One year ago Monday (Sept. 7) the federal government took over mortgage giants Fannie Mae and Freddie Mac because then-Treasury Secretary Henry Paulson – in what would become his mantra – argued that the failure of these two companies would be too cataclysmic for the U.S. to withstand.
“A failure by either one of these companies would cause a great havoc in the economic system,” Paulson said. “It would be a big blow to the average American, affect their budget and their ability to get a consumer loan, a car loan.”
What failed for Fannie Mae and Freddie Mac serves as a blueprint for what will fail with health care reform this year.
With the creation of a government-run health insurance option, President Barack Obama, Health Secretary Kathleen Sebelius, ranking Democrats, the AFL-CIO and other health reform advocates want the government to effectively take over health care. Here’s the logic: The evil insurance companies just block people’s efforts to get the care they want, they need, they deserve, reform advocates say. Health insurers companies charge too much to doctors, take too long with bills and don’t put out candy for Halloween. They are evil. If the U.S. doesn’t get into the game and create a public option or government-run health insurance program to compete, reform advocates say, then the insurance companies will continue to hurt the very people they are supposed to be helping. We cannot allow them to continue because, to quote Paulson a year ago, “it would be a big blow to the average American.”
Yet, a year after Freddie Mac and Fannie Mae received about $100 billion in government aid – with another $300 billion waiting for them, if the need arises – private mortgage lending has slowed dramatically, according to an NPR report. In other words, faced with two competitors who have government backing, private mortgage lenders have become more selective and less receptive toward making mortgage loans.
The same approach will yield the same result for health insurance. If the government option is approved, private insurers will back away from markets where the government – through accepting the lowest bid, cajoling and old style wrangling – has a distinct advantage. That’s smart business: compete where you can win; avoid where you know you will lose.
Of course, once the insurance companies start pulling out of markets, then reform advocates can say more government intervention in health insurance is needed. People can’t get the care they need, reformers will say. The door will open wide to the real prize for reformers: a single-payer system. But government control of all health insurance decisions will never, ever, ever be better than private companies. The Fannie Mae/Freddie Mac story proves that.
Mortgage response proves public health option is wrong via IFAwebnews.com .
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