I was at a conference on free speech this weekend, and thus missed the excitement of balloon boy and other assorted tempests in a teapot. I did, however, catch bits of Obama's speech, in which he joins Congress in threatening to remove the insurance company's anti-trust exemption, as a not-so-hidden payback for their report on insurance premiums.
Why should I worry about this so much? Isn't this just libertarian hysteria?
I don't think it is. I think this is fundamentally about freedom of the press.
I know, I know--it's just an industry-funded study! How can I elevate that to "the press"?
Because the idea we have about journalists being some sacred, special group that has "freedom of the press" is, like the idea that militias=national guard, pretty ahistorical. Freedom of the press was not a right accorded to the profession of journalism, on the grounds of their sacred and responsible conduct, because there was no profession of journalism. Presses were owned by individuals, who engaged in all manner of speech, commercial and non. Freedom of the press was not the freedom to own a newspaper or magazine, and say what you wanted therein. It was the freedom to disseminate written speech.
I know that at least some of my readers are gearing up to point out that we do regulate commercial speech. But this wasn't commercial speech. It wasn't even speech by a corporation. AHIP is a legal trade association.
Threatening to strip their anti-trust exemption as a quid-pro-quo is the kind of thing that sounds cute until someone thinks up a way to do it to people on your side. Would it be okay for a Republican administration to threaten Democratic groups that say unpleasing things by promising to pass laws--however sound--that would decimate the fortunes of George Soros and other big backers? Or openly declare that if unions didn't stop issuing reports in favor of a higher minimum wage, the administration would have to revisit Taft-Hartley?
Though I'm fairly sure that the PWC report is right about the ultimate direction of the change in premiums due to health care reform, the methodology by which they arrive at that conclusion is not sound enough for me to rely on any of their conclusions. And I don't see much reason to defend the anti-trust exemption as a general matter--though the argument that this helps small insurers set rates correctly doesn't sound entirely crazy, either. But I am very sure that changes in the laws should never be wielded as weapons to punish speech that politicians don't like. If publishing reports with questionable assumptions were actually a crime, most of the people complaining about AHIP would be in jail right now.
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I agree with the point of the post, but can't muster much outrage because they're threatening to eliminate an exemption to a law that my firm has to obey.
However, this is blatantly threatening - not even thinly veiled. If Chucky Schumer wants to demonstrate some real bravery, he should threaten to ban all political contributions from insurance companies, their PACs and employees. Approximately as constitutional as his other threat (which is to say, not), and he'll have some skin in the game.
People starting talking about the anti-trust exemption a few months ago. Having it suddently come to the center, in response to bad faith by the insurers is just logical.* The only reason it hadn't been on the table all along was that Rahm** had a corrupt deal that guaranteed a favorable bill for the insurers. That deal falling apart is the best thing that's happened in the last month.
* AHIP is the result of insurance companies acting in concert. So were a zillion other nasty things, from Betsy McCaughey to millions of bankruptcies, but for some reason this is the one that got their attention. When an industry has a special, government granted right to act in collusion, and it's abused it for 60 years, you take away that right. It's just plain sense.
**Of course he had his boss's approval.
"Freedom of the press was not a right accorded to the profession of journalism, on the grounds of their sacred and responsible conduct, because there was no profession of journalism."
This is a regularly overlooked point. Freedom of the press is the freedom of the people to present free speech using the written word. It isn't the freedom of THE PRESS, as a distinct group of special people in a special profession who get special rights that the rest us don't have.
Except most people think there is a 'special press' that consists of the NY Times, CNN and Newsweek.
Why do they have an anti-trust exemption? Seriously, I sort of understand why baseball does, but why insurance companies? Is it to ameliorate the effects of state mandates, licensing and other regulations?
If anti-trust laws are so good, why does everyone seem to need / want an exemption?
The conventional stated reason is that they are subject to state regulation, so it should be up to the states to set the rules and execute the enforcements.
Apparently, a lot of it has to do with sharing data for rate-setting purposes, which would be illegal otherwise. I'm not saying this is a good rationale, but that's the rationale.
It's largely for rate setting purposes. Insurance is somewhat unique in that the costs of the services provided are only known after the transaction occurs. Think about that for a second. If insurers didn't share loss cost information no new companies could ever start. This is especially true in states that require prior approval of rates. How would a small or new company justify their rates without access to a larger data set?
Also, remember McCarran-Ferguson isn't limited only to health insurers. It applies to most non-life lines (wc, gl, auto, home owners, etc).
Actually, it applies to all lines of insurance, including life.
this administration has some instincts that make me pause.
