Myles Spicer: In dismissing public option, don't go postal

  • Article by: MYLES SPICER
  • October 2, 2009 - 7:13 PM

In his Sept. 26 Star Tribune commentary, "Profit motive makes the world go round," William Shugart II had his facts correct (to echo his critique of President Obama) but his conclusions wrong.

Shugart rejects Obama's claim that the U.S. Postal Service (USPS) and Fed Ex and UPS shows that the public and the private sectors can coexist. He points out that the private businesses do well while the public entity -- USPS -- runs in the red. Proof, he says, that USPS cannot compete effectively.

That USPS loses money is true -- but not for the reasons Shugart gives. Fact is, the public service and the private ones serve vastly different markets, and both are needed for successful commerce (just as a public health care option would supplement private health insurance companies). USPS provides Americans with an inexpensive, convenient way to deliver mail and packages anywhere in the world at low, and admittedly subsidized, prices.

For 44 cents you can get your letter picked up, delivered probably in a day or two, and brought directly to the respondent's home or business. Conversely, the cheapest Fed Ex delivery is $4.57, but most Fed Ex packages cost between $10 to $15.

Thus each service provides consumers with a choice.

What's more, if Shugart is concerned with profitability, the USPS offers businesses a highly cost-efficient way to deliver such things as statements, advertising and commercial correspondence that Fed Ex could never replace. If Shugart wants the public service to concede to the private ones and leave the scene, the first complainers would be his profit-motivated corporations. USPS also picks up a lot of the dirty jobs Fed Ex and UPS choose not to service -- like junk mail and Rural Free Delivery (RFD). So Obama is correct: The private and public services can and do coexist quite comfortably.

USPS is just one of many public entities that are not self-sufficient but provide our nation needed services, protection or pleasure. Why not make the fire department a self-sufficient local government entity? Or the police? Or our park systems? The courts? Or the military? Indeed, the Bush administration actually did partially privatize the military (there are still 160,000 private contractors in Iraq today), and the result of this profit-oriented adventure resulted in massive fraud, theft and shoddy performance. So Shugart's argument that the private sector -- motivated by profit -- performs better than the public is deeply flawed.

Shugart's argument for the dismissal of the public option defeats his conclusion. The basis of the present failures and the weak, inadequate performance of health insurers is directly related to their drive for profit. Shugart states: "No profit motive means no incentive to innovate, streamline, and provide a quality product at a competitive price."

This is 180 degrees wrong. For insurers, stronger profits do not reside in streamlining anything. They rest with raising rates to the highest market price possible, then insuring only the healthy, then denying claims whenever possible. That is what increases their profits.

But Shugart is correct about one thing in disclaiming the analogy between the postal service and health care: Health care is different but far more important, and most civilized industrialized nations have found that to have a healthy, vibrant, caring society, the profit motive is not usually the path to success. That usually means subsidizing those services that are vital to advancing the nation's vitality and wellness. So it would be with a public option in health care.

The private sector would not only play a role, but probably the major one. The public sector would add to that role by providing optional services for those whom the private sector chooses to reject, or whose services are too costly, or who cannot participate in private insurance for whatever other reason exists. That does not seem too menacing, dangerous or radical. Just like Fed Ex and USPS, the public sector would provide subsidized services the private sector does not provide.

Myles Spicer, of Minnetonka, is a retired owner of an advertising agency.


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