Catching up with the market

It has been an unproductive week here at the Tucson Headquarters, thanks to a nasty head cold (not the flu, fortunately). In leiu of something new, here are a couple of unfinished notes from the “draft” file.

So much for the “free market” in health care: Apparently competition in the provision of health care services is good, as long as it’s not happening here.

The bill’s most controversial feature would begin a limited program of competition beginning in 2010 between traditional Medicare and the new private plans. Conservatives who support the provision argue it would help hold down costs. Democratic critics, backed by estimates produced by the Medicare program’s actuaries, argue it would lead to increased premiums for seniors who remain in the traditional benefit program.

Some of the Republicans who voted for the bill sought assurances in advance from the administration that cities in their states would not be chosen for the competition.

I read last week of a consortium of Utah cities that are betting that they can make money by building a super-high-speed fiber optic network and using it to feed homes with internet, video, and phone services. The ambitious plan circumvents the infrastructure of regional cable TV and phone providers by making the fiber optic network a municipal service. The Salt Lake Tribune picks up on the story to discuss a few of the financial details in the plan. Regional providers of telecommunications services have attempted, so far unsuccessfully, to block the plan.

The interesting synchronicity between these two items is the role of the market. On one hand, in the case of the medicare bill, we have lots of allegiance pledged to the market on the part of congressional Republicans, but when it comes to implementation, many of them back away warily. On the other hand, in the Utah case, we have municipalities attempting to create market competition by building the infrastructure that the telecoms all want, but have yet to build (rolling out fiber optics is expensive, particularly the “last mile problem” of actually wiring homes and businesses), and this project is opposed by those same telecommunications firms. In both cases, it seems that the rhetoric of market competition is trumped by the desire not to be the guy who actually competes.