This is another way of saying that universal coverage cannot be achieved using free-market methods — a point that many liberals correctly make. A bipartisan bill in the Senate introduced by Ron Wyden, an Oregon Democrat, purports to use the market to provide universal coverage. It would keep insurance companies in business, but only by converting them into regulated and subsidized public utilities, eliminating most existing insurance plans and expanding the I.R.S. by a quarter.I realize he's making a critique here, but I think that the idea of insurance companies as public utilities is actually about the correct frame in which to view them. Private insurance companies wield extraordinary power over peoples' lives and provide what is essentially a public good. They work in a highly-concentrated marketplace that has enormous barriers to entry, and there tends to be little choice about what company provides one's healthcare. Since most states have one or two insurance companies that have the market cornered, I think that viewing them like public utilities is basically correct, according to the facts. And the reason why public utilities are regulated is because they are in a unique position to exert leverage in influence pricing for the marketplace.
In my experience, conservatives tend to dislike utilities because they aren't competitive. But while competition can certainly improve product (e.g. the computer industry), there are times when competition just isn't possible. Having a free-market solution to electricity in, say, L.A. wouldn't work because the startup costs would be too high and there's a finite amount of physical space to lay electrical wire. Ponnuru talks about how Wyden-Bennett would turn health insurers into public utilities (this is overstating things a little, as they will still be competing), but the status quo is that we're dealing with unregulated public utilities that aren't really restricted in terms of the abuse they can dish out. It's like if PG&E could just double your rates one month with no explanation, and obviously with no recourse for the unlucky billpayer.
