Bust the Health Care Trusts
By ROBERT B. REICH
NY Times Op-Ed: February 23, 2010
MY health insurer here in California is Anthem Blue Cross. So far, my group
policy hasn't been affected by Anthem's planned rate increase of as much as
39 percent for its customers with individual policies - but the trend
worries me, as it should everyone. Rates are soaring all over the country.
Insurers have been seeking to raise premiums 24 percent in Connecticut, 23
percent in Maine, 20 percent in Oregon and a wallet-popping 56 percent in
Michigan. How can insurers raise prices as much as they want without fear of
Astonishingly, the health insurance industry is exempt from federal
antitrust laws, which is why a handful of insurers have become so dominant
in their markets that their customers simply have nowhere else to go. But
that protection could soon end: President Obama on Tuesday announced his
support of a House bill that would repeal health insurers' antitrust
exemption, and Speaker Nancy Pelosi signaled that she would put it toward an
This is promising news. Forcing insurers to compete for our business would
do at least as much good as the president's proposal to give the federal
government, working with the states, the power to deny or roll back
excessive premiums. The fact is that half of the states already have the
power to approve rates and they don't seem to be holding insurers back much.
Health insurers like Anthem claim they have to raise rates (as well as
co-payments and deductibles) because of the economic downturn. Employers are
reducing coverage and cutting payrolls. As a result, more people are buying
individual policies, but they tend to be older and sicker. Younger and
healthier Americans are simply going without insurance, and thus not
subsidizing their costlier fellow policy-holders.
This can't be the whole story, because big health insurers are making
boatloads of money. America's five largest health insurers made a total
profit of $12.2 billion last year; that was 56 percent higher than in 2008,
according to a report from Health Care for America Now.
It's not as if health insurers have been inventing jazzy software or making
jet airplanes. Basically, they just collect money from employers and
individuals and give the money to providers. In most markets, consumers
wouldn't pay this much for so little. We'd find a competitor that charged
less and delivered more. What's stopping us? Not enough choice.
More than 90 percent of insurance markets in more than 300 metropolitan
areas are "highly concentrated," as defined by the Federal Trade Commission,
according to the American Medical Association. A 2008 survey by the
Government Accountability Office found the five largest providers of small
group insurance controlled 75 percent or more of the market in 34 states,
and 90 percent or more in 23 of those states, a significant increase in
concentration since the G.A.O.'s 2002 survey.
Anthem's parent is WellPoint, one of the largest publicly traded health
insurers in America, which runs Blue Cross and Blue Shield plans in 14
states and Unicare plans in several others. WellPoint, through Anthem, is
the largest for-profit health insurer here in California, as it is in Maine,
where it controls 78 percent of the market. In Missouri, WellPoint owns 68
percent of the market; in its home state, Indiana, 60 percent. With 35
million customers, WellPoint counts one out of every nine Americans as a
member of one of its plans.
Antitrust laws are supposed to prevent this kind of market power. So why are
giant health insurers like WellPoint exempt? Chalk it up to an anomaly that
began seven decades ago in the quaint old world of regional, nonprofit
Blues. They were created in part by hospitals to spread the costs of
expensive new equipment and facilities over many policy holders.
Collaboration was the point, not competition. The 1945 McCarran-Ferguson Act
made it official, exempting insurers from antitrust scrutiny and giving
states the power to regulate them, although not necessarily any power to
The system worked fairly well until about two decades ago when insurers
began morphing into publicly held, for-profit cash machines. A new breed of
medical entrepreneur saw opportunities to profit from a rapidly aging
population eager to get every new drug and technology that might extend
their lives, and a government committed to doling out hundreds of billions
of dollars in Medicare and Medicaid.
With size has come not only market power but political clout. Big for-profit
insurers deploy enough campaign money and lobbyists to get their way with
state legislators and insurance commissioners. A proposal last year to allow
California's Department of Insurance to regulate rates, for example, died in
committee. These companies have even been known to press states to limit how
many other health insurers they license.
And when they can't get their way, insurers go to court. In Maine - one
state that aggressively regulates rates - WellPoint's Anthem subsidiary has
sued the insurance superintendent for reducing its requested rate increase.
