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What do you think about Robert Reich's new video on the public option?
Please watch this video and tell me if this makes sense to you?
http://www.youtube.com/watch?v=dBi8A_HutII
He seems to be arguing that the only way a public option will be able to guarantee a low enough price is if it is national and huge, rather than smaller and regional. Then he says that when it offers a lower price than smaller, regional insurers, they will be forced to lower their prices to compete. So, correct me if I am wrong, but he seems to say that it is impossible for a small, regional public plan to guarantee low prices, but it is somehow possible for a small, regional private plan to guarantee low prices. If that is the case, then it follows that private insurers are more efficient than a government insurer. If it is not, then he just wants to drive the private insurers out of business.
I don't know if it is possible here to have a rational intelligent debate without all the name-calling, but please try. Tell me if you think Reich is trying to say here if you believe he is a good spokesman for the cause.
Edit: I have now heard the dogma from both sides, but have yet to hear a reasonable answer. I was hoping that was possible. I do, myself, have a good insurance policy with a small, regional carrier who does dominate the market in my city. Here in Kansas, there are only 20 companies allowed to write individual policies and and only 22 companies allowed to write group policies. Most of these are small companies who are only permitted by law to write insurance in a handful of locations in the country. I would hope someone with a degree in economics would understand the concept of a monopoly. What Reich is saying in this video is that a government policy would need to draw from the entire country to compete, while the very same government prohibits private insurers from doing just that.
2 Answers
- Anonymous1 decade agoFavorite Answer
It's called the "Economy of Scale". A bigger provider/distributor/supplier is better able to leverage it's buying power to force it's suppliers to provide goods and services at the lowest possible price. It's the same reason why retailers like Wal-Mart and Costco can offer lower prices than smaller local retailers.
Your error is that you believe the market is dictated by 'small, regional private plan[s]'; such is not the case. The market is dominated by a few large corporations. The insurance side is dominated by firms such as Aetna, Blue Cross/Blue Shield and United Health Care, Inc. They will use their substantial leverage to suppress competition, and secure their own market niche.
A national public option provides a counterbalance, and thus will force these companies to operate more efficiently, so that they can offer their products at a more competitive price.
This stuff really isn't hard. It's basic microeconomics.
EDIT: changed 'UHC' to the full company name for clarification.
Source(s): MBA in Economics, Widener University. - Anonymous1 decade ago
I listened to the first 45 seconds. He's lying, I chose to not go any further. The government wants to set the rules on what is acceptable health care coverage and force private insurance companies to comply and compete. I didn't need to hear any more of his rhetoric.