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Stephen Herrington Headshot

Busting the Health Care Trusts, One Way or Another

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The Sherman Antitrust Act of 1890 was authored by John Sherman of Ohio, a Republican. The act is said to have been modeled to prohibit the specific practice of separate business entities influencing the activities of other businesses through investments in those businesses. The investments were assured by collusion between the managing bodies, boards, of companies, hence the term trust. The motivation for the law was that anticompetitive advantages accrued to businesses through this influence. And to the extent this influence limited competition and rigged prices, it did harm to the public. The Act was passed with an almost perfect unanimity of both Houses.

Teddy Roosevelt used the Act to break up 40 trust/monopolies in his term. William Howard Taft broke up 90. Both were Republicans, and it may seem a bit out of character for the party of enormous businesses to have done this, but then Republicans were, at one time, more sensible. The party, as it is now constituted, is little more than a front for criminal enterprises, if you consider monopolistic practices to be in any sense unlawful.

What is surprising is that, given the glaring evidence of just the disparities between other countries and ours in health care costs, that investigation into anti-competitive activities by the health care industry have not been more common, much less on the lips of every American. In particular, the classic "trust" style of monopoly that may exist between insurer and provider has received little attention at all. The FTC has had some successes with regional price manipulations and pharmaceuticals. One of the problems facing the FTC is that it has no authority over non-profit concerns, providers in many cases, or health insurers, concerns that then may skirt antitrust law. California has had some investigations too, by the Controller's office, but they have been largely dropped from the agenda and even their website. Much concern is out there as in the AMA. Lots of speculation, some abstractions and a the simplest of common sense leads to the conclusion that there is enough smoke around to warrant calling the fire department. But we do not appear to have a phone, let alone a fully equipped fire department.

We spend 2.4 trillion dollars a year on health care. All of that is paid by the public, either privately or through taxes. If there were no Medicare or S-CHIP or Medicaid, the public would still foot the bill through obligatory ER care for the indigent that is billed through to private and public carriers. Using the ER for primary care for 50 million people is doubtless more expensive, but at least it doesn't explode the federal budget. It just explodes your private health care bill. You can't hide from societal obligations, as much as your miserly little heart would like to. If you have a problem saving the life of a critically ill poor person, then you are welcome to not pay your taxes and to drop your personal health coverage, end up in jail or the ER yourself, and bankrupt. You are going to pay, one way or another, either through the offices of government or the inflated profits of private health care monopolies.

Now the Republicans think they can retake the country if they can force a health care bill that subsidizes coverage for 50 million people and does nothing to reduce costs. A bill like that would cost the trillion dollar CBO budget rules red herring figure that they so relish repeating. It would have tax implications and would revitalize the tax and spend liberal label of old, even as the Republicans were responsible for the burgeoning Medicare Part D, the Iraq War and TARP, not to mention the Great Recession.

Politically, economically and socially, it is not worth passing a bill that does not reduce health care costs, except to temporarily mitigate the ER as primary care status quo for 50 million people. Temporary, because the budget effects would empower the Republicans, and if they regain control of the government, they will continue their unrelenting agenda to demolish Medicare, Medicaid, SCHIP and everything else progressive, including a gutted health care reform bill itself.

So what we have is a first order political, economic and social crisis for which the solution seems to be much more politically slippery than starting an unjustified war. The one thing we might all be able to agree upon is that the health care industry is acting like a monopoly, even if it is not more that a collection of regional monopolies. And the solution should be to break up those anti-competitive monopolies, a remedy that the Republicans are ideologically disposed to believe in, if not practically.

Breaking up the health care monopolies is possible by several means in order of effectiveness and cost to the public.

1 ) A government-run single payer system would eliminate private insurer profiteering from the picture entirely, at the cost of displacing a boat load of insurance workers and provider billing workers. But with America's health bills cut by half, the nation can easily absorb the job displacements. No fits and starts required as Medicare and the VA are well understood models in place. As important, the potential for price fixing and fraudulent procedures would be reduced as their could be little effective collusion between payer and payee.

2) A government run health insurance system, the "public option", puts competitive pressure on health insurance companies and lowers the effectiveness of collusion on prices. And make no mistake, as unfair as a government insurance option might be in a real free market, we are not dealing with a free market. We are dealing with monopolies. So fighting monopolies with a government backed monopoly is entirely fair. If, as is being floated right now, there might be a "trigger" associated with implementation of a public plan, the trigger should not be about when to start it up, but should be about conditions under which it might be shut down. A trigger for implementation is just kicking the can down the road to where the Republicans hope they will have grown their number in Congress and overrule the trigger.

3) A national health care regulatory system would, presumably, not brook price fixing or market consolidations that lead to monopolies. This would undo the effect of monopolies without, necessarily, undoing the monopolies. It would require a different order of bureaucracy, one to enforce rather than implement, and would be extremely complex to administer. It would also be subject to political influence, just like the SEC.

4) An FTC mandate to remedy health care monopolies would take the remaining lifetimes of the Baby Boomers to undo the monopolies that it already took their youths to produce. And law enforcement is never so effective as is making it impossible to break the law by eliminating the institutions that are subject of the enforcement.

5) Sweeping business tax code incentives/disincentives specific to health care could make a difference in a relatively short time, but tax measures can be perverse, creating unintended incentives. And, the making of tax code is as opaque an undertaking as we have in our legislative process, and hence subject to manipulation by vested parties. So taxes might be an assist, but are likely to fall far short of a cure.

6) All of the above in various combinations.

If any of this gets done in the coming weeks it will be something instead of nothing. Any bill must contain costs if not roll them back, and if it is not the best solution, then, unlike what the media would have you believe, the game is not over. There are lots of ways to accomplish what needs to be done, some just better and quicker than others. The media meme that failure to pass something will destroy the administration is farcical. Historically, Clinton did lose a majority in the house after the failure to produce a health care solution. But that probably had more to do with the temporal proximity of his Presidency to that of the immensely popular Reagan theme than it did with legislative failure. Clinton ran as a conservative Democrat in a three way race and did not go into office with anything like the mandate of Obama, yet still won a second term, even in a Reagan America. America is no longer a sole proprietorship of Ronald Reagan, his ideas and philosophies having been as discredited as is possible. The political climate has changed and the application of an imaginary consequence to Obama goes unquestioned by the punditry, as ever. The only pertinent consequence for Democrats is if, at the end of this legislative round, the public is less inclined toward health care reform. So far, polls show that they waver on means but not the ends. For Clinton, the public supported neither the means nor ends.

So the failure to pass anything is of questionable consequence. More certain is that a bad bill, one that does nothing to contain or lower costs, will raise the prospects for a Republican resurgence. The Republicans know this, and are quite callously exploiting the moral imperative of the proposed legislation, that of expanding coverage, to pad insurance profits while fashioning an albatross for the Democrat's couture.

If the Obama Administration and Congress fail to act in the best interests of the public as indelibly voiced in the 2006 and 2008 elections, then it is up to the public to try again. If reform fails, it will be emblematic of a corrupt system of influence, a thing very like the rationale for the Sherman Antitrust Act of 1890. And it will be perfectly indicative that the fight must be taken to the next level, the very core and substance of how our representatives are elected. As a monopoly is corrupt, our health care system is corrupt, and then a government that cannot effectively deal with that corruption must itself be corrupt. Take a page from Sherman, Roosevelt and Taft, Republicans all.