Merrill Goozner has a nice post on the absurd arguments private insurers are making in order to avoid competing with a public plan. Most of the evidence he presents is convincing to the point of comedy. Are we really to believe a public plan has some sort of vicious competitive advantage in in Tuscaloosa, where Blue Cross controls 65 percent of the market? But towards the end he quotes managed care expert Joe Paduda saying, "There just isn't any logical basis for the argument that a governmental option would somehow be unfair for competition, or drive out private plans, or lead to a government monopoly." That's not entirely true. The basis for the fear is simple: Conservatives worry that government means to subsidize the private plan. Charge, say, 6 percent of payroll for companies to buy in, and when that proves insufficient to cover operating costs, plug the hole with money from the general revenues fund. That would make the public plan cheaper to companies, and thus more attractive, than its private competitors. But it would not do that through superior care delivery. It would do it through taxpayer money. Jacob Hacker's plan has an element of this. Or there are concerns that the government could use automatic enrollment to give the public plan a leg up. Pete Stark's bill, for instance, preserve the private market but enrolls all children in "Americare" -- essentially, an all-ages Medicare program -- at birth. Those would be competitive advantages for a public plan. They're also good policy. But let's not get to taken with the insurance industry's protestations. If you erased every possible advantage. If you built the regulatory equivalent of an electric fence between the public plan and tax dollars, the insurance industry would howl just as loudly. The fact that they fear unfair competition does not mean they don't ferociously oppose fair competition.
