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Friday, August 14, 2009
4:42 PM EDT
Todd Hollenbeck

Do you want your health care run like the Post Office?

President Obama recently defended his government run health care plan by equating it with the Post Office. He claims that the plan would not crowd out private companies just as the Post Office has not crowded out private competitors. He said:

“How can a private company compete against the government? My answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining, meaning that taxpayers aren't subsidizing it, but it has to run on charging premiums and providing good services, and a good network of doctors, just like private insurers do, then I think private insurers should be able to compete.
They do it all the time. If you think about it, UPS and Fed-Ex are doing just fine. It's the post office that's always having problems … there is nothing inevitable about this somehow destroying the private marketplace. As long as it is not set up where the government is being subsidized by the taxpayers so that even if they are providing a good deal, we keep having to pony up more and more money.” (Video)
Llewellyn H. Rockwell, Jr., chairman of the Ludwig von Mises Institute, wrote a fantastic article today at Mises.org. He explains how the Post Office has legal advantages that prevent competition from more efficient private companies, private companies had to struggle just to be allowed to compete, the Post Office doesn’t run like a private company, and that despite the advantages granted to the Post Office, it is still so poorly run, the private companies are able to out perform it.
 
The Post Office is subsidized with tax dollars and with legal favors. Rockwell writes, “Title 18 (I.83.1696) says that ‘Whoever establishes any private express for the conveyance of letters or packets’ can be fined and jailed. Moreover, another law (39.I.6.606) says that any letter delivered by unlawful means can be seized and stolen by the government. It is immune from antitrust action and criminal liability.”
 
For private companies to even exist, they had to find a loophole by delivering packages and not mail. The Post Office had a complete monopoly on mail, until the internet was able to chip away at that monopoly by bypassing paper mail, with e-mail. This is one example of how free markets will innovate to find more efficient and cheaper ways to provide services.
 
Rockwell explains the fallacy that health care or the Post Office will “be self-sustaining, meaning that taxpayers aren't subsidizing it,” basically running like a private company. Rockwell writes, “[I]f the goal is to get government to operate like a private service, what is the value added by having it provided by the government in the first place? The only reason for a government service is precisely to provide financial support for an operation that is otherwise unsustainable, or else there would be no point in the government's involvement at all.”
 
Finally, Obama has shown us a perfect reason to not support the government option for health care. The private sector does everything better than the government and the Post Office is a prime example (public schools are another example, which is why Obama’s daughters go to private school). Even with the legal monopoly, tax subsidies, and special treatment, the Post Office is still an abysmal failure. It is on the GAO’s high risk list, $10.2 billion in dept, and has a cash shortfall of $1 billion. 
 
This is the example that President Obama gives for what to expect from the government health care plan. A system that will be costly, slow, and impossible to eliminate once it is created. It will create burdens for the private sector and make laws to exclude them from some markets as we move closer to a single payer system.

Photo Credit: BrujaHa

Posted by Todd Hollenbeck on Friday, August 14, 2009 4:42 PM EDT
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