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Tilting at Windmills

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October 14, 2009

HARRY REID TURNS UP THE HEAT ON INSURANCE INDUSTRY.... It's pretty unusual for a Senate Majority Leader to testify as a witness at a committee hearing, so I was glad to see Harry Reid (D-Nev.) make an exception today on a key issue.

In a provocative move, the Majority Leader spoke directly to the Senate Judiciary Committee, and raised the specter of repealing the 1945 law pertaining to the insurance industry's limited exemption to national antitrust laws.

The law, the McCarran-Ferguson Act, is often cited by Mr. Reid and other critics of the health insurance industry as a reason why coverage can be so expensive for many people. They say the law allows insurers to monopolize markets and fix prices in ways that are usually illegal.

"Since 1945, the insurance industry has enjoyed exemption from federal antitrust laws because of the McCarran-Ferguson Act," Mr. Reid said. "Pat McCarran, who was the senior senator from Nevada at the time, lent his name to this piece of legislation. Although we're both Nevadans, I'm not sure what Pat McCarran had in mind when he pushed this bill. And if Pat were around today, he couldn't be happy with the state of the insurance industry."

"Providing an exemption for insurance companies to antitrust laws has been anticompetitive and damaging to the American economy," Mr. Reid continued. "Health insurance premiums have continued to rise at a rapid rate, forcing businesses to cut back on health insurance coverage and forcing many families to choose between health insurance and basic necessities."

He added: "Insurance companies have become so large they dominate entire regions of the country. They have become so powerful they block start-up businesses from entering the market, and they put smaller companies out of business. They have become so dominant that they dictate business practices. They are so influential that they exert tremendous influence over public policy."

Reid's remarks were well received by the Judiciary Committee's chairman, Pat Leahy (D-Vt.), who is the lead sponsor of the Health Insurance Industry Antitrust Enforcement Act, which would repeal the insurance industry's limited exemption.

Of course, there's a very clear political motivation behind the Majority Leader's remarks today. As Ezra explained, "Reid isn't an expert on anti-trust law, and as Senate Majority Leader, he doesn't spur legislative action by testifying before Senate Committees. He was really there to send a clear and unmistakable signal to the insurance industry in the aftermath of Monday's assault on health-care reform: Attack us, and we'll hurt you. Badly."

Time will tell if insurers get the message, but either way, I like seeing Reid play some hardball with the industry.

Steve Benen 4:45 PM Permalink | Trackbacks | Comments (17)

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Comments

Well since you seem uncapable of giving them any hell, Harry, guess I'll settle for a bit of heck.

Posted by: jones on October 14, 2009 at 4:57 PM | PERMALINK

Good one jones. A shot across the bow always gets attention.

I wonder how many people in the insurance industry realize that they are protected by an exemption.

Posted by: Ron Byers on October 14, 2009 at 5:03 PM | PERMALINK

Hardball would be a strong public option.
Hardball would be stripping Lieberman of committees or any other jackass D that thinks they are going to not vote for cloture.
Hardball would be making the opposing party actually filibuster a bill.
Hardball would be using reconcilliation if he doesn't have the votes for a strong buplic option.

This is pure grandstanding from a spineless twerp.

Posted by: ScottW on October 14, 2009 at 5:05 PM | PERMALINK

"Nice little monopoly you go there. Shame if something should happen to it."

heh

though my preference is that they not only take away the exemption, but make profiting from health care illegal.

I've had enough of those blood sucking clowns. And I HATE clowns.

Posted by: fourlegsgood on October 14, 2009 at 5:07 PM | PERMALINK

This is pure grandstanding from a spineless twerp.

True, but I think public outrage is growing over industry abuses as ordinary americans get the real story. I think there's a possibility the insurance companies may end up coming out of this crippled.

And at that point I hope they die an agonizing death. Fuckers.

Posted by: fourlegsgood on October 14, 2009 at 5:08 PM | PERMALINK

Reid may finally be waking up from his stupor. He also recently criticized the Mormon church for its role in the Prop 8 campaign.

Reid Criticizes Mormons for Prop. 8

Senate Majority Leader Harry Reid made an unprecedented statement of opposition to the Church of Jesus Christ of Latter-day Saints for its contributions to Proposition 8, telling a group of gay activists that he thinks the Mormon Church, of which he is a member, wasted resources and goodwill on the issue.

If I even knew Reid was a Mormon, I had forgotten about it, but it does explain a lot.

