Baseball and Health Insurance
One of the most essential roles of government is to maintain competition in the marketplace and prevent monopoly.
Without government oversight, larger companies can work to stifle competition and collude to fix pricing. This is why the federal government has been granted regulatory power, in the form of antitrust laws.
It is illegal for companies to fix prices or conspire to limit competition under federal antitrust law, which is why consumers enjoy an array of choices when making a purchase decision. Whether buying groceries; a car, or even a pencil, consumers benefit when companies compete for business. When congress surrenders its oversight role, competition can be compromised.
In 1944 the Supreme Court ruled that health insurance was a form of commerce, and was therefore subject to antitrust scrutiny. Prior to this ruling, the insurance industry had managed to convince congress that the sale of insurance was not commerce, and should be excluded from anti-trust enforcement.
Since the health insurance industry failed to succeed in court, they looked to congress to maintain their monopoly. It didn’t hurt that, like today, the insurance companies were heavy contributors to congressional candidates.
In 1945, in an historically unprecedented move, congress approved the McCarron-Ferguson Act, which restored the monopoly that the Supreme Court had stripped away the year before! Ever since, the health insurance industry has been shielded from federal prosecution for price-fixing, collusion, bid-rigging, and carving out protected markets.
“There are only two industries with that (antitrust) exemption: insurance and Major League Baseball. If it ever had a rationale, it’s no longer operative.” – Rep. Diana DeGette (D-Colo.)
In order for free market to benefit customers, there must be competition. The McCarran-Ferguson Act specifically limits competion in the health insurance industry. In effect, congress created an exclusionary market, which benefits existing companies by allowing them to fix pricing and stifle competition. Indeed, if you were to design a market that would benefit industry to the detriment of the public, you might very well use the health insurance market as your blueprint.
Many people believe that the health insurance industry illustrates how the free market system has failed us. What they fail to consider, is that the health insurance industry really demonstrates how congress has failed consumers. Congress granted health insurance companies an anti-trust exemption, which specifically limits competition and encourages collusion.
Because congress has perverted the free market system with the McCarron-Ferguson Act, many would argue that congress must now take over the health insurance market entirely and create a single payer system. There are two flaws in this logic.
1) Congress actually is responsible for the health insurance woes, because it was congress that handed the insurance industry the antitrust exemption. Why would we entrust the very same institution that perverted the free market with usurping it?
2) We already have very clear examples of government run single payer systems, and they aren’t very encouraging. Consider Medicare, which pays out more than it takes in and is slated for insolvency in 2017. Add to that the Social Security program which features a trust fund that has been looted by congress and is headed for collapse in 2037.
Nothing speaks so clearly as the facts. The fact is that no other industry – aside from baseball – enjoys the government created monopoly that congress handed to health insurance. It is because of this exemption that consumers are forced to shop in a protected market.
Christine Varney, who heads the anti-trust division for the Justice Department depatment put it well when she said;
“Repealing the McCarran-Ferguson Act would allow competition to have a greater role in reforming health and medical malpractice insurance markets than would otherwise be the case.”
Posted by public
on February 19, 2010. Filed under economy,News and Opinions by Denning Hardin,Opinion Editorial,Politics,US Business News,US Politics,WorldNewsVine.
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7 Responses to Baseball and Health Insurance
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maschwar
February 23, 2010 at 10:31 am
Good article. It really is going to take more than law and regulation to fix the problem. There needs to be a major attitude adjustment towards single-payer healthcare and I just do not think that this can or will happen. We have to get over this unmitigated fear of Socialized Medicine. There is nothing wrong with it!! We would all live healthier, more productive lives.
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acrimony
February 23, 2010 at 9:56 pm
I wonder why you feel we need to socialize medicine? Is it somehow different than housing, or groceries, or clothing? Should we socialize all necessities? Or only medicine?
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Scott W.
February 27, 2010 at 9:39 pm
Of course it took the Democrats to finally repeal the insurance companies exemption from federal anti-trust laws… of course, that was the house, now that it moves to the senate I am certain some self-centered, self-righteous gop whacko will step in the way of that ever happening…
So acrimony, I take it your stance is that only rich people have earned the right to the best medical care, a long and prosperous life, and poor trash just simply deserve to die because they cannot afford the same care as the rich ruling class..
that would explain how it is that the GOP managed to successfully run this economy into the ground via borrowed cash from the Communist Chinese…
how American of you
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Denning
February 27, 2010 at 10:45 pm
Scott W. says:
“So acrimony, I take it your stance is that only rich people have earned the right to the best medical care, a long and prosperous life, and poor trash just simply deserve to die because they cannot afford the same care as the rich ruling class..”
So Scott W., it sounds like your not very skilled at interpreting my stance. Would you like me to tell you, or would you prefer to hazard another guess?
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Editor
March 1, 2010 at 8:05 am
A reminder to keep it civil and that all posts now require email verification due to the use of phony email addresses
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Scott W.
March 1, 2010 at 8:09 am
You need not explain a thing to me Denning your remarks are surprisingly contradictory
[quote]I wonder why you feel we need to socialize medicine? Is it somehow different than housing, or groceries, or clothing? Should we socialize all necessities?[/quote]
Duh, let’s see, food stamps, rent supplements via welfare, and various programs such as WIC…. all very “non-socialized” programs… as I say, a little research before the insert foot maneuver
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Denning
March 5, 2010 at 1:19 am
Your comparison is not analogous. Food stamps do not socialize the grocery industry, they merely provide sustenance for the poor. If the healthcare bill were to give “health stamps” to the poor, I could see the comparison. But this bill would put the govt in the position of producing healthcare insurance, not merely aiding the poor.
I’m sure you can see the difference. No?
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