Why Real Health Insurance Reform Will Not Happen…

According to White House Advisor, David Axelrod, the Health Care bill that is about to pass the Senate will be a major win for the American people. He said yesterday on Meet the Press:

It’s going to help people who don’t have insurance, including small businesses who can’t afford it or people who don’t get it through their employer, get it at a cost they can afford.  It’s going to extend the life of Medicare and give seniors some, some more support in terms of prescription drugs and better care…

The market sees this as a big win for the health insurance industry. This means that investors see this as a big win for more profits at the insurance companies.

Health Insurance Companies Stock Performance Over the Last 12 Months

While aspects of the bill sound good, like removing the pre-existing condition barrier and insuring the un-insured etc., all we are doing is the traditional Washington DC shuffle game. We shuffle money from taxpayers to the government, who pays insurance companies. Then we also shuffle money directly from health care consumers to pay health insurance companies. The result is a huge windfall for insurance companies.

What I believe the challenge with the state of the health care in the USA is the lack of a consistency between states. Allow me to provide a brief history lesson.

In 1944, United States v. South-Eastern Underwriters Association, 322 U.S. 533 was a Supreme Court case that held that the Sherman Act, the federal antitrust statute, applied to insurance companies.

Following this decision in 1945 The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015 was made a law which:

  • exempts health insurance companies from the federal anti-trust legislation
  • allowed the states to regulate health insurance

Now the interesting thing about this is that Health Insurance companies as a result of this law are not subject to anti-trust regulations that companies like Microsoft and even Proctor & Gamble have to abide by. Yet, on the other hand, because of State by State regulation, they are not able to easily enter a state market and provide competition or even common plans among all 50 states. This adds unnecessary bureaucracy and cost while limiting competition in states which would drive premiums and costs down. We need one central (Federal) regulating body to set minimum standards for insurance plans and be the watchdog for protecting the public. This will allow all health insurance companies to compete in every state and reduce the health insurance oligopolies that exist in many states today.

It is time for Congress and the President to repeal the McCarran–Ferguson Act and let market forces help drive down cost and premiums for all of us. Instead, with the Senate bill we are about to hand them 30 million more subscribers, with no real incentive to drive down costs or premiums.

– Glenn



One response to “Why Real Health Insurance Reform Will Not Happen…

  1. Stated Goals of the Administration

    1. Reduce the cost to the average person paying insurance
    2. Expand coverage to those who don’t have it or can’t afford it
    3. Reduce the cost of healthcare to the government

    The actual bill

    1. COB says it will result in an increase of premiums to the current people receiving healthcare.
    2. COB says that the cost for a government subsidized option would likely be more than the cost of private insurance.
    3. Benefits don’t kick in for 2-3 years so we pay additional taxes for 2-3 years and no-one additional is covered.

    The sad thing is that this bill has nothing to do with Healthcare and everything to do with a budget shell game.

    The govt cannot afford to pay for the healthcare that it currently provides, not even including the people they want to cover – what to do – raise taxes.

    But since they could not raise taxes enough to actually pay those bills, because people would take up arms and throw tea in the harbor, they delay coverage for several years but collect some taxes in the mean time.

    Then the administration cuts back on medicare to cover its budget shortfall.

    The net – a feel good bill that raise taxes to cover other govt spending in the next 2-3 years, does not actually increase coverage for anyone for 2-3 years, reduces the medicare outlay, and those who are not paying attention think that something good actually happened.

    Are we all just too stoned to notice?

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