● The second, much more difficult way if tried today, is a "single payer" plan. This would be too much to handle politically for now, since it would require massive changes to the economy and to state governments. The health insurance industry is presently controlled by 50 separate state jurisdictions and is a major part of their insurance departments, which regulate insurance products. A federal law, the McCarran-Ferguson Act, was passed 64 years ago primarily in response to the Supreme Court case of United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S. Ct. 1162, 88 L. Ed. 1440 (1944), which ended a massive commercial insurance cartel. The law provides that the "business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business." While it does not prevent the federal government from regulating the insurance industry, it provides only that states have broad authority to regulate the insurance industry unless the federal government enacts legislation specifically intended to regulate insurance and to displace state law.
● This leads to the third way the federal government could intervene. In South-Eastern Underwriters, the High Court held that an insurance company that conducted substantial business across state lines was engaged in interstate commerce and thus was subject to federal antitrust regulations. The federal antitrust acts, however, only apply to the business of insurance to the extent that such business is not regulated by state law. Thus, the present Republican proposals to "increase competition" by allowing people to purchase their insurance across state lines, is both misleading and fundamentally anathema to their own base. Buying insurance across state lines would make health insurance interstate commerce once more, the McCarran-Ferguson Act would have to be repealed, and all of the business of insurance would be effectively placed under federal anti-trust scrutiny to be consistent with the Supreme Court 's 1945 decision. Hardly likely today, and a fiction intended solely to confuse the public (like to long-gone "Harry and Louise" fiction).
It is true that the antitrust division of the federal Justice Department has been quite sleepy for many years, especially as the "managed-care industry" has burgeoned under the guise of "saving on healthcare costs while improving the quality of care." That never happened. Healthcare ":costs" went up because profits were taken out of the healthcare system for investment elsewhere. Healthcare "prices" went up because the healthcare industry is a market failure. The insurance industry created a situation where the market does not efficiently allocate resources to achieve the greatest possible good. HMO and insurance company managed-care denials, have forced the many nonprofit hospitals to close beds or to raise needed money from contributors taking tax deductions and reducing further the tax base. It has not been healthcare "costs" that have been "saved" but healthcare profits from soaring premiums used by insurers to invest outside of the healthcare system. Even "Medicare Advantage"--the windfall given the commercial companies by the Bush administration--is allowed 12 percent more than traditional Medicare on its premiums (see below). This removal of healthcare-generated dollars for investment elsewhere is the cornerstone of the "waste, fraud and abuse" that plagues the broken system of healthcare in this country.
Medicare administrative costs have
traditionally been 3-4 percent of its total expenditures, while the commercial
insurance industry looks like this:
In
the following order, left to right: Health Net; Health Care Service Corp; Humana; WellPoint;
United Health; Coventry; Aetna. All companies listed are among largest eleven
insurance companies as measured by medical enrollment in all models of fully
insured and self-insured health plans. Does not include specialty benefit
enrollment.
Source: July 15, 2009, THE COMMONWEALTH
FUND.
Source: Financial data for UnitedHealth, WellPoint, Aetna, CIGNA, Humana,
HealthNet, and Coventry is from company SEC Form 10-K filings.
Note: The private insurance companies' "administrative costs" and "insurer profits" are admittedly 9 percent of "The Health Insurance Dollar" (see WellPoint's half-page ad in the N.Y. Times, September 17, 2009), three times Medicare's administrative costs. And a "public option" choice makes zero profits for insurers' shareholders. Need we say more?
Yes we do. Here's the trick: Of course, there is no free lunch.
Where managed care rears its head, profits rise and benefits slide. The
"Medicare Advantage" (private plans) enrollment, which appeared to grow from 5.4
million in 2005 to
When Senator Bill Nelson (D-FL), on September 24, 2009, attempted to save "seniors" from losing their advantages and to limit Medicare Advantage because of its windfall to the pharmaceutical industry under Medicare Part D, he made clear that he was offering only a "grandfather clause" that would exempt the those seniors who had enrolled in Part D from losing what they felt they had gained. It was about giving Medicare beneficiaries who were "dual eligible lower drug prices;" i.e., those who benefit from if they were also on Medicaid, who get a discount. It would have ended the windfall given to "Big Pharma" by the Bush Administration and ended the so-called "doughnut hole"; the total annual out-of-pocket spending threshold, only after which the enrollee is entitled to catastrophic coverage under a Part D plan . . . an intolerable economic gap for many of the elderly. Senator Nelson's amendment was defeated 10-13, but only after he said he would bring it up on the Senate floor, anyway, at the time of the final vote.
To read more about how the "managed
care industry" takeover of our healthcare system became a market failure:
