Healthcare reform has moved back onto the nation's political radar. Earlier in the week, the President expressed his support for the so-called "public option" in a speech to the American Medical Association. The AMA, of course, is one of the leading voices in opposition to such a proposal.

If a healthcare reform package were to include this public option, then, as I understand it, the government would allow all citizens to opt-in to an alternative health insurance system operated by the government. The provision's proponents claim that this benefits consumers because it creates more competition in the market for health insurance, thus driving down prices and driving up quality. But this is lunacy.

First, if the government creates a health insurance product that abides by the same rules and regulations, and is constrained by the same economic realities as all the nation's other health insurers, I hardly see how the government plan would bolster competition. The government has no particular advantage when it comes to providing health insurance compared to any other provider. A public healthcare plan would be nothing more than one more homogeneous choice, neither much better nor much worse than the other options available to consumers.

On the other hand, if the government decides to subsidize its healthcare product, then it is quite probable — perhaps even certain — that the public plan would offer consumers a bargain on face. Of course, if the government subsidizes its plan, then it doesn't create competition in the true sense of the word. The government would have a cost advantage available to no other provider. In fact, many of the same groups in favor of the public option have called similar arrangements anti-competitive in other circumstances.

The only real benefit from healthcare reform would come about if whatever changes the government make have an impact on the portability of coverage. In the long run, we will pay just as much for healthcare if we pay for it through a single-payer government run system or through our present arrangement, where groups and individuals buy from privative insurers. Portability, on the other hand, would reduce a worker's cost of moving from one job to another, which allows labor to be reallocated more quickly — a very good thing indeed.

In short, the a public plan would do nothing but give customers one more choice in an already crowded market. The only real economic benefit would come about if we reduce costs and make coverage portable. And if that requires a single payer system, that's fine with me.