Posted by: Michael W on October 14, 2009 at 5:10 PM | PERMALINK

Reid may finally be waking up from his stupor. -Michael W

If that is the case, and it quite definitely remains to be seen, then I would wish that all of our Democratic representatives were polling poorly enough to spur them to action.

Is the threat of losing their cushy job the only thing that makes these cowards grow a spine?

Posted by: doubtful on October 14, 2009 at 5:18 PM | PERMALINK

Told by an idiot, full of sound and fury,
Signifying nothing.

Why do I keep thinking of this phrase whenever I hear any Democrat in a "leadership" position "threaten" someone? I'm with ScottW. Its his job to keep the Caucus in line and help usher through legislation. With the majority at hand, he would not need to "threaten" anything....all he would have to do is....actually.....LEAD.

I'm just surprised that Reid didnt just wrote AHIP a "sternly worded letter" and leave it at that.

Wake me up when he actually does something about the anti-trust exemption or anything else in ScottW's list.

Posted by: anonymoose on October 14, 2009 at 5:19 PM | PERMALINK

I am too much of a cynic to believe Reid will play hardball with the industry.

Especially when just today, Greg Sargent reports that Reid said he is working to overcome a "Republican filibuster".

Republican filibuster indeed... only Democrats have the power to filibuster, yet he keeps lying about it.

Like I said, I'll keep my cynic hat on for a bit, s'il vous plait.

Posted by: Ohioan on October 14, 2009 at 5:29 PM | PERMALINK

"This is pure grandstanding from a spineless twerp."

True. Whether an insurance market has 3 players or 10 isn't going to result in much difference. (And you can't expect new entrants to go rushing in, if this *protection of concentration* is repealed, since the whole industry is under threat of going away).

With a largely homogeneous good, a few sellers should be enough to drive the price down near the marginal cost - they should compete on price, in the absence of collusion. There are effectively 3 American car/truck manufacturers, and they *do* compete on price. Twenty manufacturers aren't necessary.

This is just demagoguery of the big bad monopoly insurance industry - populist fluff. Health insurance companies suck ass, but *concentration* isn't really why.

Insurance plans largely do compete on price when selling to large group plans. But if you try to buy an individual policy, they look at whether they can make money on YOU alone. There's a lotta risk, and not much to gain. Which is why they will only sell you a policy with (1) reduced risk (caps, super strict, technical, pre-existing clauses), or (2) astronomical premiums. Usually both.

Posted by: flubber on October 14, 2009 at 5:41 PM | PERMALINK

who really thinks reid would follow through on this? anyone? ya thats what i thought. maybe he just wants to boost his fund raising from the health care industries.

Posted by: tgp on October 14, 2009 at 5:55 PM | PERMALINK

Why is Harry only talking about repeal?
Why is there no repeal bill being written?

Posted by: captain dan on October 14, 2009 at 7:47 PM | PERMALINK

Huh, Harry's no in charge of merging the bills, which could put the burden on the centrist Dems if the PO isn't there. Wonder why he suddenly wants to *look* like he hates the insurance company monopoly? This is a total head fake.

Posted by: Chris_ on October 14, 2009 at 11:41 PM | PERMALINK

This should be a good way to pressure Holy Joe, who is a captive of Hartford.

Posted by: bob h on October 15, 2009 at 7:44 AM | PERMALINK

Harry is trying to send a message to the insurance company, but, the insurance companies have sent a message to all Americans. What they should be doing is making it legal for all insurance companies to operate in every state instead of comfining them to just three or four states. Interstate commerce at play to avoid competition and this drives the cost factors up tremendously, but, do not expect the Democrats to even consider this as they want Single Payer only which will lead to less medicine and less doctors.

Posted by: Gene44 on October 15, 2009 at 9:12 AM | PERMALINK

The fact remains that big insurance by refusing care to patients and reimbursement to doctors over typos has ticked everyone off - both patients and doctors. They have a virtual monopoly over the whole process a hugely well financed lobby team and representatives on both sides of the isle.

A friend of mine recently laid off without children - just he and his spouse is paying $2,500.00 dollars a month for his COBRA - that is outrageous. Health insurance costs more than his mortgage unbelievable.

In 2007, before the current economic downturn, an American family filed
for bankruptcy in the aftermath of illness every 90 seconds; three-quarters of them were insured. Over 60% of all bankruptcies in the United States in 2007 were driven by medical incidents.

The insurance companies have been pillaging the overall market and are tone deaf to the suffering they have caused.

Repealing their anti-trust status is decades overdue!

Paul Burke
Author-Journey Home

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Posted by: Nadine on March 13, 2010 at 9:11 AM | PERMALINK
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