Sure, It's Competitive. Just Like the WWF.

Wrestling, purely as a sport, is highly competitive. A prime example of this takes place every four years during the summer Olympics. Top athletes struggle and strain for supremacy over their opponent and, invariably, the better man comes out on top, gaining recognition for his talent and hard work and leaving his opponent with the knowledge of what he can do to improve. This can easily be perverted, however.

When I was young, "professional" wrestling was all the rage. By "professional," of course, I mean WWF.

You had your heroes and your villains and, even though you knew the winner was picked in advance by some WWF official, you cheered anyway, getting a kick out of the spectacle for its own sake. This is not so dissimilar from what we are being offered now for the reformation of our health care sector.

The priority, for the Obama administration and for congressional Democrats, is the roll-out of a so-called "public option" for health insurance. This would be an insurance program that is available to everyone, financed by taxpayers and managed by the government. Some proponents have called it "Medicare for all." Ostensibly, this new program would "compete" with existing, private, insurance policies. As President Obama is fond of saying: If you are happy with the insurance you have, you will be free to keep it. The catch is that it might not be able to keep you.

Before qualifying that statement I would like to make clear a fundamental premise that I am working with. I don't believe it to be political, I believe it to be apparent to any reasonable observer: the government does not compete, at least not in the way we have come to understand the word. Like a wrestler with the WWF behind him, the government option is almost always the winner; but that doesn't necessarily mean there won't be a whole lot of struggling and acrobatics before all is said and done.

What this policy proposal will actually accomplish is a phenomenon known as crowding out.

Initially, the public option will become the default coverage for the uninsured. This, in and of itself, and like so many other programs, is benign enough. The problem reveals itself when the full consequences are considered. The availability of a "free" or highly subsidized insurance option will precipitate a mass movement from private to public coverage.

This occurs for two reason. (1) People recognize that they already pay taxes to support the public option, so to maintain private insurance would effectively mean paying for the same thing twice. (2) A public program can operate in ways that no private program can: It has the full backing of the federal treasury as well as a political obligation to deliver on its promises. Further, as the editors of the Wall Street Journal point out, they do not have to incur "the risks or hedging against losses that private carriers do." With such backing they can afford (for a time) to charge artificially low premiums, expanded benefits or both. This may sound all well and good, but it is unsustainable. Witness the existing Medicare program that advocates of the public-option espouse: It is this country's greatest fiscal problem, with unfunded liabilities in the tens of trillions of dollars.

*Note: The figure "trillion" has been thrown around a great deal recently, diluting for some the sheer magnitude of the amount we are talking about. To put it in perspective, if you made one dollar a second, 365 days a year, it would take you 32,000 years to earn one trillion.*

As the exodus from private to public coverage continues, and lacking the subsidies available to the government, private premiums will rise, driving more and more people into the waiting arms of Uncle Sam. Given time, and without sufficient capital coming in to underwrite their coverage, private insurers will have to close their doors. At this point, Uncle Sam will be the only "option" left.

With an ever-expanding pool of beneficiaries flocking to the public option, costs will inevitably explode. For example, as the Medicare Payment Advisory Committee and the Congressional Budget Office point out every year, the Medicare program is going to go broke as it is, and it provides minimal coverage to some 40 million seniors. Is it reasonable to expect this situation to improve if the program were expanded to every American?

To maintain the program, the only option policy-makers will have (aside from draconian tax increases) will be to cut payments for medical services, drugs and technology. We are already seeing this in the Medicare program, which pays doctors only 81% of private rates, and hospitals a mere 71%, according to a recent study from the distinguished Lewin Group.

With a reduction in capital comes some inevitable results: Less innovation. Lower quality. Reduced access. This, generally speaking, is where the stories of rationing and waiting lists rear their ugly head and become the uncomfortable symptoms of reality.

Whenever a problem arises, there seems to be an unhesitating gravitation towards government action even when, in many cases (such as the Freddie Mac and Fannie Mae boondoggle and, of course, the problems in the health care market), government action precipitated the problem in the first place.

Does this mean that the government has absolutely no role to play in health care reform? Of course not. Clearly, public policies will be necessary to reform the medical marketplace and address the problems of quality and access. But we must first make a decision as to what kind of marketplace we want. Do we want one where honest competition between insurers, providers and hospitals forces the cream to rise to the top and encourages the flexibility necessary to adapt to consumer demand? Or, do we want a faux marketplace, where the winner is predetermined, its likely outcomes apparent and our options steadily diminishing?

I suppose it all comes down to this:

Do we want Olympic wrestling, or Hulk Hogan wrestling?