The Public Option: Been There, Done That
The public option is already a great success.
Posted December 18, 2009
The public option may be on life support, but we have already tried it, and it's a huge success.
Here's how someone stated the case: "The very fact that a community can, by vote of the electorate, create a yardstick of its own, will, in most cases, guarantee good service and low rates to its population. I might call the right of the people to own and operate their own health care plan something like this: a ‘birch rod' in the cupboard to be taken out and used only when the ‘child' gets beyond the point where a mere scolding does no good."
Substitute "utility," i.e., electric power utility, for "health care plan" in the above statement, and you have the actual quote of FDR campaigning for the pubic option in energy production during his 1932 presidential campaign.
It was a Roosevelt family legacy that public competition with private interests was good for the consumer. His cousin, Theodore, had inveighed against "waterpower barons" and their high-priced monopolies. Along with their fellow New Yorkers, they could look over the border and see Canadians paying lower rates for publicly generated electricity. Kind of like looking over the border today at their superior health care system.
As skillful a politician as he was, FDR was powerless, so to speak, as governor to redress the situation, knowing that development of the St. Lawrence Seaway would require federal involvement to negotiate the necessary treaties with New York's foreign neighbor.
In his inaugural speech as governor in 1929, he said about waterpower, "The title to this power must rest forever with the people."
Later, campaigning for the presidency, again looking over the border, he observed that in Canada "the average home uses twice as much electric power per family as we do in the United States."
Only 37 days after his inauguration, undaunted by the economic challenges of the Great Depression-or, more accurately, because of the
Private utilities stoked fears that they wouldn't be able to compete with the public energy option. As in today's debate over health care, they complained that public agencies with no need for a profit would undercut them on price.
"We are willing to be put out of business if it can be done in a plain straightforward business like manner, but we do object to our Government putting us out of business," said John D. Battle, Executive Secretary of the National Coal Association.
In a compromise worked out with Wendell Wilkie, then president of the Commonwealth and Southern Company, a major private power utility, the TVA was be allowed to sell electricity in competition to private firms, but not outside of the Tennessee Valley.
And the rest, as they say, is history. The TVA is our largest public power company with 9 million customers. It was an engine of economic development. In its first 20 years, per capita income in its service region rose from 44 percent of the national average to 61 percent.
At the height of the Cold War, President Eisenhower likened it to "creeping socialism" and said, "I'd like to sell the whole thing."
And what are the lessons of this history?
First, the sad lesson for us that back in the day, despite their strenuous opposition, major private players and Republicans were ready to compromise-even as Roosevelt-"class traitor" and "socialist" was demonized as much as Obama is today. There was arguably more opposition to Roosevelt from the left. Norman Thomas, Socialist candidate for the presidency said that Roosevelt had stolen his ideas, but not stolen enough of them. The climate was so poisonous that Giusseppe Zangara while shooting wildly at the president-elect in Miami-and fatally injuring the mayor of Chicago-yelled repeatedly, "Too many people are starving!"
And the second lesson gives fodder to both the proponents and opponents of a public health care option. The TVA was so successful it drove out of business all private utilities in its region, which is one of the reasons opposition forces succeeded in placing a permanent fence around it in 1957, and managed, despite Roosevelt's dreams, to prevent its replication anywhere else in the country.
Those opposed to a health care public option try to have it both ways. Out of one side of their mouths they argue that the government can't do anything right-despite the TVA-and out of the other side, they say the public option will be too successful-like the TVA-and put the private companies out of business.
And I say, "Whatever cures your cold."
Roosevelt put it better when critics called it Communism: "It's neither fish nor fowl. But whatever it is, it will taste awfully good to the people of the Tennessee Valley."
My book, Nasty, Brutish, and Long: Adventures in Old Age and the World of Eldercare (Avery/Penguin, 2009) provides a unique, insider's perspective on aging in America. It is an account of my work as a psychologist in nursing homes, the story of caregiving to my frail, elderly parents--all to th accompaniment of ruminations on my own mortality. Thomas Lynch, author of The Undertaking calls it "A book for policy makers, caregivers, the halt and lame, the upright and unemcumbered: anyone who ever intends to get old."