Funny that revoking the anti-trust exemption for insurance companies never came up when the industry was playing along with their agenda.
The fact that their threat of punitive legislation has been made in such a blatant and transparent fashion (maybe this is what Obama meant by "transparency" in government) tells me that they clearly see nothing wrong in using the powers of government to single out private entities for punishment for not supporting their political aims.
Also - whats up with the administration's obsession with Fox news? Regardless of how you might feel about Fox news -- the fact that its "right" oriented is hardly a revelation. Do we really need the President trying to muzzle a critic in the press? Is it really appropriate?
This President has been the recipient of the most fawning, supportive and wholly un-skeptical media coverage in the last 40 years-- yet he has terribly thin skin regarding the one outlet that challenges his view.
The argument that Senator Reid is making relies on the idea that monopoly power is bad. Ironically however, that is a large part of the point of the Democratic plans, to get monopoly power so that the government can set what the 'appropriate' payments should be.
If publishing reports with questionable assumptions were actually a crime, most of the people complaining about AHIP would be in jail right now.
Yes, because in McMegan's glibertarian fantasy world, acting to revoke a legal monopoly is the same as criminalizing speech.
You'd be a great dungeon master!
You cannot possibly be this stupid.
He is.
IMO, the freedom of the press argument is pushing it to say the least. OTOH, the totality of the WH's negotiating tactics on health care reform are a great advertisement for libertarianism.
It really seems that the costs and benefits of health care reform have been allocated largely based on how "nice" various interest groups have played with WH negotiators. We saw this with big pharma, insurance companies, medical device makers, unions, and others.
I suppose it's just how the system works, but it's pretty depressing to see it all playing out in slow motion. I voted for Obama, but I'm sad to see this negotiation having familiar hallmarks of Chicago's infamously corrupt back-room politics.
Originally, I felt strongly that there was a need for greater government involvement in health care, especially on the insurance side of things to fix obvious problems in the current system (eg free-riding, pre-existing conditions, insurance companies denying insurance/benefits, etc).
I knew that correcting these problems would require me to give up some liberty, but I thought it might be a fair trade in exchange for a fairer world for myself and my fellow citizens. Now I'm not so sure. This latest round of legislating-as-sausage-making certainly doesn't make me eager to turn more control of the economy over to the government.
Jim
Jim,
Like Tic-tac-toe and Global thermonuclear war, the only way to win is not to play.
Anyway, can I get you to elaborate on something I hear a lot that confuses me. Why do you think giving up some freedom would lead to more fairness?
If we all give up freedom as individuals, how does that make society more fair? How would this sort of fairness be of benefit to anyone?
For a very rudimentary example, consider laws that make it illegal for me to squat on your land. If that's too crude, how about anti-discrimination laws? Or maybe anti-pollution laws enacted to correct negative externalities put on third parties by polluters.
Obviously, there's a lot of distance between establishing clear property rights and creating a health-care entitlement, but at least you can see where I'm coming from.
IMO, there's a libertarian argument that the current system of providing subsidized health care to all-comers and putting the cost on others is fraught with injustice and economic inefficiency. The only way to correct this is to ban the practice (liberty impinging) or to create laws that offset the injustice and inefficiency (also liberty impinging).
How is it liberty impinging to stop forcing hospitals to give emergency room treatment to all comers and eat the costs from the ones with no insurance or financial resources? It seems to me that letting hospitals turn down patients would be liberty enhancing. I'll grant that you might not want such a policy change to be made, but I don't see that it makes sense to say that it takes away liberty.
I may have been mistaken. Is there a law that requires hospitals to treat everyone, or is it just ethical best-practice?
I was thinking there was currently no law in place, and a new law prohibiting treatment without payment would impinge on the hospital's liberty.
We're obviously off the deep-end in this thought-experiment. In case anyone's scoring at home, I'm not suggesting any new euthanize-the-uninsured legislation...
I agree, it was a poor question on my part. It doesn't lend itself to the practicalities of the situation.
I suppose what I was getting at is that, at the practical end of the spectrum, the current argument really does seem somewhat close to "Do not allow medical treatments for some to save money for others". The freedom is impinged as a matter of making continued life possible. The fairness being "created" is that we no longer have to pay huge sums for preemies and my 94 year old grandfather.
At best, a big chunk of folks seem to be arguing we should replace one kind of unfairness with another. At a societal level, we're going to transfer resources away from the very old, the very young, and those with unusual and complex ailments to... actually I'm not completely sure who's going to be the beneficiary of the redistribution.
Folks who don't get sick if it turns out that costs go down, but I don't see how costs go down. So I suppose we're transferring to the currently uninsured folks who will get insurance and then also get sick.
