Sunday, George Will issued a column on the public option. In this column, he argued that public option would drive the private insurance industry out of business. Among other things, he wrote:
Assurances that the government plan would play by the rules that private insurers play by are implausible. Government is incapable of behaving like market-disciplined private insurers. Competition from the public option must be unfair because government does not need to make a profit and has enormous pricing and negotiating powers. Besides, unless the point of a government plan is to be cheaper, it is pointless: If the public option conforms to the imperatives that regulations and competition impose on private insurers, there is no reason for it.
That struck me as bizarre (I'm thinking of the Postal Service here). Anyway, it struck Obama as odd as well. Check out his response to the following question:
QUESTION: Wouldn't that drive private insurance out of business?
OBAMA: Why would it drive private insurance out of business? If — if private — if private insurers say that the marketplace provides the best quality health care; if they tell us that they're offering a good deal, then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business? That's not logical.
Now, the — I think that there's going to be some healthy debates in Congress about the shape that this takes. I think there can be some legitimate concerns on the part of private insurers that if any public plan is simply being subsidized by taxpayers endlessly that over time they can't compete with the government just printing money, so there are going to be some I think legitimate debates to be had about how this private plan takes shape.
But just conceptually, the notion that all these insurance companies who say they're giving consumers the best possible deal, if they can't compete against a public plan as one option, with consumers making the decision what's the best deal, that defies logic, which is why I think you've seen in the polling data overwhelming support for a public plan.
I think Obama is correct to the extent that non profit companies compete in a free market all of the time. Many hospitals don't need to make a profit, some insurance companies are essentially non profits. I suppose the only remaining thing is the size. But, as Obama correctly points out, a large number of people seem to favor that kind of insurance arrangement. It would seem to be an odd limitation on their freedom to shut off that option.