A Free Market Case For The Public Option

While I generally support market solutions over government action, I’m willing to look beyond ideology when the facts show that another course is better. I have no problem supporting the public option, even if this varies from my gut instincts, since experience shows that financing of health care (as opposed to its delivery) is handled better by government than by the market. Besides, I want to see a public option because, while I will naturally compare the specifics before signing, I anticipate it will be a much better deal than I can obtain on the individual insurance market.

I guess this might screw up my inclusion in Wikipedia’s article on Libertarian Democrat. Fortunately a post by Max Fisher might save me (hat tip to Andrew Sullivan). Fisher makes a free market case for the public option:

Something like televisions exist in a free market because consumers, if they don’t like any of the new TVs on the market, can simply keep their old one. If they really don’t like the market, they can even forgo owning one altogether; it will make you unpopular on game day, but it won’t risk your life. Insurance is different. Anyone with a sense of basic self-preservation has no choice but to buy health insurance every single month. You cannot opt out, there are few options to choose from, and it’s difficult to know how to price your future risk of injury. So health insurance companies have distorted incentives to innovate or provide a more cost-effective product.

A public option would, crazy as it might sound, make health insurance a free market. If there exists a government-run plan, which by all accounts would be basic and geared towards affordability, consumers will have the ability to opt out of the private insurance market. Private providers would finally have real incentives to provide a better product and innovate by building an insurance plan stronger than public insurance. Fears that a public option might decree certain treatments “not cost-effective,” which are not as outlandish as some liberals think, should delight free-market conservatives because it would be an opportunity for private insurers to step in. Worried you might develop a condition requiring $60,000 medication that no public option would ever include? Buy a blinged-out private plan that, for an increased premium, will.

The hurrahs over last week’s CBO score make this even more important. The deficit-positive badge on Baucus’s plan makes it all the more likely that his version of reform will be similar to the final product, which means greatly enhanced coverage, through a weak but present mandate and other provisions, but no public option. In short, it means 29 million more people will buy private health insurance, which is great for them. But with insurers getting millions of guaranteed customers without having to improve their product, the incentives for innovation go way down. The already unfree health insurance market would become even less free.

Again, personally I care more about the reality of the situation than mindlessly sticking to ideology, or labels. Still, I thank Max for this cover since, with the abundance of mainstream liberal blogs, it does help Liberal Values stick out by being labeled Libertarian Democrat or a Left Libertarian by some.

Update: Hayek’s views on government financing and health care reform:


  1. 1
    jacksmith says:

    CONGRATULATIONS! President Obama on your Nobel Prize. It’s well deserved 🙂

    Why A Strong Public Option Is Essential – By jacksmith – Working Class

    Robert Reich explains the pubic option:  http://bit.ly/dDYSJ

    Hollywood Supports The Public Option 🙂  http://bit.ly/3XLwPi

    It’s not just because more than two thirds of the American people want a single payer health care system. And if they cant have a single payer system 77% of all Americans want a strong government-run public option on day one (86% of democrats, 75% of independents, and 72% republicans). Basically everyone.

    It’s not just because according to a new AARP POLL: 86 percent of seniors want universal healthcare security for All, including 93% of Democrats, 87% of Independents, and 78% of Republicans. With 79% of seniors supporting creating a new strong Government-run public option plan, available immediately. Including 89% of Democrats, 80% of Independents, and 61% of Republicans, STUNNING!!

    It’s not just because it will lower cost. Because a strong public option will dramatically lower cost for everyone. And dramatically improved the quality of care everyone receives in America and around the World. Rich, middle class, and poor a like.

    It’s not just because it will save trillions of dollars and prevent the needless deaths of millions more of YOU, caused by a rush to profit by the DISGRACEFUL, GREED DRIVEN, PRIVATE FOR PROFIT MEDICAL INDUSTRIAL COMPLEX!

    It’s not just because every expert in every field, including economist, and Nobel laureates all agree that free market based healthcare systems don’t work. Never have and never will. The US has the only truly free market based healthcare system in the World. And as you all know now, IT IS A DISASTER!