Like the number of very young and very old, and folks with unusual and complex ailments, this is a relatively small number of people.
So at best, I tend to think there will be a push in the numbers of folks harmed vs. the number of folks helped when it comes to everyone getting health insurance. However, this plan seems to impose a transaction cost on pretty much everyone else in addition to effecting this transfer.
A better example would be vigilante justice: I'm not allowed to kill robbers, thieves or even murderers except in circumstances where the state would be unable to arrive in time to protect me from them. In return, the state promises to see justice done according to the standards of community. In this way, the weak and strong alike have access to justice even though only the strong would have the power to enforce it in a state of nature.
You could make the case that people should give up the right to procure health care as they see fit in return for being guaranteed one standard of health care available to all. You can drop "justice" into that sentence in place of "health care" easily enough. Of course, you can also drop in "food," "automobile" and even "chocolate bar."
The U.S. Consitution was drafted with an understanding that we would hang separately if we didn't hang together, to take up the old phrase, but it still had a strong bias toward individuals being free and independent actors as much as possible, starting with free speech and the right to bear arms. Guaranteed basic health care may be the next step from a guaranteed basic retirement (Social Security), but you're still dealing with a system that in theory is more allergic to individuals giving up liberty in return for security than most of the other Western democracies, never mind the "socialist paradises" whose open access health care we all pause to admire while doing our best not to recall that too much publicization of those system's failings would get the authors shot.
@ magellan
EMTALA requires hospitals that hospitals participating in Medicare evaluate patients presenting with a medical emergency or in labor.
@amygdala, thanks for the link!
"I may have been mistaken. Is there a law that requires hospitals to treat everyone, or is it just ethical best-practice?"
Yes, It is a law that requires it.
See, I think having regulators revisit promises made to various industries and interest groups over the years is a win for whatever reason it happens.
Should we revisit the Wagner Act? Probably! It creates an adversarial union/management dynamic that's actually pretty destructive, and, I would say, not appropriate for today's marketplace. Could a different form of unionism be both a more effective advocate for workers as well as a smaller drag on business? I think so.
Likewise with the insurance anti-trust exemption. Did it make sense at the time? Maybe. Does it now? I don't know, but it's probably worth taking a look at.
In a perfect world, we'd have a sober-minded folks who do on-going evaluation of old regulations to determine whether or not they still work. Since that's never going to happen, the only real way that old regulations will be evaluated is on a partisan basis, like Republicans looking at the Wagner act or Democrats going after the insurance anti-trust exemption.
And in the current situation, it's not as if the Democrats can magically revoke the current law--they'd need to, you know, pass a bill. The insurance industry would have a chance to lobby against it, and present their arguments. That they might lose is something they probably would want to consider in doing their horse-trading with Congress regarding which stuff they're going to fight against.
I'd like to see Congress doing a lot more of this sort of thing, to be honest. Buying a Senator (or party) ought to be a bit of a fraught endeavor with some worries that the support you gain may not be around forever. In general, anything that reduces the ROI on lobbing is a Good Thing.
Okay, but the price of that is a de-facto criminalization of political speech by any group that gets regulated by the government. Is it really worth it to revisit the anti-trust exemption? I'm willing to tolerate a fair amount of political pragmatism, but that goes too far.
Gordon Tullock always asked his classes why we didn't see a lot more cycling than we do. In plain English, why is it that the Democrats and Republicans don't spend very much time and energy reversing each others' policies when they gain power.
There are lots of reasons, but I think most of them can be amalgamated into the notion that doing so would raise the stakes of political activity. At a minimum, we greatly increase rent-seeking behavior, because it the political process becomes much more dangerous to peoples' immediate livelihoods. More dangerously, if every election means potential for great instability and politically routinely created unemployment and industrial upheaval, can political violence be far behind?
People will peacefully tolerate the other political party in control when changes are largely prospective and open to debate. When change appears to be a matter of retribution and taking, I don't think people will stand for it.
Surely there's a difference between reversing each other's policies and destroying each other's livelihoods.
@Alsadius:
"Surely there's a difference between reversing each other's policies and destroying each other's livelihoods"
If the policies have to do with economic or environmental regulation, the two aren't that far apart.
Congress can (and has on many occasions) outlawed many people's lively-hoods, or forced them out of business through regulation.
Those poor insurance companies! Gagged by the might of the state. What possible resources might they have for making their views on public policy known?
