Obama compares a government health care option to the U.S. Postal Service?

There are many things to consider when comparing a government agency to a private company. The example that Obama used in the 8/11/09 town hall meeting interesting to say the least. See for yourself...

http://latimesblogs.latimes.com/washington/2009/08/obama-healthcare-transcript-new-hampshire.html

Now, I recognize, though, you make a legitimate -- you raise a legitimate concern. People say, well, how can a private company compete against the government? And 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 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 any other private insurer would do -- then I think private insurers should be able to compete. They do it all the time. (Applause.)

I mean, if you think about -- if you think about it, UPS and FedEx are doing just fine, right? No, they are. It's the Post Office that's always having problems. (Laughter.)

So right now you've got private insurers who are out there competing effectively, even though a lot of people get their care through Medicare or Medicaid or VA. So there's nothing inevitable about this somehow destroying the private marketplace, as long as -- and this is a legitimate point that you're raising -- that it's not set up where the government is basically being subsidized by the taxpayers, so that even if they're not providing a good deal, we keep on having to pony out more and more money. And I've already said that can't be the way the public option is set up. It has to be self-sustaining. Does that answer your question? OK, thank you. (Applause.) All right, right there. Go ahead.

If UPS, or FedEx is poorly managed there is the possibility that it might have to scale back, or perhaps even go out of business. The USPS is not in any way like the private sector, because decisions within the USPS are NOT based on market demand. The USPS has lost more than 7 billion dollars this year. The U.S. taxpayers are going to subsidize the U.S. Postal service again this year. Why should we believe that the health care option is going to be any different. Obama says at the town hall meeting, "UPS and FedEx are doing just fine, right? No, they are. It's the Post Office that's always having problems." Obama at that point is trying to soften the effect that the government health care option will have on the private market. At the same time he is inadvertently pointing out the government's inability to operate the postal service.

http://online.wsj.com/article/SB124948194775607851.html

WASHINGTON -- The U.S. Postal Service Wednesday posted a net loss of $2.4 billion for its third quarter and said it expects to lose more than $7 billion by the end of the fiscal year.

The rising tide of red ink could leave the Postal Service with a potential cash shortfall of as much as $700 million by its fiscal-year end on Sept. 30, when it must pay as much as $5.8 billion to prefund retiree health benefits. Postal Service officials hope Congress will pass legislation that would provide temporary relief, including an increased ability to borrow from the U.S. Treasury Department and changes in retiree-health-benefit payments before the bill comes due.

I wonder how long it will be before the government health care option would be the subject of stories like these. The postal service does not price its services based on market demand, so it can not accurately adjust and accommodate for changes in the economy. And because the USPS is a government entity, it can't fail, Congress will prop it up, so it can do it all again the same way. Remember the CARS program and "Cash For Clunkers", estimated to cost only 1 billion, then it requires another 2 billion.

This is one interesting fact. The USPS has been involved in anti-trust law suits. Companies have attempted to file suit against the USPS for unfair trading practices.

When the government health insurance option competes with private companies it will do so on a level playing field right?

Supporting the status of the USPS as a government corporation, in 2004 the U.S. Supreme Court held that the U.S. Postal Service cannot be sued under antitrust laws, because US anti-trust law (the Sherman Antitrust Act, for example), does not allow the federal government - of which the USPS is part - to be sued.

Obviously this will be true of the public health care option.

In the proposed health care bill, the government will require all private insurance providers to offer plans which meet a specific government standard, yet to be determined. Remember the USPS, UPS, and FedEx? The U.S. Postal Service does not directly regulate its competitors. Not a good comparison if you ask me.

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