Arnold Kling asks a good question:

Just once, I would like to see someone making this argument collect data on how where insurance company overhead comes from. I suspect that very little of it comes from designing means for selecting customers in the individual market. Instead, I suspect that a lot of overhead is associated with designing and administering plans for employer-provided health insurance, where adverse selection is not an issue. In the individual market, a lot of the overhead relates to regulatory compliance, because health insurance is regulated differently in every state, and it is illegal to sell health insurance across state lines (except in the case of an employer-sponsored plan).

Which leads me to a question I have had all along about the public option. Will it have to comply with state regulations? If so, then it will be misleading to talk about the public option, because it is unlikely that the same plan will work in all fifty states. If not, then it is misleading to talk about the public option being on a level playing field with private health insurance.

The full post can be found here.