If an industry gets handed government goodies when its political position is strong, it should expect to have those government goodies taken away when its political position is weak. The fact that an industry's political position is weak is often a reflection of the way it treats its customers. The administration is willing to forbear from exploiting insurance companies' weak political position provided they do their bit to get universal health insurance. If they go back to trying to frustrate universal health insurance in the interests of their private gain, all bets are off, and they shouldn't expect to keep their government handouts. Including the anti-trust exemption.
But this reduces to "two wrongs make a right" and "lets's add another wrong on top of it".
Yes, we've created a world where many industries profit not by their industriousness, but by patronage. The patrons using this system to silence current supplicants while engaged in an effort to create even more supplicants is not something that ought be encouraged.
That's all fine and dandy. Congress has a perfectly legitimate role in legislating against previous laws seen as favorable to a specific industry if said industry is opposing Congress' goals. It's a symptom of a shitty government, but hey, that's what we have.
The problem occurs when this industry produces some literature that may have a substantive argument for continuing the favorable policy (or an argument against Congress' goals) and the result is political backlash. If the study or report is misleading, debate it on its merits, don't threaten the authors with a political penalty. If the report is somewhat accurate, an honest government would adjust its policy stance. But again, hey, we don't have an honest government. Par for the course.
The anti-trust exemption isn't a government handout; there's reasonable evidence to think that the result of repealing it would be higher administrative costs and more consolidation, because sharing rate-setting data makes underwriting more effective across the industry. It may not be good policy, and perhaps it should be repealed, but the government should not hold that over the insurance industry's head to get them to stop making political speech. If you don't think that it's a problem to use government power to crack down on speech you don't like, or that it's okay as long as that speech comes from institutions you don't like or wish to get rid of, I'm not sure there's any point in continuing the conversation.
>I'm not sure there's any point in continuing the conversation.
Indeed.
We are in the midst of a free speech debate in Canada, and I'm constantly amazed at what people are willing to give away to have the ability to have power over their enemies.
And Matt, if you don't think you are giving something away to have that power, you don't even have the sense to know what you have.
Derek
I don't think that "using government power to crack down on speech you don't like" describes what is going on here. What's going on here is a negotiation between an industry and the government. The industry is trying to negotiate a good deal for itself. The administration wants it to take a somewhat worse deal. The "speech" that the industry is engaged in is the word "no". The administration is using its leverage to push the industry to instead say "yes". You could interpret this as a "crackdown on free speech" in the same way you can interpret any government negotiation with another party as a crackdown on the other party's right to express itself by saying "no, we don't want your deal". But that's an obfuscatory way to interpret the situation.
The administration isn't announcing it will look at the anti-trust exemption because of the PwC report. It's because AHIP has backtracked on supporting universal health insurance. The PwC report is one propaganda offensive in that effort by AHIP. If the PwC report had come out but AHIP were still backing the health insurance reform bill, the administration wouldn't be retaliating.
It's pretty common to see people who get into substantive conflicts with the government misconstruing what's happening to them as an infringement of their right to free expression. I won't adduce any of the more ridiculous examples, but I think you know what I mean.
Perhaps it's putting something besides a public option on the table.
My question is how else to you negotiate through regulatory capture?
Or openly declare that if unions didn't stop issuing reports in favor of a higher minimum wage, the administration would have to revisit Taft-Hartley?
What next? Threaten children with free ice cream & donuts! Threaten to take away their spelling homework! Threaten potheads with legalization!
Taft-Hartley is the nastiest pice of anti-union law on the books in the western world.
When you think you're in a good faith negotiation (As the Whitehouse seemed to, not that anybody outside Washington was under that delusion) and the other side goes off lying & publicly trashing things, getting tough is pretty much what anybody with a grain of sense* would do.
*Libertarians under pressure should feel free to grow their body hair & learn to play the flute.
Is that before or after the Democrats went on an explicitly-stated strategy of demonizing insurers even though the insurers were willing to negotiate, because it was politically popular?
Yeah, you've kind of got the cause and effect reversed. Obama bought them off with a deal (of which I disapprove, but there you are). Congress reneged. They reneged. Now Congress and Obama are threatening punitive regulatory action against them for saying they think the health care plan will raise premiums.
This is par for the course with the Obama Administration. In April he told Bank CEOs that he was the only thing that stood between them and "the pitchforks."
http://www.politico.com/news/stories/0409/20871.html
The pitchforks, of course, were being wielded by his buddies over at ACORN and Code Pink.
Funny, I seem to remember the Michelle Malkin, the teabaggers etc. being very much against the bailouts.
1) (Please don't refer to them as teabaggers)
2) They were against the bank bailouts, the issue wasn't the bailouts, it was threats against the issue in this case wasn't the bailouts, the bailouts had already happened. This was about threats of violence that had been directed against the bank execs and their families.
