More on deregulation: A comparison
Posted on September 22nd, 2008 by Jason Rosenbaum in Profits Before People
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The similarities between financial deregulation and subsequent bailout and conservative proposals to further deregulate health care are too great to be overstated. Here's how the financial version has played out so far:
The financial industry was systematically deregulated (see Phil Gramm and the 1999 Gramm-Leach-Bliley Act) to allow less government oversight over the banking industry. Subsequently, the industry ran with the new rules, making obscene amounts of money by taking obscene risks.
When those risks turned sour, the banking crisis had become so large and so widespread that now, apparently, the government is the only one who can avert crisis by bailing them out - to the tune of $700,000,000,000 in taxpayer money.
If conservatives have their way, health care will turn out exactly the same way. Insurance companies will be deregulated, which will allow them to make obscene amounts of money. Instead of taking risks, they will insure less and less people under the new rules because they will now be legally able to only insure those people that make them a profit.
So, what happens to the rest? That's where the bailout comes in. Under deregulation, the ranks of the uninsured will grow. Government (and hospitals) act as the explicit firewall in this system (as opposed to the implicit one in the financial system) - more people will join public plans for the poor and/or elderly and more people will show up at emergency rooms uninsured. The net effect is the same: The corporations make a lot of money, and government foots the bill for the bailout.
Here it is, in chart form:
| Financial Bailout | Health Care Bailout | |
| 1 | Deregulate and take more risk | Deregulate and cover less people |
| 2 | Profit | Profit |
| 3 | Crisis! (too much risk) | Crisis! (too many uninsured) |
| 4 | Bailout with taxpayer money | Bailout with taxpayer money |
We don't want to repeat history, right?
Honestly, it's pretty simple. If we deregulate and provide less oversight to corporations - whether they be financial institutions or insurance companies - we shouldn't be surprised when they turn around and make as much money as they can without regard for risk. Just as deregulation only exacerbated the housing bubble (if not out and out caused it), deregulation will only exacerbate the problem we have in this country with uninsured patients and spiraling health care costs.
There is another way, of course. Regulate insurance companies harshly and make sure they are forced to cover everyone sufficiently and affordably. And while you're at it, make a real public health care plan (not a firewall) that people can opt-in to if they want. It will lower everyone's cost and help cover the uninsured. And it won't continue giving taxpayer money away to corporations.