The whole health care insurance debate (or debacle) just nauseates genuine problem solvers like myself. There's so much disingenuous political gameplaying going around. Part of the problem is that the Democrats are trying to hammer a solution in search of a problem. For example, what's the relative crisis in health care? Is it health care itself or the method of health care payment? Are people dying because a hospital turns them away over inability to pay? No; in fact, there are laws to guarantee emergency care. Are poor people prevented from obtaining health care insurance? No--they qualify for Medicaid. What about households filing for bankruptcies because of catastrophic expenses? No--those costs already get passed back to other health care customers. Well, then, what about the people whom don't have insurance; isn't it clear that they are much worse health risks than the general insured population? No. Many uninsured people are healthy individuals (e.g., young people or small business upper-income families easily able to obtain and afford health insurance) whom prefer to pay medical expenses out of pocket, not wanting to pay for the services of a middleman (i.e., insurers).
But, the Dems insist, there is an affordability issue, and some middle-class families run into problems involving catastrophic expenses, preexisting conditions, benefit caps, and the like. Fair enough; for example, there certainly is need for reforms in relevant underfunded state/region assigned risk pools, which may have enrollment caps. The problem is that there are a number of issues involving health care costs, many of which involve things beyond our control, e.g., a larger number of older Americans generally requiring more medical products and services. Another issue involves a perversion of the concept of insurance: for instance, seeing a doctor over routine, minor matters simply because the visit is "free" or has a nominal cost. This constrains a doctor in terms of how many patients he or she can see; a doctor may also be affected by the below-market payments for services of government-sponsored patients (e.g., Medicare/Medicaid). There are other issues as well, in terms of unnecessary preventive testing, drug prescriptions or treatments and defensive medicine, staffing resource throughput and distribution, dysfunctional immigration policy and quotas, abusive lawsuits, etc.
However, what irritates me in particular is Speaker Pelosi's shameless, intellectually dishonest attempts to blame the problem on lack of competition and "immoral" profiteering. The "solution": public sector competition and antitrust legislation. The fact is that government is part of the problem, not the solution. Take, for instance, Texas' recent malpractice tort reform; a consequence of reform was an increased number of physicians operating in Texas, more malpractice health care insurers, and lower premiums. If Pelosi was seriously interested in competition, she would work against an anti-competitive Byzantine system of state-specific mandates, enable small businesses to self-insure through some interstate cooperative mechanism, and eliminate a tax bias against consumer purchase of health insurance.
As someone influenced by the Chicago School, I am somewhat skeptical about the efficacy of antitrust legislation and prosecution; one of the most glaring recent examples of government incompetence dealt with the FCC's belated approval of the merger between satellite radio vendors Sirius and XM; the merged company barely staved off bankruptcy over the past year. The rapid emergence of competitive technologies over the past decade, e.g., high definition radio and wireless provider services, pressured the satellite radio vendors, given steep costs associated with satellite launching and maintenance.
Pelosi's demagoguery against the health insurance companies, implying that "special interest" federal anti-trust exemptions have protected the industry, simply doesn't bear up under scrutiny. The Associated Press did a fact check this week, showing that despite the fact that health insurance premiums have doubled over the past decade, health insurers have not been profiteering; the sector's profit margin over the past year was 2.2%, putting it in the bottom half of industies (more typically have averaged around 6%), credit ratings have dropped, and its margins have rarely exceeded 8%--less than other types of insurance, other health sector industries (e.g., medical devices and drugs), and other private sector businesses (including high tech). But even if we concede that, say, insurance rates have been up nearly 130% over the past decade, what public policy changes account for that? Have states stopped regulating and enforcing anti-competitive behavior in insurance over the past decade? No. Has the famous antitrust exemption cited by Pelosi been passed recently? No.
The well-written conservative blog No Oil for Pacifists had a good recent post on Insurance and Antitrust. The author points out that the motivation for the 1945 McCarran-Ferguson Act was the result of a prior year Supreme Court decision classifying insurance as interstate commerce (i.e., subject to federal laws). Let's not forget in 1945, the Congress and Presidency were controlled by Democrats. The exemption was to enable insurers to pool loss-related data for purposes of more scalable actuarial analyses and to facilitate reinsurance (i.e., insurance companies hedging their risks). This exemption, if anything, has increased industry efficiency and is pro-competitive. The post further points out that the exemption is narrow in scope, state regulation has retained its lead role and responsibilities, and the U.S. government continues to scrutinize within-industry mergers using classic antitrust criteria.
