Senate committee approves health care plan

[DGuller]

Wait, wait, wait.  Repealing the antitrust exemption makes sense; why didn't they start with this in the first place?  Not enough glitz, glamor, and HOPE?

It makes sense if you don't know much about the business of insurance.  With some knowledge it becomes far less clear on what should be done about it.

[KRonn]

Wait, wait, wait.  Repealing the antitrust exemption makes sense; why didn't they start with this in the first place?  Not enough glitz, glamor, and HOPE?

It would seem to have made sense, actually. Probably didn't want to go there before since the insurance companies, big lobbies and all, would have been more troublesome in the health care debate. But it now appears more like it's being used as punitive and retribution instead, even though that may not be the case. But coincidental? That seems a bit dubious now. The insurance companies are easy to vilify anyway, rightly or wrongly. 

[KRonn]

Interesting. No surprise really and to be expected, as those who stand to make/lose out or new players in the new scheme of things jockey for position and influence.

[size]
http://www.cnn.com/2009/POLITICS/10/15/health.care.lobbying/index.html

Millions spent to sway health care opinions

CNN) -- The amount of money lobbyists are spending on health care reform could break records, and now that the five bills before Congress have cleared committee, that spending is expected to go into overdrive.
Lobbyists are hitting the Capitol to schmooze lawmakers.

Lobbyists are hitting the Capitol to schmooze lawmakers.

"It is sort of a Super Bowl of lobbying for health care reform. The lobbyists are winning so far. But the game's not over yet," said Rep. Jim Cooper, D-Tennessee.

As lawmakers work to come up with a plan that can make it to President Obama's desk, industries and interests close to the issue are digging deeper into their pockets to sway public opinion and those in office.

The insurance industry launched its first air attack with an ad aimed at seniors.

"Most people agree we need to reform health care, but is it right to ask 10 million seniors on Medicare Advantage for more than their fair share? Congress is proposing more than $100 billion in cuts to Medicare Advantage," the ad says, referring to the private insurance plan Medicare offers to some recipients.

The industry's trade group America's Health Insurance Plans put out the ad. Video Watch more on the big bucks spent on health care lobbying »

In addition to the battle with the insurance industry, liberal reform supporters and armies of special interest groups are entering the fray.

And there's also a ground offensive: Lobbyists hitting the Capitol to schmooze lawmakers. Members of Congress feel they're getting slimed.

"I rise just days before Halloween to unmask the insurance industry," said Rep. Donna Edwards, D-Maryland. "Now, we see the industry and their lobbyists for what they are, a little shop of horrors."
Don't Miss

    * Pushback grows against insurance industry report

The health care sector has spent $263 million this year lobbying Congress for changes to reform plans, a government watchdog group estimates.

"This is one of the biggest lobbying pushes that we've seen on a single issue in U.S. history," said Dave Levinthal, communications director for the nonpartisan Center for Responsive Politics.

There are more than 3,000 people registered to lobby about health care, almost six lobbyists for every member of Congress.

Many of the lobbyists are former members of Congress and staffers from both sides of the aisle.

"It's like a sports team. If you want to put together a good team, then you're going to have to hire some pretty big-dollar players," Levinthal said.

Cooper, who opposed President Clinton's health care plan in the 1990s, says President Obama put himself in a tough position when he invited the health care sector to help craft reform.

"There are a number of groups that are threatening to revolt on the White House deals and Congressional deals," Cooper said.

Earlier this week, AHIP released a controversial study it commissioned claiming the Senate Finance Committee bill would result in premium increases of up to $4,000 for a family. However, the study conducted by the consulting firm PricewaterhouseCoopers did not take into account some of the proposed subsidies that would be offered to low-income families to help them pay for insurance, and the firm has said such provisions would offset some of the impact it estimated.

Republican leaders in Congress are quoting the study, predicting higher premiums for consumers. But Congressional Democrats and the White House say the analysis is flawed.

Finance Committee spokesman Scott Mulhauser called the analysis "a health insurance company hatchet job -- plain and simple."

Some top Democrats including Senate Majority Leader Harry Reid are swinging back at the insurance industry. Reid testified before the Senate Judiciary Committee, asking them to repeal an antitrust law that has given certain protections to the insurance industry and lets them reap in huge profits.

Reid's office says the law allows insurance companies to huddle in a room and come up with rates. They say that other than Major League Baseball, no other industry has this exemption.

If lawmakers were to repeal this law, the McCarran-Ferguson Act, it could cut into the health insurance industry's profits.

Reid's office says the timing of the attempts to appeal the law -- shortly after the health care industry's report -- is just a coincidence.
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The industry, however, says the McCarran Ferguson law has nothing to do with competition in the market.

"The focus on this issue is a political ploy designed to distract attention away from the real issue of rising health care costs," the industry said in a statement.

[DGuller]

Watching or reading CNN's take on insurance industry makes my brain go dead.

