(Cross-posted from Think it Through)
Hypocrisy is once again on display in the United States Senate. Creating competition in the health insurance industry is the one goal that Congressional Democrats and Republicans can say they agree upon, even if they disagree about how to bring about this competition.
Senators have been scrambling to create new and ever-more complicated systems - public insurance option, and cooperative exchanges - that only theoretically would infuse the health insurance markets with more competition.
But the truth is that we can lower insurance rates immediately by repealing the McCarran-Ferguson Act of 1952, which has allowed insurance companies to operate outside the federal antitrust laws for the past 57 years. So far, the Senate has been unwilling to end the insurance industry's baseless exemption from the antitrust laws.
A recent statement by Senator Evan Bayh exemplifies the doublespeak that characterizes the Senate pronouncements on the health insurance industry. "Normally in our country we like the free market system to operate and to efficiently allocate resources. Now from time to time to where there is a problem with that if you have something called a natural monopoly, well then the government steps in to regulate that to make sure they don't gouge consumers and if you have to use the antitrust laws or other steps to make sure that there is robust competition, that people get the choices and the lower costs that they deserve, well you use the law for that purpose. So I think we ought to try, first, aggressive market reforms to give that competition and lower price that the American people want. I think that is what the President was alluding to in his speech. If that does not work, well then there is an appropriate role for government to step in, but that should not be the first choice. That should be only if the free market cannot be reformed sufficiently."
The clarity of remarks like those of Senator Bayh is one reason many Americans are indeed skeptical that Congress really means what it says about competition. They have good reason to be skeptical.
The antitrust exemption for insurance left it up to each state to regulate insurance carriers. Insurance commissioners and commissions in the states have been notoriously cozy with the insurance industry. The result has given us health insurance monopolies in some states and price agreements among insurance companies in others to keep prices high. Ronald Brownstein recently reported in the National Journal "the American Medical Association reported recently that insurance markets lack robust competition in more than 90% of metropolitan areas; in 16 states one insurer writes at least half the policies."
I recently asked a Washington lobbyist who spent years on the Senate Banking Committee if anyone over the past two decades ever introduced legislation to repeal the McCarran Act. His answer: "Sure a few senators, but never anyone on the banking committee." In other words, the senators such as Banking Committee Chairman, Democrat Chris Dodd of Connecticut, who were in a position to change the laws, who could move a bill through the Senate, were too close to the insurance industry to want to upset the status quo.
Won't someone in the Senate step us and say: Let's do something simple that will reduce insurance rates immediately. Let's end the fiction and acknowledge that insurance companies are national businesses (one is even called "nationwide") that should be subject to the national antitrust laws.
Repealing McCarran-Ferguson would be a simple, effective solution to lower insurance rates.
It would be good for the public but a little unsettling for the senators who speak sanctimoniously of the promise of competition, but are unwilling to act to keep the promise.
John Russonello is a partner with Belden Russonello & Stewart: Public Opinion Research and Strategic Communications in Washington, DC. He writes the blog "Think it Through."