Profit ( John Stossel )

FOX Business ^ | November 2, 2009 | John Stossel

[george76]

Last week, Bill O’Reilly had me on The Factor to talk about the health care bills. He correctly pointed out that a public plan might obliterate private alternatives. But I was puzzled by the reason he gave:

" A taxpayer funded company would have a huge advantage because profit motive is nonexistent."

I understand the logic. Last quarter, insurance companies averaged a 2% profit... In theory, a non-profit government insurance company would be able sell insurance for 2% less...

But that’s not how the economics work out in real life.

The quest for profit actually lowers costs.

In categories where competition is allowed, the US Postal Service has just a 16% market share - behind UPS and FedEx, even though FedEx and UPS make a profit. That’s because FedEx and UPS offer better deals and better prices. Pursuit of profit turns out to be the motivator that gets companies to innovate in ways that cut costs. Non-profit government rarely does that.

In fact, non-profit government has an amazing ability to raise costs.

Pelosi-Care would have an unfair advantage because government cheats. They would cheat in two ways:

1. A government corporation can borrow money more cheaply.

2. Pelosi-Care will be propped up with subsidies.

Remember, the Post office was supposed to break even. So were Amtrak, Fannie Mae and Freddie Mac, and the Federal Flood Insurance program. But now all are propped up by subsidies.

Federal flood insurance requires $1.3 billion a year in subsidies.

Amtrak gets $1.5 billion a year

Fannie Mae and Freddie Mac had to be bailed out with $100 billion, and the government has pledged another $300 billion.

[originalbuckeye]

There are things about which John Stossel and I disagree. That being said, I'm glad he's getting more face time on FOX. ABC had practically muzzled him as they didn't agree with his research. They didn't ever dispute it, they just didn't appreciate having him tell the politically incorrect truth on their network.

[sten]

problem here is that we will ALL be forced to pay for it via taxes.

meanwhile, corporations will dump their employees onto the public insurance to improve their profits. as that happens, driving customers away from private insurance companies, the costs per customer in those private insurance companies will start to increase.... until finally they merge or go out of business.

in the end, only the government plan will exist... of course, there won’t be any doctors as the remaining doctors will be taxed at stupid rates (for being part of the evil 5%) while also enjoying the increased work load due to ‘free’ care... which will just drive them all out.

next up would be triage... otherwise known today as ‘death panels’

[mvpel]

The only reason that the USPS requires cash subsidies now is because the Democrat Congress gave a fat payout to their union buddies by changing the rules for pension funding to which the USPS has to adhere.

[!1776!]

He gets close with unfair advantage #2 - propped up with subsidies. While I agree - that will be one nail for the coffin, he missed others - "the rules." Direct subsidies are one thing, indirect subsidies are another - penalizing companies, creating additional red tape, marching docs into line, etc.

Subsidies sure - the private sector can beat that hurdle, its the rest of the deck stacked against the private sector that is the primary problem.

I wouldn't be surprised if there was a provision in the bill protecting the government option activities from litigation (or at least creating huge hurdles for), while creating new opportunities to sue the private insurance industry.

DOubt I will get all 1900 pages read close enough to find out though.