Choice and competition protect consumers of healthcare … and electricity

Lynne Kiesling

Matt Welch does a sharp and thorough textual exegesis of parts of President Obama’s speech to Congress on healthcare (health care?) last night, in his article on the accusations of lying that are flying around Washington these days.

Matt’s final paragraph struck me, not just because I think he (and President Obama, in this case) is accurate when he makes this argument about health care:

There was one line in the speech last night that pointed to an alternative, more promising future: “My guiding principle,” Obama said, “is, and always has been, that consumers do better when there is choice and competition.” Unfortunately, the president evinces zero understanding of how increased regulation can reduce consumer choice, even or especially when the government joins the competition. And even if he did see the connection, we’d have good reason to suspect that he wouldn’t talk about it openly with the American people. That, ultimately, worries me more than a senior citizen who wants to keep the government out of Medicare.

Sadly, I think Matt is right with respect to the realpolitik of health care politics. But let’s focus on President Obama’s statement:

“My guiding principle,” Obama said, “is, and always has been, that consumers do better when there is choice and competition.”

This is my guiding principle too. If we can follow through on that principle, then health care policy will focus on doing things like removing the asymmetric tax treatment of employer-provided health insurance, and removing the barriers to insurance contracts across state boundaries. At its core the problems of health care policy are those of obsolete regulatory institutions.

But let’s also apply it to other areas in our lives that have obsolete regulatory institutions. Gee, hmmm, can we think of any of those … ? How about retail electricity regulation? Removing entry barriers and asymmetric legal treatments of potential retail competitors would start us down the road of choice and competition. Choice and competition trump monopoly and control every time … unless you are the monopolist with the government-granted entry barrier.

Let’s apply President Obama’s guiding principle that consumers do better when there is choice and competition to retail electricity markets. And health care.


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