This is the Cato Daily Podcast for Wednesday, June 17th, 2009.

I'm Caleb Brown.

The government health insurance plan bouncing around capital hell wouldn't compete with the private sector.

It would most likely crowd out the private sector.

So says Cato Institute Director of Health Policy Studies, Michael Cannon. Wouldn't additional private insurers provide the same function that President Obama is arguing a government

option is going to provide.

I think that's correct and if we were to lower barriers to competition

between private insurance companies,

we would have a lot more options for employers

and individual consumers.

And that would keep all insurance companies honest. The problem with creating a new government health insurance program

is that you're not going to get that sort of competition.

What you're going to get is a new entrant in the market who can hide the true cost of its activities

and therefore keep its premiums artificially low compared to its competitors and will therefore pull consumers into this new government

program not by providing a lower cost higher quality option, but just by virtue of the government's

ability to hide its costs.

Now how can the government do that?

There are all sorts of ways.

The government can directly subsidize its program with taxpayer money.

It can indirectly subsidize that program

in countless other ways.

As you may recall that there was this once

...