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24 Jun 2009 05:18 pm
Dissent Of The Day
A reader writes:
The economic argument
against the public
option is simple. Yes, it may reduce monetary outlays, but it will do
so by forcing providers to accept prices lower than what they would in
a competitive market. The public option can do this because it will be
subsidized by taxpayer money. Thus, the public option will crowd out
other insurers and achieve monopoly pricing power. Once monopoly
pricing power is achieved, then you will see a decline in both quality
and supply of health services. The key is the lack of supply. At the
monopoly price, the number of people willing to provide heath services
will be suboptimal. This is why you have to wait six months for a CAT
scan in England. Effectively, supply is rationed. And yes, "costs"
will be lowered, but only if you just count cash outlays. If you count
the implicit cost of the having to wait too long for health care
services or receiving lower quality care, then it's not such a
bargain. No free lunches I'm afraid.
This is textbook economics as to what happens with monopoly pricing. Don't need to be an ideologue at all to believe this.
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