In September, Rep. John Conyers and Sen Patrick Leahy introduced into their respective judicial committees legislation that challenged the exemption to federal anti-trust legislation enjoyed by health insurance companies.  Called the Health Insurance Industry Antitrust Enforcement Act, the purpose of this legislation is to ensure that “health insurance issuers and medical malpractice issuers cannot engage in price fixing, bid rigging, or market allocations to the detriment of competition and consumers.”  On Wednesday, theHouse Judiciary Committee voted to pass Conyers’ amendment out of committee with a 20-9 vote, including three Republicans offering their bipartisan support in revoking the anti-trust exemption for health insurance companies.

I get to talk to conservatives on a daily basis, and was informed yesterday that the efforts to repeal the health insurance companies’ antitrust exemption was simply legislative smoke (despite the bipartisan support) to propel our country on the slide towards a nationalized health care policy.   When I thanked him for warning me about the impending fascist doom, I was accused of being “ignorant.”  Hey, perhaps I was wrong to dismiss such concerns.  Maybe the antitrust exemption enjoyed by the health insurance companies is the glue holding our fragile democracy together!

Prompted, I did a little research.  Beginning with federal antitrust legislation, which was passed by the United States to prevent “trusts” formed between companies to corner or monopolize a certain economic market.  Monopolies were viewed as the direct antithesis to free-market capitalism, as by engaging in secretive deals regarding price-fixing or bid-rigging, efforts to provide innovative competition to these large trusts would never succeed.  According to liberal economic theory, competition and innovation leads to efficiency and reduced prices.  By cornering the market, monopolies do not provide such opportunities regarding reduced prices and result in an anti-competitive market with ever-increasing costs to the consumer.  Taking steps to protect consumer interests, Congress passed the Sherman Antitrust Act in 1890, followed by the Clayton Act of 1914. The text of the Sherman Act states:

“Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine….

Section 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine….”

These pieces of legislation were used by Presidents Theodore Roosevelt and William Taft to sure 120 companies for being uncompetitive (i.e. not capitalist enough).  These Acts, which are now codified under Title 15 of the United States Code, was used to justify a federal mandate in the late 1970s to break up the Ma Bell national phone system created by AT&T, creating numerous local and regional phone companies, allowing the explosive growth of the telecommunications industry in the decades since.

So, yes, as a rule, free market economics is to prevent any involvement of the government on any level.  However, ironically, antitrust legislation is used by the federal government to ensure that free market economics actually occurs, encouraging an environment that provides healthy competition for the benefit of the consumer.

Over the past century, U.S. federal antitrust legislation has been applied to every sector of the national economy.  And last I checked- despite heated rhetoric from the Right and the Left over the past decade- the United States has not slipped into a fascist dictatorship.  Market economics continues to be the ruling ideology, despite having the “Far Leftist ideologue” Obama in the White House.

Now, there are two exceptions to the antitrust legislation: Major League Baseball and health insurance companies.  While the possibility that revoking MLB’s antitrust exemption may also propel the country into a fascist dictatorship, that is for another day.  Instead, we’re focusing on the antitrust exemption enjoyed by health insurance companies.

So, why do health insurance companies enjoy antitrust exemption?  This exemption was granted to health insurance companies by Congress through McCarran-Ferguson Act, passed in 1945 that allows state law to regulate insurance business without interference from the federal government.  The federal government could apply antitrust laws only in situations of boycott, coercion, and intimidation.

So, there we go.  Thanks in part to McCarran-Ferguson, the federal government punted the issue of insurance regulation to state governments.  This was legally possible with Congress stating that as the antitrust legislation only applies to interstate commerce- and that health insurance does not fit the definition of “commerce”- they should enjoy an exemption to the antitrust laws.

Hm.  Health insurance companies not fitting the definition of commerce?  That might come as quite a surprise to a large number of people, who look at annual double-digit premium increases  and the fact that health insurance companies are publicly traded on the NYSE as evidence that health insurance companies fits the very definition of “commerce.”

At any rate, a result of insurance regulation being kicked to the states has led to a hodge-podge of standards regarding insurance- some states demanding tough regulations that are highly enforced, while others taking more of a a lax stance towards health insurance regulation.  This has resulted in states standing idly by while health insurance companies have monopolized within state borders, resulting in a situation where many consumers have limited options regarding the health insurance they can purchase.  As these state monopolies do not allow for the competition and innovation that would otherwise be provided by market economics, Congress has them squarely in their sites through the proposedMcCarran-Ferguson repeal.  Anybody who supports market economics should support the proposed repeal of McCarran-Ferguson as well, which explains the resistance by conservative Republicans, who have strongly been a proponent of ” corporate communism.”

Some conservative advocates could view insurance regulation as a “state’s rights” issue, and on the basis of that argument it could conceivably be suggested that federal regulations of health insurance is a creeping expansion of government power.  Thus necessitating the need to hide fearful under your beds.  That is, until you remember that federal antitrust laws apply to every other aspect of the nation’s economy, and none of us have started goose-stepping yet.  (Minus those who have spent their summer vacations attending various Tea Parties, of course.)

Besides, isn’t one of the often-repeated talking points offered by our friends on the Right that the restrictions on interstate purchasing of health insurance be relaxed?  Well, by golly, if such restrictions were to be relaxed, that would result in health insurance undeniably becoming an interstate commercial enterprise, and there would be no other option than to haveMcCarran-Ferguson repealed.  What those who cry “fascism” due to the Democrats (and Republicans) passing amendments through the Judiciary committees of both house of Congress don’t realize is that by repealingMcCarran -Ferguson one step is being taken closer towards the conservative goal of offering insurance across state lines.  (It kind of just makes you want to sigh andshake your head slowly in continued astonishment towards our right-wing friends who, to be blunt, are simply utterly confused.)  Of course, steps need to be taken to ensure that state monopolization by insurance companies aren’t replaced by regional monopolies.

After all, the entire end result of the proposed repeal is to insert market economics into a segment of the economy that has really suffered no such competition from free enterprise for over six decades.  Its funny how conservative Republicans brand themselves as supporters of free-market capitalist economics, but repeatedly- as in this case- demonstrate themselves as anything but.  After all, a monopoly should only remain a board game, and not an accepted economic situation supported by those on either the Right or the Left.

antitrust | health care | insurance | nazi