Health Care Reform Part 1: Obama's Plan and the Public Option

Health Care is one of the most important issues for Obama’s presidency. Especially in the past few weeks, the debate has intensified, with people on either side of the issue expressing their opinions quite… passionately, in some cases.

I think it’s a big enough issue to warrant several blog posts. In this first one, I’ll examine Obama’s plan for health care reform and give my opinion on it.

On Obama’s website, the following tidbit about health care can be found:

President Obama has announced three bedrock requirements for real health insurance reform:

Reduce Costs — Rising health care costs are crushing the budgets of governments, businesses, individuals and families and they must be brought under control

Guarantee Choice — Every American must have the freedom to choose their plan and doctor – including the choice of a public insurance option

Ensure Quality Care for All — All Americans must have quality and affordable health care

Now we have to show Congress where the American people stand.

In my opinion, Obama has generally the right idea. I agree with and support his plan on all but one key point.

First of all, I agree with him that we need reform. The insane costs alone warrant some action on the health care front, but even without that, nearly 50 million Americans have no health care insurance — that’s about 1/6 of the population. I believe that every person has a right to quality health care.

I also agree with Obama that everyone should be able to choose their plan and doctor, and that government shouldn’t get in the way of patient and treatment.

But I strongly disagree with Obama about the necessity of a public insurance option that would compete with private companies. I definitely am in support of Medicare and/or Medicaid for those who cannot afford private health insurance. But introducing a public or government-run health care option for the general public would be, in the long term, a disaster.

In the short term, a government-run option competing with private health insurance companies would be great. It would create more competition, forcing prices down and quality up.

But I am of the opinion that when private and public companies compete, private companies can rarely, if ever, survive. Public companies usually give higher quality for less cost; they can have government funds to back them. Again, this would be great for consumers in the short term. But the public option would be too good: private companies would be unable to compete and would die out in the long term.

So let me be clear. Right now, Obama’s plan does not call for a socialized “one-player” health care system. I don’t want to spread that kind of misinformation. But there’s a good chance that the public health care provider he is calling for would eventually drive private companies out of business, and this could result in a one-player system whether that was the original plan or not.

Any one-player system is always worse than a system with multiple, competing players; in the latter competition will drive down costs and keep quality high, while there is little incentive for low costs or high quality for a single player. Because of this, I am unsatisfied with any health care plan that would include a public option, including Obama’s plan.

In a town hall meeting, Obama responded to a criticism similar to this with the example of the US Postal Service. As a public company, it competes with private companies like UPS and FedEx. I don’t accept the validity of this analogy.

In my opinion, the USPS offers a different service than its competitors. When you want to send something on the cheap, you use the USPS. But if you need to get something somewhere fast, FedEx or UPS are better bets – even though they cost more. In other words, speaking generally, the USPS is low cost and low quality, while its private competitors are high cost and high quality. While USPS does compete with FedEx and UPS, it really offers a different kind of package delivery.

Now, take that and apply it to the health care system. The public option (a la USPS) would be low quality and low cost. Obviously, your health is more important than the speed your packages are delivered. No one wants low quality health care. Unlike the situation in Obama’s postal example, a public health care option would compete directly with private companies.

So, to sum things up, I agree with the majority of Obama’s plan. I agree that reform needs to happen, that everyone should have health care, and that people should be able to choose their provider. But I am against the idea of a government-run insurance option for the general public.

If I was a congressman, would I vote for a bill based on Obama’s plan? Probably. Even this partially flawed reform is better than doing nothing, in my opinion. But I would much rather see a compromise with GOP congresspeople that ditched the public option but kept the rest of Obama’s plan.