Health Care For America Now

Yesterday I had a quick chat with David Balto from the Center for America Progress, an antitrust attorney in the private sector, and former Policy Director of the Federal Trade Commission, about the piece I put up on what repealing the anti-trust exemption for the health insurance industry would do. He had a few key points to make. (The following is lightly edited.)

First, he made it clear that repealing the anti-trust exemption is essential to making health reform work:

The market is broken right now. The market is highly concentrated with most markets controlled by a monopoly or duopoly. As a result profits are skyrocketing, along with costs. This is a market that's tremendously broken.

The McCarran-Ferguson antitrust exemption makes a difference when there are several competitors in a market who use it to coordinate activity that might otherwise be illegal. But when you're a monopolist like the insurance companies, you don't have a competitor to collude with, so the insurance industry hasn't needed the exemption because they don't compete with anyone now.

However, that's set to change.

The goal of health reform is to enable competition to finally break out in these markets. If it does break out, then we have a really serious problem because the insurance companies can use the McCarran-Ferguson exemption to stifle competition in ways that would otherwise be illegal because they're exempt from anti-trust regulation.

In other words, creating a public health insurance option to compete with the insurance companies is only the first step. Unless we repeal their anti-trust exemption as well, they will be able to engage in all sorts of anti-competitive deceptive and fraudulent practices to drive out competition and keeping screwing me and you over.

Balto made another point, too, about what repealing this exemption would do for people:

The McCarran-Ferguson Act [the name of the anti-trust exemption] today serves as an obstacle to anti-trust and consumer protection enforcement by the federal government, because if you try and bring federal lawsuits, they will be stifled by McCarran-Ferguson. For example, the Ingenix suit [where UnitedHealth had to pay $350 million in a settlement concerning price fixing and fraud] was brought by the state of New York. If that same suit was brought by the Federal Trade Commission [the federal agency that handles anti-trust issues], insurance companies would have defended their conduct under the McCarran exemption.

So, the FTC has been handcuffed in trying to protect consumers against anti-competitive behavior by the insurance industry

To sum up, eliminating the McCarran-Ferguson exemption is essential to making health care reform work. Without it insurance companies can stifle the competition reform is intended to create.