It doesn’t take a PhD in economics to figure out what will happen.  The government will set prices below market value, we will pick up the difference in profit with our tax dollars and private companies won’t be able to compete and will go out of business.  The government will be the last remaining option for health care.

Could that be the plan from the beginning?

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