Discussing the idea of a "public option" as part of President Obama's health care reform, Harvard economics professor Gergory Mankiw writes in the New York Times, "Consumer choice and honest competition are indeed the foundation of a successful market system, but they are usually achieved without a public provider. We don't need government-run grocery stores or government-run gas stations to ensure that Americans can buy food and fuel at reasonable prices." But that is hardly a sound argument about the lack of a need for a public health insurance plan. In fact the government intervenes in the food and fuel markets in all kinds of ways to assure Americans access at "reasonable prices." On food, there is a food stamp program on which the federal government spends roughly $37 billion a year, the WIC progam at roughly $5.5 billion a year, and school lunch and breakfast programs on which the federal government spends about $14.6 billion a year. On fuel, there is a $5.1 billion a year Low Income Home Energy Assistance Program, as well as a strategic petroleum reserve that the government can fiddle around with to affect the price of oil and gas. America has a significant military presence in the Persian Gulf in part to assure that Americans can get fuel at reasonable prices, and you'd better believe a good deal of U.S.-Saudi diplomacy focuses on just that issue.
Mr. Mankiw worries about the public plan "sqeezing providers." But right now the government is squeezing providers on behalf of Medicare, leaving those of us with private insurance to pay ever-increasing premiums. For all Mr. Mankiw's concern about the chance that providers will be squeezed, he doesn't offer much hope for those premium-payers, who are also getting squeezed. This is not an argument in favor of a public option, just a suggestion that the critics of the public option would be more persuasive if, rather than simply defending the health-care providers, they offered some suggestion to improve the lot of those employers and individuals who are paying their own way in a system that is already 45.3% government-paid.