This is a title of an excellent essay by Jared Rhodes about how people think it’s OK for a government-run insurance plan to compete with commercial insurers. An excerpt:
Private insurers compete with each other to provide the best product they can on the market. Their costs are based on the payments that they can negotiate with providers, voluntarily. Their revenue is based on the number of customers they can attract, voluntarily. These companies are contractually obligated to provide that is clearly stated in the policies they underwrite. Many of these companies are quite large. Dealing with them can sometimes feel impersonal. But no matter how big they are, they cannot “wield power” capriciously, break contracts arbitrarily, or force you to subsidize your neighbor’s premium. Consumers have recourse if they do.
The government, on the other hand, has no other way but to deal by force. It gets price advantages by strong-arming providers (and will almost certainly be dictating care options before Obama’s term is over). It gets operational advantages by hamstringing the private industry with regulations. And whatever revenue the government cannot raise from premiums, it can confiscate through taxation and inflation. That’s not a business model. That’s organized crime.
Read the whole piece here.
(via FIRM)
