Monday, October 5, 2009

Save Medicare!

Medicare is going broke. You can save it by either raising taxes or cutting benefits. Cutting waste can help, but government seems incapable of truly eliminating waste, and even if Medicare were waste free you'd still need to raise taxes or cut benefits.

Fortunately, there's another way to save Medicare. Medicare can open up a Money Making enterprise, and use the money to help cover its debts. There are millions of Americans who would rather buy Medicare than their current insurance policies. The government can offer it to them at a nice profit, for a true win all around. Millions of Americans get a better health care plan, and the government gets revenue to help keep Medicare afloat.

If you want to save Medicare, let it make money. Let it be exposed to market competition, and learn how to fight to keep customers. In addition to making money, the lessons learned can help improve quality for its current customers as well.

What many people don't know is that there is a precedent for this idea. There was a time when the Federal government offered free mail delivery to everyone over the age of 65. This was very expensive as it required mailmen, delivery trucks, and post offices, none of which brought it any revenue. The burden on taxpayers was terrible, and the volume of mail went up year after year, threatening to bankrupt the nation Meanwhile everyone under the age of 65 was barred from using the free US Post Office and instead had to use FedEx or UPS for mail delivery, each of which was fairly expensive. Finally some frustrated customer had a brilliant idea. Why doesn't the government offer mail service to everyone? As you can imagine, people were quite shocked at the idea. Do you know how expensive it would be to give free mail service to everyone? So the customer explained that he wanted the government to offer mail service and charge a hefty markup. He gets his mail delivered, and the government makes money. Well in that case, why not use FedEx or UPS? So he explained that even with the markup, it would still be cheaper than FedEx or UPS? So then he got attacked from the other side. If the government offered mail service, it would put FedEx and UPS out of business. And he said trust me, FedEx and UPS will do just fine. Anyone who says private companies can't compete with government bureaucrats doesn't understand American ingenuity and capitalism. There will always be a market for additional forms of mail delivery, and if they are run well FedEx and UPS will find many ways to make money. In fact FedEx will buy Kinko's and UPS will buy Mail Boxes Etc. And sure enough he was right.

And so the US Post Office was saved from bankruptcy by competing in the market and making money off of those under the age of 65. The lesson here is very clear. If you want to save Medicare, let people buy it. When you want to save a species from going extinct, you encourage people to eat it. And if you want to save a government program, find a way for it to make money, so people can voluntarily purchase it.

The High Price Public Option

The purpose of a public option is to compete on price and quality, thereby forcing insurance companies to become more competitive. What's much better than offering one public option is to offer several of them, so consumers can choose the best fit. And by making them profit generating, these “Deficit Fighting Public Options” can help balance the budget.

One way to truly ensure that these Public Options will be Profit Generating is to not allow them to undercut the competition. Whatever the lowest price in a given market may be, the Public Options must charge an amount equal or greater to them. This means that the government will only be competing on quality, and not on price. If you may ask why would anyone be interested in purchasing such a Public Option, the reason is that many Americans trust the US government more than they do the insurance industry. If they feel the government will be less likely to them deny coverage when they need it, let them purchase a Public Option and pay full price for it. Millions of Americans will have greater peace of mind, and the federal government will make money off of them.

Now I don't think those in favor of a Public Option will need to go that far in order to get the votes they need. I think the previous ideas I gave will be more than enough to get the measure passed. Giving each state the power to allow these Profit Generating Public Options to be sold – and to get a cut of the revenue - is an especially good idea, since it will put pressure on state legislators to vote in favor of allowing their state to offer the Public Options. However if all else fails, a Profit Generating Public Option that will only compete on quality and never undercut on price will be an especially hard measure to vote against.