
Why Public Option isn’t really a choice after all:
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I have seen Howard Dean (http://www.youtube.com/watch?v=PbWaYKeW4gU) and Robert Reich (http://www.youtube.com/watch?v=dBi8A_HutII) talk about the Public Option as just creating another choice for Americans. I am all in favor for more choice. The challenge is the choices are not equal. The Public Option would be government sponsored (or run depends on if they start a semi-private organization, like the Post Office to run it) and able to operate in all 50 States (and I assume territories). However, the current regulations prevent existing health insurance companies from offering services across State lines.
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This inequality in potential market will almost guarantee that the Government plan will be able to negotiate cheaper prices on items that are purchased in bulk (services are not the same but the differences are too difficult to explain in this short post). The Government plan has the potential of 307,000,000 customers within their health insurance plan whereas a private insurer has significantly less—limited to the population of the State in which it operates.
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For a market-based example consider what happens when Wal-Mart moves into a new market. Being a very, very large retailer the smaller, local retailers are forced to close. They cannot come close to matching the prices that Wal-Mart can offer on the same goods. This is why there are many people protesting Wal-Mart’s intrusion into a new market.