This kind of thing seems to be a powerful argument for the connection between economic and political liberty. The more pull the government has through economic regulation, the more backdoor ways it has to attack those who criticize its policies. And since most changes in regulatory policy might have some some small benefit, its a lot more difficult for the government to actually get caught, because its easy to point to the purpose of the regulation change even if its 1% fix a problem and 99% getting back at somebody for criticizing the powers-that-be. That being said, I'm all for eliminating the anti-trust exemption in principle, just not with the reasons for doing it right now. Could we eliminate the NFL and MLB's antitrust exemptions while were at it?
Of course we could. How do you think the Nationals were inflicted on Washington?
I'm not sure this post (& comments) is clear headed about the "punishment" that is being imposed.
If the antitrust exemption is just a handout to the insurance lobby, then threatening to take away the handout in response to perceived industry gluttony is legitimate. It's certainly not a "de-facto criminalization of political speech." (Whatever that even means.)
OK, now assume that the antitrust exemption is NOT a handout. In antitrust law, exemptions are granted when they INCREASE competition. There are rare, but real, circumstances when this can happen. (Someone mentioned sports as a good example.) If congress ends the exemption, then competition will DECREASE, the insurance companies will have higher profits, and we will all pay more. Some punishment!
You're not getting it. I don't have any issue with the government removing an anti-trust exemption as a matter of policy. What is problematic is when the government chooses to do so as a matter of retribution for expressing opinions that it finds objectionable.
Megan is exactly right here--what would the left say if a Republican administration threatened to remove the ability of unions to engage in collective bargaining in response to unions' vociferous opposition to Republican policies? Would that be okay too?
I had an earlier post about why the antitrust law probably increases competition, but regardless.
This threat comes only after the industry refuses to play nice, there may be legitimate reasons for removing the exemption, but those aren't the true reasons being used. As bombloader pointed out, there are reasons for and against most things. A policy of, "disagree with us and we'll re-evaluate laws affecting your industry and look more favorably upon those that auger against your desires" is de-facto crim of political speech (for lack of a better term). Sure there will be legitimate reasons they can hide behind, but it's pretty transparent what's driving Reid and Obama here.
The "some punishment" analysis is closest to the truth, but it's more than that. The exemption applies to the entire industry, but there is no segment of the industry for whom it less useful than health insurance, and managed care in particular. In certain lines of business, and mostly on the P&C side, you could say removing the exemption would have a significant detrimental effect on smaller companies, and huge problems for agents (who would no longer be able to rely on standardized policy forms to compare coverages.) In health insurance, I can't imagine a single thing the revocation of antitrust would change, except perhaps to grant companies legal justification to opt out of state guaranty funds.
I agree with Michael. Insurance companies are using purchasing power from the large number of insureds they have signed-up to negotiate deals with local healthcare providers. I can see such deals having an anti-competitive effect because it's difficult to enter the market.
Competitors sharing data may raise anti-competition red flags, but I don't see how that changes the market much.
The reverse of that is also true, of course; standard regulatory negotiating tactics are the kind of things that sound like threats to fundamental rights when someone thinks up a way to do it to people on your side.
Megan, I suppose this is worth the post since eternal vigilance is the price of freedom. But there's not much here. If I had a half-hour, I'd go find some very similar pressure that the Reagan administration brought to bear on one of its opponents during the deregulation push in the '80s, or something related to environmental/stem cell/energy deregulation that Bush did in the last decade. I suppose it looks different when you're in the middle of it, but I don't think there's anything unprecedented here.
That's quite possible, but it doesn't really defeat MM's point that this kind of thing is an abuse of the regulatory process. One which probably has been used by more than one administration at least since the beginning of the modern regulatory state.
For those interested in learning what the antitrust exemption is, why it exists, what it does and doesn't cover and how it is applied, I'd recommend this:
http://www.gao.gov/decisions/other/304474.pdf
Alsadius,
Surely there's a difference between reversing each other's policies and destroying each other's livelihoods.
Livelihoods are based on policies. Policies establish patterns of employment. When you change laws, you're going to create some jobs and destroy others because you change the cost of doing business. This is already enough to drive plenty of people apeshit nuts, so it's obvious the problem will get even worse if you suddenly start doing it on a purely punitive and political basis.
Ironically, the progressive movement at least partially took root in the latter half of the Nineteenth century as an effort to stamp out the spoils system in civil service. That idea gained even more popularity when a disgruntled and somewhat nutty office-seeker assassinated President Garfield in 1881.