Who's Afraid of a 'Public Plan,' and Why?

Photo: Whos Afraid of a Public Plan, and Why? Private Sector May Not Have as Much to Fear From a Public Plan as it Thinks

Why are private insurance companies and managed care organizations so frightened of a "public plan"?

One controversial element of current ideas about health care reform is the proposal that a new public health insurance plan sponsored by the government should be created.

This new public plan would be an alternative source of insurance for people who cannot get health insurance through an employer-sponsored plan at work and cannot find an affordable option in the private, individual market, or as an additional option for employers seeking group coverage for their employees.

There remain many differing visions about what this public plan might look like and how it might be structured, but any such approach is the subject of some pretty heated debate. Understanding a bit more about why this idea is controversial might be helpful as the conversation moves forward.

From literally the time of our nation's founding, most Americans have been taught (and genuinely seem to believe) that the private sector can do almost anything more effectively and more efficiently than the government.

We acknowledge a few exceptions: national defense, international relations, some policing and public safety functions and basic education. Even in those areas, the government role is often viewed as a grudging admission of necessity, rather than a clear expression of preference. And whenever it seems to be an option, we pursue means of having these public functions accomplished though contracts with private entities.

In part, of course, some of our belief that private initiative is preferable to government action is historic, emotional and a matter of basic philosophy. It reflects a view that government, even if it is democratically elected and subject to a wide range of checks and balances, is to be feared as a force that may reduce our liberty and perhaps our highly valued self-reliance.

This latter aspect is of special concern if government programs reach too deeply into too many areas of our daily lives.

Will Public Plan Really Be Competition?

But most of our national aversion to government seems to be more a matter of practicality than philosophy. We simply believe that government is not very good at most tasks. That it is cumbersome, bureaucratic, slow to respond, quickly becomes entrenched and resists change even when the need to adapt is obvious to all.

Large programs like a state's department of children and families, or federal agencies like FEMA are routinely cited as examples that affirm this view. Nimble, effective private sector entities like Apple Computers, the BlackBerry folks or eBay exemplify the alternative.

In health care, the comparisons are between a slow, intrusive, bureaucratic Medicare or Veterans Administration program, as distinct from a well-managed private insurance company or an astoundingly effective provider like the Mayo Clinic or Geisinger. And again the comparisons seem to affirm the superiority of the private sector alternative.

But all of this raises two pretty basic questions. The first is a simple "why?" What is it that makes the private sector organization more efficient, responsive and effective? The answer is almost always that this is the natural and certain consequence of competition: Private entities simply must manifest these characteristics or they won't survive in the marketplace.

The second question is more intriguing.

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