On the way back to NeuWestbaden, Woodrow Park stops at Heorot to address a small crowd.
"Fellow citizens! If you saw the debate, you know I am Woody Park and I support the Eutopian Labor Party. You also learned that the ENP wants to 'privatize' both Omnicare and Medicure ASAP. The Party of Liberty, who didn't bother to show up at the debate has said so as well. They both want to do it for dogmatic reasons, either to make government smaller or end a monopoly, or both. They are entitled to their beliefs, but if you vote for them, it will end up costing you money. Most of funds handled by Omnicare are for health insurance. These premiums come from the employers. If someone works for the Federal government, then the Federal government pays that premium. That shows up in the budget, but it is just a normal employment cost, not a subsidy. Someone else working for a company or a province has their premiums paid by the company or the province. Those premiums cover their whole family, not just the worker. Someone who is self-employed pays their own premium. They may not figure this in when they are setting up their business, but it is better than skimping and doing without insurance. The Federal government, through the social programs pays the premiums for the unemployed, so the truly needy are not denied healthcare, an aspect that the other parties said they would not change. This is the other part of what goes from the Federal coffer, meaning your tax dollars, to Omnicare and thence to Medicure.
If there were a private alternative, Omnicure's premium and claims processing system would be working at less than its capacity, which would make them less efficient. The private company would have to build up their own systems, which will cost them money, that they will need to cover with their premiums. They would probably offer lower rates to attract business, but they would do so by being quite selective about who they insured, thereby skimming the healthiest individuals out of the system, leaving the state to cover the more expensive cases. Where is the gain for our nation in that case? There isn't one. Or, to attract business, they might sell no frills policies, with severely limited benefits. They would get some business, because people know that if something really bad happened, they could still get treatment, so in effect, the state would be subsidizing the private insurer.
The private insurer would have to raise capital to set up its operations, funds that it would have to earn a fair return on. Using a normal mix of equity and debt, the weighted average cost of capital typically averages about 11%. Omnicare, being backed by the government, has its investment funded at government debt rates, which thanks to dollarization, are now substantially less than that. Thus we see that, in this case, the noble (to some) ideas of smaller government and ending monopoly really mean higher costs for the nation as a whole, with hidden subsidies for the private alternative. Some businesses are more efficient as a monopoly. Your town does not need two competing water companies, one is more efficient. It must be either regulated or run by a government to make sure the monopoly power is not abused, that the service is adequate, and that it is responsive to the demands of you, its customers. For the reasons discussed, health insurance belongs in this category, of areas where a monopoly is more efficient. Looking at the cost of health care in the United States makes this conclusion obvious, if my words failed to convince you.
The Eutopian Labor Party answers to you, the people. Instead of trying to get rid of Omnicare or waste your money privatizing health insurance, we will devote our energies in making it better, by making it more efficient and more responsive. Only a party that believes in the validity of the concept can effectively do that. Vote for the Eutopian Labor Party!"
