The U.S. Postal Service: A Winning Model For Health Care?

Health care reform opponents frequently deride government intervention by snarking, "Do you really want health care brought to you by the people who brought you 'Cash For Clunkers'?" My typical riposte is that the alternative is to have health care brought to you by the same people who brought us execrable institutions like Comcast, or Verizon, or -- hey! -- Cigna, the people who actually do bring me my health care, and who haven't a single person on staff capable of understanding that I was not born in September. True story!

But what about putting forth the U.S. Postal Service as a model? Well, the system is struggling financially and facing cutbacks in service, and there's no small amount of general public support for closing down branches -- until the public finds out it's their post office branch that's under the gun. Then, it's NIMBY war unleashed on the streets of America! As it turns out, people like the postal service. Even those folks schlepping out to Galt's Gulch want to get their Netflix on time.

But: the U.S. Postal Service as a model for health care? U.S. News and World Report's Rick Newman makes the case today on the paper's "Flow Chart" blog:

The Postal Service may not seem all that efficient, but it does one important thing pretty well: Transport a letter between any two addresses in the United States for less than a dollar, usually in three days or less. It's such a mundane task that we take it for granted. But if a private-sector firm wanted to compete across-the-board with the Postal Service, it would have to build a humongous infrastructure able to reach every household in America, six days a week. No company wants to do that.

Firms like FedEx and UPS compete with some of the services the Postal Service offers. That's because they've targeted parts of the delivery business that can be profitable if run efficiently. But they want nothing to do with universal mail delivery, which would be a guaranteed money-loser. Gee, that sounds a lot like insurance companies that want to cherry-pick the profitable parts of the healthcare business, offering care to healthy people with employers who can help pay the premiums while steering clear of people with costly problems or less money to spend.

During our last Sunday Morning liveblog, I speculated that it was the U.S. Postal Service rates and scope that helped keep the costs of private-sector mail and package delivery affordable. Well, not long after, I got an email from frequent Eat The Press contributor "The Anonymous Business Consultant," debunking my premise. Nevertheless, he was of the same mind as Newman on using the U.S. Postal Service as a model for health care reform:

The USPS has a government-awarded monopoly, and - I don't remember the exact numbers - but the monopoly basically consists of a law that nobody else can deliver a letter under 12 (ish) ounces for less than 12(ish) times the cost of a postage stamp. In fact, I'd be willing to bet that the abolishment of that monopoly would lead to really, really cheap, and really, really awesome mail delivery - like 100% internet-trackable letters for 50 cents, courtesy of Fedex and UPS. Their 2-day prices are already set at the legal minimum, and I'm sure with enough volume they could go much, much lower and still make a profit.

So why do we continue to have the monopoly? Simple: Because along with the monopoly comes the legal mandate of universal coverage. Everybody in the US gets mail. Nearly all places get it six days a week (although there are places that are weekly). If the private sector were to take over mail delivery and be given access to the small/cheap mail market without a similar mandate, probably 20% of America would suddenly be unable to receive a letter at home.

The parallels with health care actually aren't bad. Right now, insurance companies get to pick and choose who they cover. If the law changes to force them to cover everybody, they will jack the prices up a lot to compensate. That is basically exactly what UPS and Fedex would do in a similar case, which is why somebody in an earlier, less stupid time came up with the idea of the Postal Service - the "public option" for sending stuff when the private sector can't/won't serve you.

The Postal Service's usefulness is probably running out, and there are severe problems with the model. The internet has made many of its core functions obsolete. And hey, if that happens in health care too, then great; maybe we can just download cures to diseases from Napster or something. But for now, I'd guess a public option is pretty important if you want to have universal health coverage and not have premiums shoot through the roof.

By the way! Do you want health care brought to you by the people who brought you Federal Express? In my experience, the answer is no -- unless of course you prefer your healthcare to be delivered, consistently, to the apartment building across the street.

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