Limited Support for Competition

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Ezra Klein had an interesting chat with Sen. Lindsey Graham (R-S.C.) on health care, which is well worth reading. One exchange stood out for me. Ezra asked Graham why a public option can't serve as some kind of compromise, since it would compete on a level playing field with private insurers, and would place limits on who would be eligible. Graham replied:

"My belief is that no private-sector entity can survive over a long period of time competing against the government. The public option will be written by politicians. It will be generous. Nobody in my business worries about the bottom line. Eventually, the public option will dominate the marketplace because the political forces in the public sector are different than the economic forces in the private sector. Eventually, the private sector will give way.

"You know, we already have Medicaid and Medicare. The private sector covers the middle. If a public option becomes part of that mix, you'll have the whole deal covered by the government. That's why I'm against it. And what I'd like to do long-term is enhance the options available to the retirement community and reform Medicare.

"We need to come to grip with the fact that our entitlements programs are unsustainable. We talk about one trillion dollars for health-care reform, but what about the 36 trillion unfunded liability on Medicare? Do you know that 78 percent, I think it is, of Part B premiums are subsidized by the government? Every American on Medicare pays $96 a month. That's 25 percent of the cost of the service. Why should the government subsidize my health-care premium when I retire? I'll have money available. I think we should look at that."

There are a few interesting angles here. First, for all the talk from the right about Obama "targeting" seniors, we're still left with the reality that conservative Republicans, including Graham, still don't care for Medicare at the conceptual level. His remarks strongly suggest that he just doesn't think it's a good idea for Americans to subsidize seniors' health care, and would prefer to "enhance the options," which sounds like a nice euphemism for partial privatization.

Second, Graham believes a public option would invariably "dominate the marketplace" because it will be "generous." It's worth noting that the administration and Democratic leaders have already talked quite a bit about this, and have said there wouldn't be an endless stream of subsidies to ensure the public option "wins" the competition.

But I was also struck by Graham's insistence that "no private-sector entity can survive over a long period of time competing against the government." Haven't we already seen ample evidence to the contrary? FedEx competes with the USPS. Broadcasts networks compete with PBS. Bookstores compete with libraries. Taxi cabs compete with public buses.

If Graham is convinced private insurers would lose out to a public option, perhaps he assumes the private insurers aren't offering consumers an especially compelling product?

http://www.washingtonmonthly.com/

Edited August 10, 2009 by Col. 'Bat' Guano