John Calfee has a great column in the WSJ today tackling some of the major myths regarding a public “option” for health insurance — what he calls “Fannie Mae health care.”
President Obama and most congressional Democrats say they want to preserve private health insurance. They also want to add a “public plan” to compete with private insurance plans. Their basic argument is that a public plan would offer needed competition, save money through low administrative costs and zero profits, realize greater economies of scale, and be a superior negotiator of the prices of medical services and technology.
The first three arguments are bogus. The fourth argument is only half-bogus — but the half that isn’t reveals a great danger: If a public plan is inserted into private insurance markets, the American health-care system could rapidly evolve into a single-payer system, which would have devastating effects on R&D for new medical technology.
Definitely worth a read.