Let’s watch the President’s celebrated comment on the success of private sector package delivery services as compared to the flailing public option so we can put his remarks in context:
He’s trying to tell us that a public option won’t crowd out the private providers already there. But, that’s not what we learn by studying this example. His comparison show much more effective the private options are and betrays a limited understanding of the industries he’s comparing.
Let me explain. In the world of parcel delivery, FedEx and UPS were created long after the Postal Service, that is, the public “option” preceded the private ones. According to the Post Office’s website, it was founded in 1775, with the appointment of Benjamin Franklin as the first Postmaster General. By contrast, the forerunners of the companies which would eventually be known as UPS and FedEx were founded in 1907 and 1913 respectively.
In the health care arena, however, the President is proposing the exact opposite, a new public option created long after the private ones.
And those two companies have grown in large part due to disatisfaction with the Postal Service. And today, while the private companies are, in the president’s words, doing “just fine,” the public one is “having problems.”
That is, the very creation–and marketplace success–of these companies was due to resourceful individuals, on their own, meeting a need the government-backed industry could not fulfill. Over the years, as the federal government has relaxed some (but not all) restrictions on the postal service’s monopoly on parcel delivery, these companies (and other package delivery services) have continued to find new markets, improving delivery across the country and earning profits for their shareholders.
Were Pesident Obama to apply the lesson of the success of FedEx and UPS to the health care industry, he would advocate the kinds of deregulation that facilitate the entry of new private companies into the market for health insurance.