The Reasoned Review

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Health Insurance Anti-trust Exemption

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Matt Taibbi has one of the most lucid posts on the recent health-care scandal I’ve seen recently.

You may remember the California Anthem Blue uproar that occurred a week or so ago, wherein they arbitrarily and unilaterally jacked up their prices almost 40%. Taibbi asks the logical question – “Why can’t California customers just switch to another, cheaper provider?” – and then answers it: “Because they have no choice.”

You see, as it turns out, health insurance providers are exempt from anti-trust legislation, which means they can hold veritable monopolies over huge areas and no one can do a thing about it. This was certainly news to me.

Dating back to 1947, what was supposed to be a “temporary” exemption quickly became a permanent loophole in the Sherman Anti-Trust legislation.

As Taibbi says:

This is why insurers (especially insurers with large market shares in small states) are easily able to gouge customers and deny coverage. There’s really no legal mechanism for preventing the firms from getting together and arranging price-fixing and other outrages. In a normal market customers would be able to get better coverage and cheaper rates from a competitor, but insurance is really more like a series of competition-free fiefdoms where the customers can’t go elsewhere for a better deal.

The exemption is known as the McCarran-Ferguson amendment, and so long as it’s still on the books health-care providers will continue to have a monopoly over large swaths of land. This is yet another reason why the “individual mandate” in Obama’s health-care plan is so goddamn offensive. “Reform” is impossible without repealing McCarran-Ferguson. How many of you think that’s likely?

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