Political clout can be especially advantageous at the federal level, as the
big Wall Street banks have so brazenly demonstrated. Over the past two and a
half years, WellPoint's employees and associates have contributed more than
$922,000 to federal political campaigns, and the company has spent $7.8
million lobbying Washington policymakers, according to the Center for
Responsive Politics. It should not be surprising that WellPoint was one of
the leading opponents of the public insurance option, which would have
subjected it to competition even where it had sewn up the market.
Antitrust is no substitute for broader health care reform, but it's an
important prerequisite. If a handful of giant health insurers are allowed to
dominate the industry, many of the other aspects of reform (establishing
insurance exchanges, requiring people to have insurance, even allowing
consumers to buy insurance across state lines) won't bring down the price of
Regardless of what happens at the White House's health care meeting on
Thursday, we've got to make sure health insurers compete for every one of
our dollars. First chance I get I'm going to find another health insurer
here in California - unless Anthem has such a lock on the market I can't
find a better deal.
Update: On Wednesday, members of the House voted overwhelmingly to eliminate
the heath insurance industry's antitrust exception.
Robert B. Reich, a professor of public policy at the University of
California, Berkeley, and a secretary of labor under President Bill Clinton,
is the author of "Supercapitalism."
The Torture Lawyers
Editors, The New York Times
February 24, 2010
Is this really the state of ethics in the American legal profession?
Government lawyers who abused their offices to give the president license to
get away with torture did nothing that merits a review by the bar?
A five-year inquiry by the Justice Department's ethics watchdogs recommended
a disciplinary review for the two lawyers who produced the infamous torture
memos for former President George W. Bush, but they were overruled by a more
senior Justice Department official.
The original investigation found that the lawyers, John Yoo and Jay Bybee,
had committed "professional misconduct" in a series of memos starting in
August 2002. First, they defined torture so narrowly as to make it almost
impossible to accuse a jailer of torturing a prisoner, and they finally
concluded that President Bush was free to ignore any law on the conduct of
The Justice Department's Office of Professional Responsibility said
appropriate bar associations should be asked to look at the actions of Mr.
Yoo, who teaches at the University of California, Berkeley, and Mr. Bybee,
who was rewarded for his political loyalty with a lifetime appointment to
the federal bench. It was a credible accounting, especially since some
former officials, like Attorney General John Ashcroft, refused to cooperate
and e-mails from Mr. Yoo were mysteriously missing.
But the more senior official, David Margolis, decided that Mr. Yoo and Mr.
Bybee only had shown "poor judgment" and should not be disciplined. Mr.
Margolis did not dispute that Mr. Yoo and Mr. Bybee mangled legal reasoning
and produced work that ultimately was repudiated by the Bush administration
itself. He criticized the professional responsibility office's investigation
on procedural grounds and excused Mr. Yoo and Mr. Bybee by noting that
everyone was frightened after Sept. 11, 2001, and that they were in a hurry.
Americans were indeed frightened after Sept. 11, and the Bush administration
was in a great rush to torture prisoners. Responsible lawyers would have
responded with extra vigilance, especially if, like Mr. Yoo and Mr. Bybee,
they worked in the Justice Department's Office of Legal Counsel. When that
office renders an opinion, it has the force of law within the executive
branch. Poor judgment is an absurdly dismissive way to describe giving the
green light to policies that have badly soiled America's reputation and made
it less safe.
As the dealings outlined in the original report underscore, the lawyers did
not offer what most people think of as "legal advice." Mr. Yoo and Mr. Bybee
were not acting as fair-minded analysts of the law but as facilitators of a
scheme to evade it. The White House decision to brutalize detainees already
had been made. Mr. Yoo and Mr. Bybee provided legal cover.
We were glad that the leaders of the House and Senate Judiciary Committees,
Representative John Conyers Jr. and Senator Patrick Leahy, committed to
holding hearings after the release of the Justice Department documents.
The attorney general, Eric Holder Jr., should expand the investigation into
"rogue" interrogators he initiated last year to include officials
responsible for facilitating torture. While he is at it, Mr. Holder should
assign someone to look into the disappearance of Mr. Yoo's e-mails.
The American Bar Association should decide whether its rules are adequate
for deterring and punishing ethical failures by government lawyers.
The quest for real accountability must continue. The alternative is to leave
torture open as a policy option for future administrations.