Are You Pro-Marketplace or Aren't You?

Obama made the right argument today in favor of a public plan (w/o expressly endorsing it). The idea of a public plan is to insert a solid product into the market - and then let everyone compete to beat it!

OBAMA: Now, the public plan, I think, is an important tool to discipline insurance companies. What we’ve said is, under our proposal, let’s have a system, the same way that federal employees do, same way that members of Congress do, where we call it an exchange, but you can call it a marketplace, where, essentially, you’ve got a whole bunch of different plans….As one of those options, for us to be able to say, here’s a public option that’s not profit-driven, that can keep down administrative costs, and that provides you good, quality care for a reasonable price as one of the options for you to choose, I think that makes sense.

QUESTION: Wouldn’t that drive private insurance out of business?

OBAMA: Why would it drive private insurance out of business? 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.

On another note - concerning the CBO score from last week claiming health care would cost like $1.6 Trillion over 10 years (which was faulty b/c it didn't scored an incomplete bill that didn't include all the cost saving measures like a public plan) - I saw Julie Rovner (NPR) on the News Hour tonight and she mentioned that we spent something like $2.6T as a nation on healthcare in 2006 (and it keeps going up), so on the whole scale of things, $2B extra a year to improve the system and cover more people isn't that bad (even assuming the partial/faulty CBO score).