Why a public option keeps private enterprise honest

Here in Santa Clara back at the end of the 1990's we had a problem: when 911 called for an ambulance, response times were often 15 to 20 minutes or longer from the private ambulance company that served the area under contract with the county. That was completely unacceptable. After some public discussion, the Mayor and City Council came to a decision: The City of Santa Clara would get into the ambulance business.

Which they did. The city bought three ambulances, and placed them at three fire stations, one at the north, south, and middle of the city. Several firefighters at those stations were already trained paramedics because each fire engine requires a trained paramedic to be on board as a first responder, so they simply expanded the Fire Department by a few more paramedics to provide additional staffing for the ambulances. The county was then informed that if their contracted ambulance service did not arrive in time to transport a patient to the nearest trauma center in the event that the Fire Department responded to an emergency call and determined that a patient needed transport, the Fire Department would transport the patient instead.

Faced with that competition from the public option, the private ambulance company, which had previously been fat and happy with its monopoly ("we're the only ambulance company, so if you don't like how fast we respond, up yours!") and which had insisted that it couldn't respond any faster because it was unable to hire sufficient paramedics to staff more ambulances due to a nation-wide shortage of paramedics, suddenly discovered it could find sufficient paramedics after all. It swiftly rushed more ambulances into service to be able to respond faster than the Fire Department could respond. As a result, the Fire Department's ambulances average one (1) use per year.

The point, the point... even a public option that is little-used is enough to keep the private providers honest and providing good service. Which is why the news that Senator Max Baucus, D-Bribed, has killed the public option in the Senate is lousy news indeed, because without a public option, there is simply no way to keep the private insurance oligopolies honest. Regulation, you say? But AMR was regulated in Santa Clara County. But they made more money if they short-staffed, so they short-staffed -- the fines for slow response were less than the costs of adequately staffing their ambulances, so they did what made them more profit, and f*** the patient. The only way to keep an oligopoly honest is to provide a competitor for it, and this competitor has to be a public competitor because the oligopoly, having the advantages of scale, could run any smaller private competitor out of the market the way Wal-mart drives small local businesses bankrupt when Wal-Mart enters a small town. If you have 75% of the market and 75% of the doctors locked up under contract to you, that's an advantage that no private competitor is ever going to be able to deal with before running out of money.

So what's the Baucus plan? Apparently, to force all of us to subsidize private insurers at gunpoint, with no options if private insurers fail to provide the contracted care. It is to laugh, especially since there are not the votes in the House to pass a bill without a public option. We can hope that the conference committee will put the public option back in -- we know the House won't pass the bill without it, after all -- and bills out of conference are not subject to debate or filibuster, they get a simple up or down vote. If somehow that doesn't happen, the only "reform" that will come out of Congress this year will be "reform" that's as bad as what it's supposedly reforming... and a royal reaming for all of us at the hands of insurers who will then smugly inform us, "we're the insurance industry, we don't care, we don't have to because you have no alternative to us."

-- Badtux the Options Penguin