Tuesday, September 22, 2009

That Stamp Will Cost You $23,000, Pal.

I found this bit of brilliance over at DailyKos. Hunter is one of my favorite writers over there. Just thought I would share...
-LCL

That Stamp Will Cost You $23,000, Pal.
by Hunter
Tue Sep 22, 2009 at 07:46:03 AM PDT

One of the central complaints against a so-called "public option", a mechanism by which Americans may optionally purchase health insurance via the government, as opposed to private corporations, is that private insurance companies could of course never compete fairly in the marketplace against a such an ultra-efficient juggernaut. This is of course the exact opposite of conservative thinking of the last three decades, in which the government could not possibly -- could not possibly, I say! -- do anything half as competently as our private corporations, which is why everything from Amtrak to the post office has had to fight for every last scrap of congressional support, and why Social Security should be privatized and run by the titans of Wall Street, and why large portions of our wars in Iraq and Afghanistan are reliant on private companies to the tune of so many billions of dollars that nobody is entirely sure how many billions it is, any more, and is incidentally why our brave American soldiers in Iraq risk electrocution when they step into the shower.

But never mind that, because if there is one thing that conservatism is truly expert at, it is telling you that anything in conservatism means the exact opposite of everything conservatism has been telling you it means for the last thirty years, and it all makes perfect sense, thank you very much, because that was yesterday and this is today, and conservatism will likely mean something else tomorrow, so don't get too comfortable with it. As such, we will happily believe that yes, everything from the Pentagon to our Social Security checks would be more efficiently run by private industry -- but there is no possible way private industry can compete with the efficiency of the federal government. And if you deduce some conflict between those statements it is possibly because you are a communist.

It did start me thinking, though. Private companies like UPS and FedEx compete perfectly well with the socialist front that is the United States Post Office. How could this be?

I don't have a good answer, but I wonder if they would compete even better with the government if they acted a little more like health insurance companies. The health insurance companies are operating at peak efficiency already -- we know that if they had to be any more efficient, via competition with a robust public plan, they simply couldn't function at all. So let us imagine what UPS would be like if subjected to the same masterful industry leadership.

First off, if health insurance companies ran the mail service you couldn't actually expect to send mail anywhere. You would have a list of addresses it was OK to send mail to, and if you wanted to send your packages anywhere else you'd have to deliver it your own damn self.

If health insurance companies ran the mail service, you wouldn't know what it would cost to mail a package, because nobody involved would be able to tell you, even if you spent the better part of a week on the phone with them. You would know what it cost you one only after you received the bill for mailing it. This bill would come one month later, but additional charges would be added a month after that, more additions would come two months later, the total would be revised again in four months, and would be adjusted again after six months. If you want to complain, knock yourself out, but chances are you won't even remember what it was you mailed back in the summer of 2008 or whenever-that-was.

If health insurance companies ran the mail service, it would cost you money to mail a package, but it would also cost you money to not mail a package. That'd be the fee for possibly mailing a package, in the future, and it would go up by twenty percent every year under the "just because" clause of your contract.

If health insurance companies ran the mail service, your contract to have packages delivered would stand a chance of being revoked if you actually mailed one.

If health insurance companies ran the mail service, between twenty and forty percent of packages simply wouldn't arrive at their destination because delivering them wouldn't be cost effective, so bite us.

And your package delivery service wouldn't just idly sit by and send what you wanted them to send. They'd tell you want you wanted to send. Flowers are nice, but couldn't you just send a card? Cookies are a bit much, don't you think?

If health insurance companies ran the mail service, sometimes you'd ask to mail a package to your aunt in Philadelphia but instead you'd be told you had to mail it to her in Chicago, because Philadelphia would cost more. On the bright side, it'd be good for her to get out of the house more often.

Your aunt couldn't just get the package, in any case. That requires a separate form. No -- I mean this other form. And you need to fill it out this way, not this other way. And now it's two days late, so everything is cancelled and we're taking your package, the one that we waited six months to deliver anyway. The cookies were stale, by the way, so try harder next time.

Of course, all this is nonsense, because you can't really make credible comparisons between delivering a package and providing a service that has responsibility for the health and welfare of every person in the country. Delivering packages is important.

5 comments:

Bill said...

Not to be Debbie Downer here, but I thought the objection to the public option stemmed from the fear of competing with a government plan that doesn't have to profit, not that they're afraid it would be more efficient.

That would be an unfair competition, but just as in the case of FedEx and UPS, or idk, private schools, it's something that private industry can overcome.

Good post, though

Anonymous said...

Bill, you're absolutely right that the competition fear is not based on any perception that the government would operate an unfairly efficient plan. That was a very foolish thing for Hunter to write. The competition problem arises because government-sponsored enterprises can afford to operate extremely *inefficiently* without being run out of business. (This happened with state-supported airlines, just as one egregious example.)

Anonymous said...

Why is USPS being likened to a public plan? (I realize that at the end Hunter says they are dissimilar, but the rest of his article assumes that they are similar in some respects.) People can argue over whether USPS actually receives indirect government subsidies, but in a general way it makes its money in much the same way private businesses do. It runs off user fees and charges, not tax appropriations or mandated contributions.

When you subtract the joking exaggeration and account for the natural differences in business model, we actually see that because USPS and an insurance company are both businesses, they actually take an arguably similar approach to a lot of things. Consider some of Hunter's examples:

Hunter: "First off, if health insurance companies ran the mail service you couldn't actually expect to send mail anywhere. You would have a list of addresses it was OK to send mail to, and if you wanted to send your packages anywhere else you'd have to deliver it your own damn self."

Well, you can't send mail literally anywhere. You have to send it to an official postal address (and some kinds of mail won't go to all postal addresses, such as P.O. boxes). There are places and properties without postal addresses. (To say nothing of the ever-growing list of restrictions on what can actually be sent.)

Hunter: "If health insurance companies ran the mail service, you wouldn't know what it would cost to mail a package, because nobody involved would be able to tell you, even if you spent the better part of a week on the phone with them."

Clearly, Hunter has not spent time on the phone with the USPS. But seriously though - in many cases you don't know what it will cost to mail a package until you're actually mailing it.

Hunter: "You would know what it cost you one only after you received the bill for mailing it. This bill would come one month later..."

Actually, I believe this often happens in business mailings, what with bulk rate accounts, return postage arrangements and whatnot. Ordinary individuals don't generally receive invoices after the fact from the USPS, but many businesses with high mailing/shipping volume do.

Hunter: "If health insurance companies ran the mail service, it would cost you money to mail a package, but it would also cost you money to not mail a package. That'd be the fee for possibly mailing a package, in the future, and it would go up by twenty percent every year under the 'just because' clause of your contract."

Hunter, you lovable dimwit, you already pay a fee for possibly mailing a package in the future, which goes up every year or so. It's called "buying stamps".

LeftCoastLefty said...

If government would run healthcare so inefficiently, why is the administrative cost of Medicare at about 4% compared to the private sectors which is at about 40%???

Anonymous said...

There are a couple of economic points to bear in mind here.

1. Medicare's administrative costs are actually higher than private insurance on a per-person basis, which is a more meaningful metric.

2. Regardless, higher administrative costs should not be confused with lower relative efficiency.

Economists explain why here:

http://www.cahi.org/cahi_contents/resources/pdf/CAHI_Medicare_Admin_Final_Publication.pdf

And here:

http://www.heritage.org/Research/HealthCare/wm2505.cfm