Wednesday, October 14, 2009

Timothy Noah on Possible McCarran-Ferguson Repeal

Over at Slate, Timothy Noah has penned an excellent piece on the threat by some Senate Democrats to include repeal or partial repeal of the McCarran-Ferguson Act in any health insurance reform package. Noah's piece does a great job explaining the history that led to McCarran-Ferguson Act in 1945. He also elaborates on the policy arguments for repealing McCarran-Ferguson, pointing out that the insurance industry claims that they operate in a "highly competitive industry." Finally, he notes that opposition to McCarran-Ferguson has been bipartisan: President Reagan's Federal Trade Commission advocated repeal, for instance.

Here's a link to Noah's piece.

http://www.slate.com/id/2232443/

Perhaps the most interesting tidbit in Noah's piece was his claim that Senator McCarran of Nevada shows up as Senator Pat Geary of Nevada in Godfather II.

Readers of this blog will recall that, in early August, I called for repeal of McCarran-Ferguson as a way of injecting competition into the health insurance market. Here is a link to that post:

http://bishopmadison.blogspot.com/2009/08/r-ohio-liked-competition-d-illinois.html

Let me also add the following. Much of the discussion of McCarran-Ferguson has focused on the statute's grant to insurance companies of an exemption from the antitrust laws. Less attention has been focused on the section of the statute that empowers states to block out-of-state insurers from entering their markets. This sort of state-by-state protectionism prevents the formation of a true national market in health insurance. If there were such a highly competitive, national market, then arguments for the so-called "public option" would become weaker than they already are.