One of Barack Obama’s frequent statements regarding health reform is that we need a public option "to keep insurance companies honest," which is a nice little campaign speech but wrong when it comes to economics. If President Obama’s goal is to keep the rates charged by private insurance companies down, you don’t need a public option; you just need to make sure there is competition among private companies.
If the President thinks that the private insurance companies are colluding to keep prices up, that is what the antitrust laws are for. If he thinks there are not enough insurance companies offering health insurance policies, then get the regulations modified so more companies can offer policies.
If he thinks there are not enough different types of affordable policies, then don’t pass all kinds of laws and regulations adding more and more things that have to be covered by health insurance policies. Let people to choose what they want, and don’t make them pay for coverages they don’t want. People aren’t stupid; they can decide for themselves.
But mostly, to use President Obama’s own example: It’s not the Postal Service that keeps FedEx honest; it’s UPS.
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