Crooks and Liars:
John Conyers and some allies on the House Judiciary Committee have come up with a fabulous way to get the insurance industry in line - by threatening to remove their anti-trust exemption.
Many people don't know that the insurance industry, under the McCarran-Ferguson Act of 1945, has a broad anti-trust exemption that facilitates regional monopolies. The Act allows states to regulate the insurance business instead of the federal government, but also allows that, as long as the state regulates the industry, federal anti-trust laws would not apply.
As a result of this exemption, states have seen markets for health insurance where one or two companies predominate. In the state of Maine, Wellpoint controls 71% of the market. In North Dakota, Blue Cross controls 90%. Using the Herfindahl/Hirschman Index, a metric for market concentration, a 2007 study by the AMA found almost every health insurance market in the United States is highly concentrated.
"This legislation would specifically prohibit price fixing, bid rigging, and market allocation in the health insurance industry," said Conyers. "These pernicious practices are detrimental to competition and result in higher prices for consumers. Conduct that is unlawful throughout the country should not be allowed for insurance companies under antitrust exemption. The House Judiciary Committee held extensive hearings on the effects of the insurance industry’s antitrust exemption throughout the 1980s and early 1990s. It became clear then that policyholders and the economy in general would benefit from eliminating this exemption.
"The legislation we introduced today is intended to root out unlawful activity in an industry grown complacent by decades of protection from antitrust oversight. In doing so, we aim to make health insurance more affordable to more Americans. I want to thank my friend Senator Leahy for his leadership on the bill and for working with the House on this joint introduction."
The US needs a massive round of trustbusting. I would've started with Wall Street, but this is just as good. Not only are monopolies a anvil tied to the foot of competition, but -- as we've seen recently -- they've become "too big to fail," which frees them up to try really risky and stupid strategies. After all, if the strategy's a bust, the taxpayer has to bail them out -- they're too big to fail. No matter how boneheaded and irresponsible they are, that taxpayer parachute is going to open.
We need to start enforcing antitrust laws again and we need to stop okaying mega-mergers. We've been way too stupid for way too long and it's time for us to wise up. As I said, insurance companies are as good a place to start as any.
