"Selling Insurance Across State Lines" is Health Insurance Deregulationby: Richard Goldberg
Mon Jan 11, 2010 at 13:15
<snip>
The most dangerous part of the Senate's current health care bill is not the mandate, though requiring people to buy health care they cannot afford is a strange kind of reform; and it is not the limits on federal subsidies of abortion coverage for those who presently cannot afford coverage at all. The most dangerous part is the provision that allows health insurance to be sold "across state lines." We know it is the most dangerous because it's modeled after the deregulation that gave us usurious credit card interest rates and obscene late fees. It's why consumers are buried in debt from which they cannot recover. And it's what Congress is quietly attempting to do to American health care.
A little history: In the 1970s, nearly every state in the Union had usury laws, which prohibited banks from charging their credit card customers astronomical interest rates. Most states also had limits on the amounts banks could charge for late fees. These were not anti-competitive or undemocratic; they were sensible state consumer protection regulations, passed by democratically-elected state legislatures, dating back to the early 1900s. Because the national banks provided credit cards to consumers in every state, they were required to abide by each state's consumer protection laws. If a Nebraska bank provided a credit card to a consumer in Minnesota, the bank could not charge that consumer more than Minnesota’s consumer protection laws would allow. This system still works for other consumer products, from cars to lawnmowers. And for a time, it worked for banks.
In 1978, everything changed. The National Banking Act, which established a system of national charters for banks, had been passed in 1864. But on December 18, 1978, the Supreme Court decided Marquette National Bank v. First of Omaha Service Corp., holding that the National Banking Act allowed banks to charge credit card interest rates that were limited not by the state in which the consumer lived, but only by the state in which the bank was located. Minnesota could no longer prevent a Nebraska bank from gouging Minnesota consumers. In essence, credit cards could be offered "across state lines."
Spurred in part by an economic crisis, this triggered a race to the bottom. Citibank executives, attempting to avoid New York's consumer protection laws, called the Governor of South Dakota. Aware that the state was experiencing an economic downturn, they promised that Citibank would move there, bringing with it much-needed jobs, if only the state were to eliminate its usury laws and allow Citibank to charge exorbitant interest rates without regulation. In a single day, state legislation written by Citibank was introduced and passed, eliminating usury laws in South Dakota. Delaware followed. As a result, the few states that won the race to the bottom became the home of the nation’s credit card industry. They remain so to this day. From their new homes in South Dakota and Delaware, banks sell credit cards "across state lines"—unregulated by the states in which they are sold. State usury laws, like state limitations on exorbitant late fees (invalidated by another Supreme Court decision), have never been replaced, leaving an entire industry "regulated" by a few states with no interest in meaningful regulation.
This is the future of the health insurance industry. "Selling health insurance across state lines" is a euphemism. This is health insurance deregulation. Its intended, practical effect is to eliminate state regulation of health insurance. The health insurance industry is already blessed with an antitrust exemption, allowing it to determine prices by collusion; now it will suddenly be free from the state regulation that protects consumers. Does your state require insurance companies to cover medically necessary abortions or vaccinations? Not anymore. Does your state require that your health coverage be automatically renewable? Not anymore. Does your state require that newborns be automatically covered at birth? Not anymore. Borne of a bill originally intended to increase competition in insurance, this mass deregulation will decrease competition and trigger yet another race to the bottom. We've seen it before.<snip>
Link:
http://www.openleft.com/diary/16880/selling-insurance-across-state-lines-is-health-insurance-deregulation:wtf:
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