    It’s not just because providing or denying medically necessary care for profit motivations is wrong. Because it is WRONG! It’s professionally, ethically, and morally REPUGNANT!, Animalistic, VILE and EVIL.


    The public option is ESSENTIAL because over 200 million of you are trapped in the forest of the wolves. Which is the forest of the DISGRACEFUL, GREED DRIVEN, PRIVATE FOR PROFIT MEDICAL INDUSTRIAL COMPLEX! With no way out except through needless inhumane suffering, and DEATH. While the wolves tear at your flesh, and rip you limb from lib. Then feast on your lifeless bodies like a dead carcase for transplant parts.

    At the most vulnerable times of your lives (when you were sick and hurting), millions of you have had to fight and loose cruel, but heroic battles. Fighting against the big guns of the DISGRACEFUL, GREED DRIVEN, PRIVATE FOR PROFIT MEDICAL INDUSTRIAL COMPLEX! in the forest of the wolves. All because you have no place else to go. You have no other CHOICE!

    But the PUBLIC OPTION will give you someplace safe to go. And it will give us someplace safe to take you. The public option will be your refugium (your refuge). Where the wolves cannot get at you when your down, hurting, and vulnerable. Where everyone who needs it can find rest, security, comfort and the care they need. Protected by the BIG GUNS of We The People Of The United States. THE MOST POWERFUL PEOPLE AND COUNTRY ON EARTH.

    This is why it is so critical that we do not lead another 50 million vulnerable, uninsured Americans into the forest of the wolves, without the protections of a Strong Government-run MEDICARE like public option. We The People Of The United States MUST NOT LET THAT HAPPEN to any more of our fellow Americans. If healthcare reform does not contain a strong MEDICARE like public option on day one. YOU MUST! KILL IT. Or you will do far more harm than good. And millions more will die needlessly. Rich, middle class, and poor a like.

    To those who would continue to obstruct good and true healthcare reform for the American people, and who seek to trap millions more vulnerable Americans in the forest of the wolves. We will continue to fight you. We are prepared to wage all out war against you, and will eagerly DESTROY! you. Time…is…UP! YOU HAVE BEEN WARNED! No Co-op’s! No Triggers! NO INDIVIDUAL MANDATES! without a Strong MEDICARE like public option on day one.

    Healthcare reform can be the GREATEST! Accomplishment of our time and century. A time when future generations may say of us, that we were all, AMERICAS GREATEST GENERATIONS.


    I therefore call on all my fellow Americans and the peoples of the World. To join us in this fight so that we may finish becoming the better America that we aspire to be for everyone.


    I have been privileged to be witness as many of you fought, and struggled to take your first breath, and your last breath on this earth. Rich, middle class, and poor a like. Life is precious.

    Whatever the cost. WE! MUST SUCCEED.

    God Bless You My Fellow Human Beings

    jacksmith – Working Class

    ATTENTION!! Congress Has The Votes Needed To Pass A Public Option – TODAY  http://bit.ly/TCq7O

    Things You Can Do To Help NOW! http://www.everydaycitizen.com/2009/09/tired_of_watching_people_die_n.html

    A majority of voters would rather have a Democrats only bill with a Public Option. Than a bipartisan bill without a Public Option.

    A state based insurance plan is NOT!! a Public Option. Nor is it a Strong, National, Medicare like Public Option.

    No Triggers! http://www.huffingtonpost.com/jason-rosenbaum/a-trigger-for-the-public_b_277910.html

    Triggers http://www.huffingtonpost.com/david-sirota/weve-seen-these-triggers_b_283583.html

    Krugman on heathcare  (http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/)

    Senator Bernie Sanders on healthcare (http://www.youtube.com/watch?v=RSM8t_cLZgk&feature=player_embedded)

    John Garamendi on the Public Option and the Grassroots:  http://bit.ly/TJMty

    Howard Dean on the Public Option http://www.youtube.com/watch?v=8SKfW2dUnow&feature=player_embedded

    We’re Number 37! in quality of health care http://www.youtube.com/watch?v=yVgOl3cETb4&feature=player_embedded

    Twitter search (#welovethenhs #NHS #hc09 #hcr #healthcar #obama #p2 #topprog #) Check it out.

