A Trap Hidden in Repeal and Replace

Steve Sherman,

Donald Trump won the presidency based on a few big promises. One of those promises was repealing Obamacare and subsequently replacing it with something better. Congress is very slowly inching closer to doing just that. Repealing and replacing Obamacare will be a hallmark for the Trump years and there are a number of different proposals floating around – some good and some not so good. One particularly dangerous idea has taken hold with conservatives.

In 1945, the McCarran-Ferguson Act gave states authority to regulate insurance without the federal government interfering. States wanted to have the power to regulate insurance transacted within a state and, for that to happen, these companies had to be exempted from antitrust regulations.

Many on the left have advocated for years for repeal of McCarran-Ferguson as a way to limit the profits of insurance companies.

So why are Republicans pushing this idea as part of repeal and replace? Some excellent conservatives are pushing a bill called the “Competitive Health Insurance Reform Act of 2017.” Rep. Paul Gosar (R-AZ) argued “by restoring federal anti-trust laws to the business of health insurance, my legislation represents a critical first step to establishing the proper foundation for a competitive and consumer-driven health insurance marketplace.” The problem is that repeal of this law will increase regulation and will empower future liberal administrations to regulate large insurance companies out of existence.

obamacareimpacts_small A Trap Hidden in Repeal and Replace Law

Republicans want to set the table for selling insurance across state lines, yet this bill is not necessary to allow that practice.

Back in 2010, this idea was being pushed by liberal Democrats and legislation to nullify McCarran-Ferguson. Andie Brownlow of the American Thinker wrote on March 5, 2010 that this idea would have put in law a conflict of interest:

Congress appears to be gearing up for federal regulation of health insurance and clearing away any states’ rights impediments to that end. Although strengthening antitrust laws would ensure that major providers do not collude for unfair advantages, the same power in the hands of the federal government — a party now with a vested interest in health care — brings a conflict of interest.

An Op Ed appearing on the Competitive Enterprise Institute (CEI) website in 2010 synopsized the arguments Democrats have made over the years to suspend McCarran-Ferguson:

Democrats have long blamed the McCarran-Ferguson Act of 1945 for aiding insurance industry consolidation and coordinated pricing. So, last year, Rep. Sheldon Whitehouse, Rhode Island Democrat, and Sen. Patrick J. Leahy, Vermont Democrat, introduced a bill that would repeal the limited antitrust exemption.

It is understandable that Republicans want to follow through on the promise to repeal and replace. The ability to open up the marketplace by allowing insurance to be sold across state lines has also long been a goal the conservative movement. With Congress and the White House in Republican control that goal will no longer be a dream. It is now. However, setting the stage for an increase in federal regulation by gutting McCarran-Ferguson seems like a mistake that will have long term negative consequences.

The idea that antitrust law needs to be applied to more companies and expanded is not consistent with free market capitalism. Leaders in government sometimes can’t see the forest for the trees. We don’t need a new form of regulation added to how insurance is delivered to the American people just as we are about to toss of the shackles of the Obamacare nightmare.

The federal government simply needs to get out of the way. Obamacare can be repealed and replaced and the insurance companies of the world will thrive as they provided innovative plans to people across every state in the Union.

  • BadWhisky

    I have been thinking about the repeal and replace ACA and would like to make a few suggestions.
    • First forget replacing it. Bring in the Insurance and tell them you need them to provide a number of inexpensive plans starting at the bottom with a simple major medical plan with a low deductible, no co-pays, no drug plan and no maintenance other than a 100% paid for yearly physical and preventative measures such as the yearly flu vaccine and a max out of pocket annual cost. These few things they would cover would actually benefit their bottom line by reducing the cost of treating anything detected early. This type of policy would benefit those who are younger and less vulnerable to major illness and those who need something but could not afford what we currently have. Additional plans and/or options could add at additional cost.
    • Second remove the limits on healthcare reimbursement accounts; or, at least allow enough to meet the cost of drugs treating chronic conditions and a yearly insurance deductible for an individual. To encourage the use of these accounts stop taking the left over money for the government at the end of the year, either makes it roll over or better yet allow it to be rolled into an IRA or 401K account for retirement purposes.
    • Third limit the legal liability of the medical facilities and staff in law suits with the exception of cases involving gross negligence.
    • Forth, people with pre-existing conditions, provided they have a record of maintaining health insurance, should not be penalized nor refused coverage if they for reasons beyond their control lose their current policy and/or change employers. Those who have chosen to not be responsible and make the decision not to carry a healthcare policy should not be forced upon an insurance company because they made that decision, they should have to deal with the consequences without penalizing everyone else.
    • Fifth, the government should not dictate specific blanket coverage items required in all policies such as for procedures such as abortion and items such as birth control, if individuals want such coverage they should choose the policy with those items or options for those items.
    • Lastly, for the fiscal year in which the transition away from the ACA occurs we need to be prepared to cover those who are insured and would be adversely affected by the transition. I would suggest that the government simply pay for their coverage for the year or until they can be rolled to a policy which meets their needs, the insurance companies know who they are and it will behoove them to get on the stick and fashion a policy to move them to the private sector. For those who are still unable to meet the cost of a reasonable policy they should be put on Medicaid, it would be cheaper that the ACA; and, if the corruption were weeded out of the system more doctors would take it.