Professor Mark J. Perry's Blog for Economics and Finance
Posted 1:51 PM Post Link
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Hmmm, one would've thought that the citizens would've already learned the lesson offered up by R.I.N.O. Richard and Ted 'let her drown' Kennedy...
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The issue of the lack of price discipline for government programs should have been emphasized.The enormous unfunded liabilities that face popular government programs (Social Security, Medicare and Medicaid, not to mention Indian Health Services, Veteran's Administration, the Postal Service and Amtrak) are clear evidence that the Government lacks price discipline. This is largely caused by either implicit or explicit taxpayer backing. The likely outcome of a 'Public Option' is quite straightforward:The government will price premiums substantially below that of private operators, drawing in a larger-than-expected number of insureds. It is likely that the population served by the public option will also exhibit a higher utilization rate as well.This will cause expenses to balloon over revenue almost from the 1st year. Then doctors will limit the number of public option patients, which is rationing, pure and simple.And after that will be the call for taxes to finance the public option's deficit, which will lead to more people making more demands on the services. A far greater way to reduce the number of uninsured people would be for the government to distribute vouchers for health insurance premiums for those who are @ the low end of the income distribution, and tax credits for those who purchase their own policies. Additionally incentives to PRE-FUND premiums would further reduce future expenses.All in all, Obamacare (or whatever you want to call it) will either fail; or make it's deficit-fueled debut, bankrupting private insurers. Not a bright future at all.
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Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.
Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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