[Caliga]

Watching or reading CNN's take on insurance industry makes my brain go dead.

[DGuller]

Just to provide a counter-point to the "repealing McCarran Ferguson obviously makes sense" arguments, let me describe what it is.  It is a limited exemption from anti-trust laws that allows insurers to co-operate when it is necessary for the well-being of the insurance market.  One example of when that is needed is sharing the data.  Most insurers do not have enough data on their own to calculate required premium with any sort of precision.  Pooling the data makes it easier, but obviously it can be seen as collusion, since a lot of companies determine their premiums from the same data.

What McCarran Ferguson doesn't allow is price fixing or collusion.  When you hear some Senator spouting off that insurance is expensive because insurers are legally allowed to collude, and you'll hear that A LOT, you should know that he has no idea what he's talking about.  Obviously some kind of price agreement can form implicitly due to data and model sharing, but that's a far cry from accusing the industry of having formed a cartel.  The fact that these accusations fly unchallenged is a sad indictment on both the politicians, and the media that repeats falsehoods uncritically.

[Berkut]

The problem is that laws like that, even if they do not intend to create that situation (price collusion) often provide cover for it anyway. If you let them, they will certainly collude, since it is in their interests to do so - and the law seems to give them the cover they need for that.

[DGuller]

The problem is that laws like that, even if they do not intend to create that situation (price collusion) often provide cover for it anyway. If you let them, they will certainly collude, since it is in their interests to do so - and the law seems to give them the cover they need for that.

Insurers are still subject to federal anti-trust laws when it comes to price fixing and collusion, which is why the exemption is called limited.

[Berkut]

The problem is that laws like that, even if they do not intend to create that situation (price collusion) often provide cover for it anyway. If you let them, they will certainly collude, since it is in their interests to do so - and the law seems to give them the cover they need for that.

Insurers are still subject to federal anti-trust laws when it comes to price fixing and collusion, which is why the exemption is called limited.

Of course - but are those law enforced? Are they enforceable, given that the insurers can just claim that their prices are not "fixed", they just happen to look that way because of the exemption that allows data sharing?

There is certainly *something* going on, with insurance companies posting incredible profits while expanding at an incredible rate. I don't know if it is price fixing and collusion, but it would not at all surprise me if that was the case.

[Admiral Yi]

Of course - but are those law enforced? Are they enforceable, given that the insurers can just claim that their prices are not "fixed", they just happen to look that way because of the exemption that allows data sharing?

There is certainly *something* going on, with insurance companies posting incredible profits while expanding at an incredible rate. I don't know if it is price fixing and collusion, but it would not at all surprise me if that was the case.

Are they posting incredible profits?

[DGuller]

Of course - but are those law enforced? Are they enforceable, given that the insurers can just claim that their prices are not "fixed", they just happen to look that way because of the exemption that allows data sharing?

There is certainly *something* going on, with insurance companies posting incredible profits while expanding at an incredible rate. I don't know if it is price fixing and collusion, but it would not at all surprise me if that was the case.

I wouldn't assume that "something" is going on, nor would I just take at face value the statement of politicians that insurers are posting incredible profits.  Historically, insurers have produced lousy returns on capital.  The industry's financial performance did improve in the recent years, but attributing it to a 65 year old exemption is a stretch.

As for enforcing the anti-trust law, I don't know, I'm not a lawyer.  Obvioulsy data sharing makes it easier to get away with price fixing if you set out to do it.  However, that would still be illegal, despite what some senators think.

[Berkut]

Of course - but are those law enforced? Are they enforceable, given that the insurers can just claim that their prices are not "fixed", they just happen to look that way because of the exemption that allows data sharing?

There is certainly *something* going on, with insurance companies posting incredible profits while expanding at an incredible rate. I don't know if it is price fixing and collusion, but it would not at all surprise me if that was the case.

Are they posting incredible profits?

I thought they were, but admit that was based on just what I have heard from talking heads. I imagine the real answer depends on who you ask.

[The Minsky Moment]

The problem with M-F is that is balkanizes supervision and makes the quality of regulation ultimately depend on the least competent, honest and dilligent of the 50 state insurance departments.

[DGuller]

The problem with M-F is that is balkanizes supervision and makes the quality of regulation ultimately depend on the least competent, honest and dilligent of the 50 state insurance departments.

Does it really do that?  The problem with state regulation is that passing the mustard with North Dakota regulators will not make it any easier for you to enter New Jersey market, for example.  It's a huge problem in itself, as you have to deal with 50 regulators instead of one, but at least it prevents the race to the bottom that you mention.

[alfred russel]

The problem with M-F is that is balkanizes supervision and makes the quality of regulation ultimately depend on the least competent, honest and dilligent of the 50 state insurance departments.

Can you explain--the applicable insurance regulator is going to be where the business is done, so there can't be a race to the bottom (except for niche markets like captives--where there definitely is a race to the bottom).