The Case for Postal-Style Healthcare

You've heard the refrain: If the government ran healthcare, it would be just like the U.S. Postal Service. And nobody wants that.

Or do we? The USPS, an independent government agency, is the convenient butt of jokes regarding poor service, rude employees, and occasional government mangling of personal property. It routinely borrows from the government to cover operating losses and endures disruptive political meddling in basic management decisions.

Despite the disparaging clichés, however, the Postal Service has some attributes that might make it a strong model for healthcare. It provides a basic service that's not available from the private sector. To people without health coverage, postal-style healthcare might be a lot better than none at all. If service in a government healthcare plan turned out to be surly, that might even be a good thing: It would ensure a healthy market for better-run private plans, reducing fears of a government takeover. Oh, yeah, there's one other thing: In customer satisfaction surveys, the Postal Service already scores higher than health insurers.

[See why health insurers aren't as greedy as critics claim.]

Postal put-downs imply that private-sector businesses are more prompt, courteous, and efficient than anything run by the government. But that's not always true. Some companies prioritize quality and service, but others have a habit of cutting corners to reduce costs and increase profits. That's why shoppers struggle at the self-checkout line in grocery and home-improvement stores, and it takes forever to get a live human on the customer-support hotline. Microsoft is one of the most profitable companies in the world, but when was the last time a friendly employee came on the line to help you solve a problem with Windows or Excel? Instead, Microsoft shunts you off to its help and support Web site to hunt around for solutions. (Maybe that's one reason it's so profitable.)

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.

[See the industries hurt most by soaring healthcare costs.]

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.

In the mail business, the Postal Service is the deliverer of last resort, required by law to provide a "fundamental service" to the American people "at fair and reasonable rates." But our healthcare system doesn't have a last-resort provider offering basic service at reasonable rates. As a nation, we support universal mail delivery but not universal healthcare.

[See the trouble with healthcare reform, in numbers.]

Amtrak, another favored target of government-bashers, is also a dark-horse model for a federal healthcare plan. Sure, critics deride the government-run railroad for indifferent staff, creaky equipment, and weak financial performance. Yet the only thing worse than Amtrak is—every other mode of mass transportation. On many of its routes, Amtrak competes directly with the airlines, which prove their private-sector superiority every day through negligible meal service, surprise fees, packed planes, and seats designed for supermodels. Even with spartan service, the airlines struggle to earn a profit. A ride on Amtrak, with its cushy seats and unhurried ambience, makes you wonder if maybe the government should start an airline.

It's legitimate to ask whether taxpayer dollars should support rail service or mail delivery (or healthcare). But if you're the customer, who cares? Does anybody look up the company's annual report before choosing a cable provider or deciding where to buy a phone? Or choosing a doctor or health insurance plan? Nope. What we care about is service and quality, which often conflicts with profitability because it's expensive.

Let's just assume that if there ever is a federal healthcare option, it will be as inefficient as we consider the post office to be. So what? If service were poor, plan participants would have an incentive to look elsewhere for care, the way most businesses requiring quick package delivery choose FedEx or UPS over the Postal Service. Since private plans would presumably be more efficient, they'd have a built-in competitive advantage and would still appeal to employers and individuals who can afford their own coverage. The postal-style plan, meanwhile, would provide basic service to a lot of people who couldn't get it anywhere else—while providing fresh fodder, valid or not, for the late-night comedians.

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