Saturday, October 11, 2003

Rights and Reason: Barriers to Health Insurance

National Review's senior editor, Ramesh Ponnuru, speaks favorably of Missouri Sen. Jim Talent's proposal for expanding consumer health insurance options:
Senator Jim Talent, a Republican from Missouri, thinks he can put a dent in the problem. When he was in the House, he championed a measure to let small businesses pool together to offer health insurance to their workers. It passed the House with bipartisan support, but stalled in the Senate. Talent's first speech in the Senate, to which he was elected last year, was devoted to breaking the logjam.

Talent says that his "association health care" bill is the only free-market measure to increase access to health insurance that stands a chance of passage in this Congress. The idea is simple. Federal law lets large employers get health insurance for their workers without having to comply with state regulatory mandates. So if Nevada has decided that all insurance plans have to cover chiropractors' visits and hair transplants, big businesses can still provide different packages of health benefits. Talent's bill would let small-business trade associations offer insurance for their members on the same basis. That's why it's officially titled the "Small Business Health Fairness Act."

Talent's bill is supported by conservatives such as Rep. Ernie Fletcher, moderates such as Senators John McCain and Olympia Snowe, and liberals such as Rep. Nydia Velazquez. It is also supported by President Bush. Its most enthusiastic supporters, however, are in the small-business lobby. "This is the number one concrete problem confronting small business today and therefore entrepreneurship in general," says Talent. Small businesses lose employees because they can't offer decent insurance coverage. The bill is a top priority for the National Federation of Independent Business.

The bill is opposed by Blue Cross/Blue Shield, which fears it would lose its strong position in the small-business market. (At one point, Blue Cross even ran a sweepstakes offering people who wrote form letters opposing the bill the chance to win $300 and a free trip for four to Washington, D.C.) The National Association of Insurance Commissioners is against the bill, since state insurance regulators would lose business, too. The National Governors Association and the National Association of Attorneys General is also opposed, since they are duty bound to oppose all things right and good. Ted Kennedy has threatened a filibuster.
I'm willing to consider the merits of Talent's proposal. Certainly the elimination of arbitrary political barriers (imposed by the state insurance cartels) is a good thing in principle and practice. But if we're going to allow business to band together to obtain insurance, why not also allow physicians to band together without fear of antitrust prosecution? It's not a free market if one side has a government-sponsored advantage over the other.

One reason the Talent bill will get more attention than efforts to exempt physicians from antitrust, however, is the relative position of the lobbyists involved. Small business advocates will no doubt fight honorably for their right to try a new business model for offering insurance. The American Medical Association, on the other hand, continues to demonstrate moral cowardice in the face of the Federal Trade Commission and Antitrust Division in confronting the ongoing assault on physician rights. The AMA has backed off its earlier position of endorsing a strong antitrust exemption, and now favors merely reducing the standard of antitrust law applied to physicians from "per se" to "rule of reason". In practice this will do nothing to stop the FTC and DOJ. In principle it means the physicians have waived any notion that they have the right to act in their economic self-interest. There is no such thing as accepting some antitrust regulation; either you hand your rights over to government lawyers, or you don't. One cannot compromise with organized thugs.

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