Beard begins by saying:
From this comment, I assume that you'd prefer the government to keep out of the anti-trust business as well. Right?
The whole point of capitalism is for there to be a competitive marketplace, in which sellers compete for the attention of buyers by improving value of their product. Right? This means that if a company, or a small group of companies, figures out a way to game the system and maximize profits without improving value, then they are violating the reason why we are so fond of capitalism. Anti-trust laws were created for exactly this reason. By leveling the playing field, the government can ensure that the capitalist system is a competitive one, not a collusive one that simply exploits the customer and maximizes profits.
He (I’m making a gender assumption here based on handle) then goes on to discuss how insurance companies make a profit - taking in more revenue than they pay out - and how they can game the system by selling health insurance only to healthy people and by refusing to pay claims if their insured have the temerity to actually become ill. He goes on:
Given the structure of corporations, if not prevented by law, they will do these things, just like a 2-year-old will try to swipe candy from the supermarket if you don't make him put it back.
Therefore, we need to level the playing field, establishing rules by which insurance companies must play. Limiting the government's role in the health care process is like unleashing the 2-year-old in the candy store with no rules. This will not end well.
He then notes that customers can also game the system and concludes by advocating a single-payer system.
So let’s begin. My wanting to limit the government’s role in the health care process is not equivalent to my wanting to eliminate the government’s role in the health care process. I believe capitalism is the best engine ever devised for improving people’s material well-being. I also believe that unrestrained capitalism is a nightmare. Thus I’m a big fan of anti-trust regulation for the same reason Beard supports it: to level the playing field.
The issue of how much government regulation is necessary to produce that level playing field is an ongoing one and is one of the continuing points of dispute between the Left (which usually believes more is better) and the Right (which supposedly believes less is better but also has a Main Street segment that looks unfavorably on Big Business that is too big). It seems to me that the trick is to have enough government regulation to keep the playing field level while avoiding regulation that itself tilts the field (this is the crux of Zingales’ distinction between being pro-market and being pro-business) or that shuts down the game completely (makes doing business so difficult the industry dies).
So I have no objection to government (at some level) regulating the health insurance industry. However, the belief that the regulations embedded in health care/insurance reform are benign government moves designed solely to level the playing field is not shared by all observers. Furthermore, we must consider that the proposals embedded in various health care/insurance reform proposals go far beyond mere government regulation. In those proposals we also see:
- government protection of and/or support for some industries. Under the Baucus bill some health care industries suffer from excise taxes on their products while others do not. In the Rich article I reference in my original post, Rich points specifically to a lobbyist’s success in convincing the government to protect drug prices. These are hardly examples of anti-trust regulation designed to level the playing field.
- government competition with industry. This is what the Public Option explicitly is. We can have endless discussions about whether the Public Option will compete fairly against private insurers (Greg Mankiw’s points still need addressing) but even if through some miracle it does compete fairly, it is still competition. Similarly, the government -initiated and backed co-ops are competition and there is no pretense they will compete fairly. Government competing with private industry goes far beyond field-leveling regulation.
- government destruction of an industry. The Single-Payer plan will destroy the private health insurance industry. Under the Single-Payer bill I know of, private health insurance companies will be restricted to providing insurance for non-essential medical care:
SEC. 104. PROHIBITION AGAINST DUPLICATING COVERAGE.
(a) In General- It is unlawful for a private health insurer to sell health insurance coverage that duplicates the benefits provided under this Act.
(b) Construction- Nothing in this Act shall be construed as prohibiting the sale of health insurance coverage for any additional benefits not covered by this Act, such as for cosmetic surgery or other services and items that are not medically necessary.
I am unable to figure out how an insurance company could make money selling policies to cover face-lifts.
Even if we assume a Medicare For All that allows people to buy supplemental insurance - that is, the government provides a certain menu of health services and private insurers provide the rest - I hold out little hope for the private health insurance industry. Assuming government health insurance is decent there would be little room for private insurers. Perhaps a very small industry could survive by selling policies that allow access to unproven and very expensive treatments but I doubt it.
On the other hand, it is true that we could consider the destruction of an entire industry an example of leveling the playing field. A bit scorched earth, perhaps, but leveling nonetheless.
So those are my thoughts on how the proposed health care/insurance reforms don’t exactly fall into the realm of government regulation for anti-trust purposes designed to achieve a level playing field. The other point I want to make is that my post was about the Federal government’s role in the health care process. Insurance companies are already regulated, primarily at the State level. Some States - like my New Jersey - regulate them very heavily. Others regulate them very lightly. I see no reason why insurance company regulation needs to move to the Federal level. Nor do I see any reason why government provision of health insurance - through a Public Option, government-initiated co-ops, or a Single-Payer system - needs to be implemented at the Federal level. If State A wants a Single-Payer system, they should develop one. Similarly, State B may want a Public Option; State C may want individual mandates; State D may want pre-existing condition exclusions removed; State E may want government-backed co-ops; and State F may want the wild, wild west when it comes to insurance company regulation. There’s no reason to impose a one size fits all policy across all 50 States and 300 million or so people.
In his health care speech on September 9, Obama referenced Alabama:
So let me set the record straight. My guiding principle is, and always has been, that consumers do better when there is choice and competition. Unfortunately, in 34 states, 75% of the insurance market is controlled by five or fewer companies. In Alabama, almost 90% is controlled by just one company. Without competition, the price of insurance goes up and the quality goes down. And it makes it easier for insurance companies to treat their customers badly – by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates.
My basic reaction to his claims about Alabama is “so what”. Alabama has a democratically elected State government. The citizens of Alabama, via their State government, can decide if they want to use government resources to provide competition via a public option or to provide incentives for other insurance companies to enter the market; they don’t need the Federal government to tell them health insurance is being mishandled in their State. Furthermore, the Great State of Alabama - like the Great State of New Jersey - can decide what type of regulation it wants to impose on the health insurance companies operating within its borders. State governments are just as capable as the Federal government of outlawing practices like cherry-picking and overcharging. Obama’s statement is, at bedrock, a remarkable display of arrogance: States (perhaps especially “backward” States like Alabama) are not competent to manage their own affairs and must be both chastised and assisted by the Federal government.
Finally, I want to consider Beard’s final words:
... it is far more straight-forward to simply go to the SIngle Payer system, covering everyone by law, and just pay for it with taxes. Good example of taxes paying for tangible value for every taxpayer.
I have no reason to believe that a Single-Payer system will provide me with tangible value. I am very happy with my health insurance and my health care; I have never had a procedure so much as questioned much less denied. Since it is impossible for my health insurance to get any better, I am virtually assured that under a Single-Payer system I will receive an inferior product. So while I am perfectly willing to throw some tax money in the pot to help those who cannot afford health care and/or health insurance purchase it, I am not willing to jeopardize my health care to do so. Considering the reportedly high levels of satisfaction with health care in this country, I don’t imagine I’m the only person who feels that way.
The Reality Check - Raises some interesting points about the difference between a business being insured by a health insurer and that business being self-insured and merely using a health insurer to do the paperwork. Now that’s a whole other can of worms in this debate.
Blue Cross a good monopoly - Some further information - good and bad - about Alabama Blue Cross Blue Shield. It’s worth nothing that Alabama Blue is a non-profit. You know - like the Public Option and the government-initiated co-ops.
Fact-Checking the President on Health Insurance - Some info about Alabama Blue among other things.