  2. 2
    Paul Burke - Author Journey Home says:

    Federal workers and retirees can select plans from $100 dollars a month to $500 dollars for the most expensive family plan. That plan should be open to everyone, small businesses and corporations as well. I work for a good company but the best they offer is close to 400 a month.

    Rockefeller’s Medicare plan should be implemented as well.

    Most importantly the 1945 anti-trust exemption for private insurance companies has to be repealed.

    All of the ideas to promote competition need to be rolled out this is not a problem with a one way solution. It is a multifaceted problem that requires a myriad of approaches.

    People who ask who pays are not cognizant of the overall raping of the economy that the anti-trust protected insurance companies have been doing. Macro economics of scale are much more favorable than a business model that has doubled in the past three decades from 6 to 12 and now 24 thousand per household.

    6,12,24 – those are the numbers that matter!
    Paul Burke
    Author-Journey Home

  3. 3
    Ron Chusid says:

    Opening the plan available for federal workers to everyone was a major component of John Kerry’s plan in 2004. Of course back then Republicans claimed this meant government take over of health care.

  4. 4
    Captin Sarcastic says:

    I write about this very topic a few weeks ago here . I came to basically the same conclusion, that there are some services government should deliver, and history should not be the defining characteristic determining what those services are. Modern healthcare is not something the Founders could possibly have envisioned, and if they had, the might well have built in a single payer plan into the Constitution.

    The reason that government is involved in anything that we want government involved in is because it makes the most sense. Whether government should be directly involved in providing health insurance is debateable, which is precisely why this experiment should be undertaken, to end the debate, and find out the answer. Libertarians are not opposed to government doing what government can do better than private enterprise. So let’s have competition and find out which serves us better, and it may well be that both can exist and provide better than one without the other.

    I have to add that anyone who considers themselves remotely libertarian could not possibly side with the health insurance industry in this debate, considering the extent that this insurance is so entrenched in government as to be essentially a government run option, with the exception of having the purpose of enriching shareholders, not serving their customers with the best value possible.

  5. 5
    Ron Chusid says:

    “Libertarians are not opposed to government doing what government can do better than private enterprise”

    It depends upon the individual libertarian. There’s a wide variety of views which are held by people labeled libertarian. Some libertarians agree. Financing of health care might be considered like police which many (but not all) libertarians agree is best handled by government. Other libertarians believe that pretty much nothing can be done better by government.

    I’ve had some libertarians tell me that I can’t be a libertarian if I support such government involvement in health care. If I bother to respond I point out that the name of this blog is Liberal Values, not Libertarian Values. I’m not terribly concerned about whether I fit the libertarian label anymore. I support the policies I support based upon their merit, not whether they fit into any specific label.

    “I have to add that anyone who considers themselves remotely libertarian could not possibly side with the health insurance industry in this debate…”

    Unfortunately many libertarians have fallen into the businessman as hero mentality of an old Ayn Rand novel and identify with all businesses, including insurance companies. (Yes, I realize that Rand did have some businessmen she considered more heroic, and others who she did not approve of, but such distinctions have become lost by many libertarians).

    “Modern healthcare is not something the Founders could possibly have envisioned, and if they had, the might well have built in a single payer plan into the Constitution.”

    Yes, I’m also not impressed by conservative/libertarian arguments based upon the Constitution. Some elements such as the First Amendment contain basic principles which are timeless. The basic structure of government remains the same (with some changes over time by amendment, such as popular election of Senators). We cannot make decisions on matters such as health care based upon a document written before it was an issue. The founding fathers were generally intelligent, liberal individuals and if they lived in an age where there was more government involvement in health care in every other industrialized country I’m sure they would have also established such a system.

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