Monday, September 22, 2008

McCain Still Touting Benefits of Deregulation

This gem of a quote is courtesy of John McCain himself courtesy of a stump speech article he wrote for a publication called Contingencies (which I had not heard of before).
Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.
[The emphasis added is mine.] To be fair, he is referring to opening up insurance markets nationwide, similar to opening up the banking industry so you can bank anywhere you choose regardless of in which state your bank is located. However, that deregulation didn't lead to more individuals choosing a checking account from a "national" bank as much as it resulted in larger banks crossing state lines to purchase regional or local banks. (Has your bank changed names recently?) Do we want/need that in the insurance industry, too?

The Obama campaign rightfully pounced on the quote in Florida, with Obama saying "So let me get this straight -- he wants to run health care like they've been running Wall Street." McCain senior economics adviser Doug Holtz-Eakin fired back, "If Barack Obama thinks that today's financial troubles were caused by policies which allowed Americans to use an ATM anywhere in this country, then it is better that he continue to be silent about solutions to the crisis on Wall Street."

Holtz-Eakin is oversimplifying the issue. While having a bank account with a nationwide bank like Chase or Citibank does allow me to use my ATM nationwide, I was already able to do this thanks to ATM networks set up long before banking deregulation. Is he suggesting that McCain invented national ATM banking? </snark>

Jumping back to the broader picture of McCain's health plan, I don't see how allowing individuals to buy their own insurance anywhere in the country will suddenly lead to lower premiums. Yes, Blue Cross of Vermont would now be able to sell policies to someone who previously used United Healthcare in Kentucky, but the net effect will be the watering down of consumer power. The best rates for healthcare are generally received by larger groups -- a big company can negotiate better rates than a small business or an individual. This is simple economics, but it hasn't led to many individuals or small businesses banding together for greater purchasing power even in the current regionally-limited market. How will empowering millions of Americans to act individually substantially reduce rates? If I can pull an example from a different type of insurance, my car insurance hasn't dropped significantly even though I can choose from several companies that compete nationwide.

Yes, I could stick with my employer's plan if I wanted, but McCain's plan simply wouldn't help millions of Americans who currently don't have an employer-sponsored health plan today.


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