Wednesday, October 21, 2009

The Way of "Public Options"

I have been worried a little about the “public option” the Obama administration has been pushing to include in the Health Care reform now making its way through both houses. The administration is claiming such things as increased competition and reducing costs as a reason for needing the government to take on the role of insurer. First, the government is already fully vested in insuring millions of people. There is a very large constituency who have a large stake in keeping the status quo as far as the government’s health care. They are the retired population who utilizes the system we know as Medicare.

Let’s take a moment and look at something a little unassociated with the current debates going on in Washington about the Health Care reform. Student Loans. The student loan program started back in 1965. It was a private/public partnership. In the Federal Family Education Loan (FFEL, pronounced fell) the banks would loan money to students who would pay them back. The Federal Government would reimburse the banks for up to 97% of defaulted loans. That is a simple way to put it. Oh, I left out something many in Washington want everyone to remember. The Government took on the bad leaving the good (and the profits) to the banks. That too is a little over simplified.

So, in 1993, congress created an alternative to the banks. Students would cut out the middle man and borrow directly from the Federal Government. The excuse at the time was that the banks needed to have another source of competition. This was the way to reduce the cost to borrowers while increasing profits to the Government, who was insuring all the loans anyway.

Enter the Student Aid and Fiscal Responsibility Act (SAFRA). The house passed the bill the week of September 18, eliminating the private sector’s role in federal student loans altogether. If this bill passes the senate, the approximately 4,500 colleges and universities that are currently signed up for FFEL will have to abandon the program and start using the direct-loan option by July 1, 2010.

Now, is there a parallel between the government’s involvement in health care and the way the student loan programs have gone? I don’t know but there is an eerie familiarity to the argument for a “public option”.

This morning I got another message from requesting my money. Yeah, that is another thing I always like to read about in my inbox. In any case, they’ve created a new advertisement that suggests the “public option” is all about making it more competitive. An organization that is all about social medicine is arguing the lesser offense of a “public option” for health care that would stimulate competition.

I do not believe everyone arguing for a public option is seeing it as the gateway into a more socialized system. Some do, however.

The “public option” is considered by some the most important part of the Health Care legislation. Many, like the organization, are more interested in moving on a larger agenda that can benefit from a “public option”. I don't see the “public option” as truly beneficial to the citizens as a whole. Do you? Let me know what you think.
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