September 14, 2009
Dean Baker
Truthout, September 14, 2009
See article on original website
We all know that there are basic philosophical differences between liberals and conservatives. Liberals believe that the government can be used to improve the lives of ordinary people. Conservatives on the hand believe that the government should redistribute money to the wealthy. This philosophical difference has come through very clearly in the debate over giving people the option to buy into a publicly run health insurance plan.
Since the conservatives are not honest enough to own up to their true principles in this case, it is worth briefly recapping the argument they put up as a cover. The conservatives claim that if people are given the option to buy into a public plan, then so many people will choose to do so, that it will drive the private plans out of business. The country will then be stuck with only a government-run insurer and patients will have no choice. This will be bad news, because the government can’t do a good job providing the American people with health insurance.
The logic of this one is more than a bit difficult to follow. We are supposed to be worried because people will freely choose to go with a government-run insurance system that is badly run and inefficient rather than private insurers. Do the conservatives think that we cannot trust people to make their own choices about health insurance? Is this yet another case of nanny state conservatives who want to step in to prevent people from making choices that they think are bad for them?
But wait, the conservatives argue that the public plan will be subsidized by the government. This means that it won’t be fair competition, the government plan will enjoy subsidies that will allow it to charge less than private insurers, therefore people will buy into the public plan rather than private insurers.
This is a little better than the conservatives’ stupid patient theory, but not much. First, if the government-run plan is really as bad as the conservatives want us to believe, then it would take some pretty large subsidies to allow it to compete with those clever boys running private insurance plans. People will not fly an airline that doesn’t get them to their destination or buy a computer that does not work.
If a government-run insurance plan is really a bad plan, then it will simply go out of business unless there are truly massive subsidies. To get people to buy into the bad public plan rather than the high quality private plans we would probably have to give them subsidies of at least $1,000 per person. After all, health care is important to people.
This brings us to the conservatives’ stupid voter theory. There is nothing in any of the plans on the table that provides any subsidy whatsoever to the public plan. So at the moment, subsidies are nowhere in sight. However, the conservatives argue that somehow, somewhere Congress will slip in subsidies to the tune of at least $200 billion dollars a year ($2 trillion over a 10-year budget horizon) to support a public plan that provides bad insurance. Where would the $200 billion a year come from? Would Congress raise taxes by this amount and the public would just go along because it thinks it is important to subsidize its bad public plan? Alternatively would they just let the deficit explode?
Again, this is a possibility, but in spite of all the rhetoric about the fiscal irresponsibility of Congress, it generally has kept deficits within reason, except to finance wars and to deal with the economic disaster created by rich bankers. There really is no precedent for Congress running up huge deficits to fund a bloated social program, especially one that is presumably unpopular because it provides bad coverage. The conservatives’ story here is not a slippery slope scenario, but rather a huge hidden grand canyon. Yes, it could be there, we just have no evidence for it.
Yet, it gets even worse. Even when we have the huge public plan that has displaced the private competition because of its huge subsidies, there is still the possibility that new competition will come up in the future. In other words, if we have this hopelessly inefficient bureaucratic monster of a health care system that is killing off our loved ones, why wouldn’t some clever entrepreneurial type set up a new well-run private plan to offer a real alternative? Certainly there are many people who would be willing to pay far more than $1,000 a year extra to get decent insurance rather than the monster portrayed by conservatives. In short, even if the big bad public plan managed to use huge taxpayer subsidies to drive out the competition, this would just be a temporary situation. In a dynamic market, new insurers will step in to fill the gap, unless the conservative vision also has Congress outlawing competition altogether at some future date.
Of course at this point we are dealing with something entirely fictional that has nothing to do with any proposal currently being debated. The bottom line is that the conservative position is that there are people getting rich running private insurance companies and they want to protect this situation long into the future.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of Plunder and Blunder: The Rise and Fall of the Bubble Economy. He also has a blog on the American Prospect, “Beat the Press,” where he discusses the media’s coverage of economic issues.
