The Case Against the Public Insurance Option

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• JIM LEHRER:

  Next: that health reform battle. White House officials announced today President Obama will speak to Congress next Wednesday night. One of the issues being closely watched, of course, will the president call for including a public plan option?

  That debate over the public plan is where our conversation series picks up tonight. Last night, we spoke to an advocate — tonight, an opponent.

  Jeffrey Brown has that.

• JEFFREY BROWN:

  And that view comes from Robert Laszewski. He's a former insurance executive, now president of the consulting firm Health Policy and Strategy Associates.

  Welcome to you.

• ROBERT LASZEWSKI:

  Thank you.

• JEFFREY BROWN:

  One criticism of the public option is that it — it will not just compete with private — the private sector…

• ROBERT LASZEWSKI:

  Right.

• JEFFREY BROWN:

  … but crowd it out.

• ROBERT LASZEWSKI:

  Yes.

• JEFFREY BROWN:

  Explain that. Explain the fear. How would that work?

• ROBERT LASZEWSKI:

  Well, one of the things that the president has said about the public option competing with insurance companies is, why are insurance companies worried? After all, UPS and FedEx don't have a lot of trouble competing with the post office.

  The difference here is that Medicare, unilaterally, sets the prices it pays for the services that compose Medicare. So, if Medicare sets unilaterally the price it pays a doctor, it pays a hospital, it pays a drug company, that would be like the post office unilaterally telling its labor unions that it's going to pay 20 percent less than prevailing market rates, that it's going to pay 20 percent less for its leases on its post offices; it's going to pay 20 percent less for the electricity and the heat and the lights.

  If FedEx and UPS had to compete with a government entity that was paying 20 percent to 30 percent less, they couldn't possibly compete. And that's the fundamental problem.

• JEFFREY BROWN:

  Well, we had — Jacob Hacker was on, as you know.

• ROBERT LASZEWSKI:

  Right.

• JEFFREY BROWN:

  Yesterday, I talked to him. And he was saying that these are resourceful companies. They have 170 million customers. They have brand-name loyalty, market — in many markets, not even all that competitive.

• ROBERT LASZEWSKI:

  Yes.

• JEFFREY BROWN:

  So, they start with such an advantage. He was worried — instead of worrying about them — whether a government plan could even find its way in.