Democrats Try to Hit the Insurance Industry Where it Hurts

Harry Reid is telling the Senate Judiciary Committee that the real reason health insurance is so expensive is that they're evil monopolists, and we need to repeal their anti-trust exemption:

The law, the McCarran-Ferguson Act, is often cited by Mr. Reid and other critics of the health insurance industry as a reason why coverage can be so expensive for many people. They say the law allows insurers to monopolize markets and fix prices in ways that are usually illegal.

"Since 1945, the insurance industry has enjoyed exemption from federal antitrust laws because of the McCarran-Ferguson Act," Mr. Reid said. "Pat McCarran, who was the senior senator from Nevada at the time, lent his name to this piece of legislation. Although we're both Nevadans, I'm not sure what Pat McCarran had in mind when he pushed this bill. And if Pat were around today, he couldn't be happy with the state of the insurance industry."

"Providing an exemption for insurance companies to antitrust laws has been anticompetitive and damaging to the American economy," Mr. Reid continued. "Health insurance premiums have continued to rise at a rapid rate, forcing businesses to cut back on health insurance coverage and forcing many families to choose between health insurance and basic necessities."

He added: "Insurance companies have become so large they dominate entire regions of the country. They have become so powerful they block start-up businesses from entering the market, and they put smaller companies out of business. They have become so dominant that they dictate business practices. They are so influential that they exert tremendous influence over public policy."

This is supposed to be payback for that report saying that premiums were going up under the Baucus bill.  Good luck with that.  As I understand it, one of the prime causes of excess concentration in the health insurance market is state level regulation, not some sort of price fixing agreement.  When the regulations make compliance too expensive, or make it hard to operate at a profit, the companies with the smaller client bases exit the market, especially if they have sister companies outside the state. 

In principal, I'm in favor of anti-collusion laws, though in practice, anti-trust cases are more often a weapon used to quell competition, rather than an actual benign force in the market, and by the time the case has wrapped up, they're usually moot.  (See, AT&T, IBM, Microsoft).    And I certainly don't see why insurance companies should have an exemption from whatever laws we do have.  But it's hard to escape noticing that this basically amounts to political extortion, which is not the way our laws should be used.

Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In