bludstone (bludstone) wrote in ontd_political,
bludstone
bludstone
ontd_political

Obama compares the new health care plan to the post office... but theres a problem with that.



#1 In business, when a company wishes to enter the marketplace, when it chooses to make its entrance matters. Some companies have a first-mover advantage, some have a late-mover advantage, and others find it advantageous to get in sometime in the middle. Health care is a business and so is shipping and mail. Who came first in the shipping and mail industry? The answer is the US Postal Service, which was established in 1775. UPS was established in 1907 and FedEx was established in 1998. UPS became successful because the US Postal Service was just not good enough at what it did for the marketplace. FedEx came about because of its alternative method of distribution based out of Memphis, Tennessee. UPS and FedEx in the name of capitalism constantly improved their services and products so that the US Postal Service had to keep up with them. Unfortunately, the US Postal Service is still woefully behind in the shipping arms race. The US Postal Service also suffers due to their image of slow service, bureaucracy, and inability to function well with the marketplace because they are a government corporation. The U.S. Postal Service is a de facto monopoly as well and all non-urgent mail must go through this entity.

In health care, the government could compete, but they would have an unlimited amount of coverage pending anger from overseas creditors. The government would be a default insurer for those that are uninsured. They would be the late-mover and since their service would be "free" and since their service would also undercut a health care industry that is bloated due to government interference. Private insurers and the government would provide the same services as opposed to the US Postal Service and their private competitors. The private competitors have a different niche than the US Postal Service. The private competitors can offer something that the US Postal Service cannot. ObamaCare provides a low-quality health care plan that would be "free" and private insurers would charge premiums and deductibles for plans that are not in the hands of government bureaucrats. The benefit of not dealing with the government with one's health is rather nice, but the amount of people that would leave the private plans due to affordability concerns would ultimately leave the good plans to a smaller amount of Americans.

In this case, the private insurers ("good money") will be at a premium and driven from the general populace, which will prefer the debased insurance provided by the government ("bad money"). Obama's health care program will drive out private health insurance much like the way gold standard was driven out by the silver standard and how the silver standard with some gold backing was driven out by fiat currency. Look at the prices of gold and silver. They have never been less than a dollar, in fact they have over time gone up in value per ounce. The premium value of private insurance will grow as ObamaCare deteriorates.


#2 The USPS has been designated by the GAO (Government Accountability Office) as "high risk". Here is their statement...

USPS urgently needs to restructure to address its current and long-term financial viability. USPS has not been able to cut costs fast enough to offset the accelerated decline in mail volume and revenue—particularly costs related to its workforce, retail and processing networks, and delivery services. To achieve financial viability, USPS must align its costs with revenues, generate sufficient earnings to finance capital investment, and manage its debt.

Mail use has been changing over the past decade as businesses and consumers have moved to electronic communication and payment alternatives. Mail volume decline has accelerated with the recession, particularly among major users in the advertising, financial, and housing sectors. Mail volume has typically returned after recessions, but USPS’s 5-year forecast suggests that much of the recent volume decline will not return.

GAO is adding the U.S. Postal Service’s (USPS) financial condition to the list of high-risk areas needing attention by Congress and the executive branch to achieve broad-based transformation. Amid challenging economic conditions and a changing business environment, USPS is facing a deteriorating financial situation in which it does not expect to cover its expenses and financial obligations in fiscal years 2009 and 2010. This year, USPS expects to increase its year-end debt to $10.2 billion and incur a cash shortfall of about $1 billion.

Another key risk factor is the accelerated decline in mail volume. Mail volume declined by 9.5 billion pieces in fiscal year 2008 to about 203 billion pieces. As of the end of May 2009, mail volume had decreased another 18.5 billion pieces, and USPS expects to end fiscal year 2009 with mail volume of 175 billion pieces—about 28 billion pieces fewer than in fiscal year 2008. Further, it expects flat or continued volume and revenue declines over the next 5 years. These trends expose weaknesses in USPS’s business model, which has relied on growth in mail volume to help cover costs and enable USPS to be self-supporting.

http://catchingthenuances.blogspot.com/2009/08/high-risk-post-office-gives-hints-about.html

My first post, be gentle. I know I'm against the grain of the comm here :)
Tags: health care
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