A Libertarian and Law Professor's Point of View of Health Care Reform

In my never-ending search/quest for answers, reasons, explanations and peace of mind as to why we don't have a more reasonable, just, moral, rational and, dare I say it? competitive system of health care in this country, I ran across this article, Private and Public Competition In Health Care.  I found it at Forbes.com and it was written by Richard A. Epstein.

Equipped with my trustworthy computer, fiber-optic internet account and dogged determination for knowledge, I Googled Richard A. Epstein and I found out he's a very distinguished professor of law and now he's at the NYU School of Law.  (I went to NYU, but not the Law School part)

He's staged his Libertarian argument in this article on the idea that enough competition to the big guys already exists within the health insurance arena.  The big guys are WellPoint, Aetna, CIGNA, United and the Blues.

Right now a multitude of small firms coexist with such huge operations as Aetna, Blue Cross/Blue-Shield, Cigna, United HealthCare, and WellPoint. But does this medley of firms suffice? In a recent Wall Street Journal column, Robert Reich, a former Secretary of Labor, suggests that the answer is no. 

Professor Epstein insists competition from a public entity, as Mr. Reich suggests, won't work.

He quotes Mrs. Reich's article from the WSJ, where Reich says, "Without government as competition, the private sector has little incentive to improve."

What is Professor Epstein's rebuttal?

The claim is a simple economic blunder. The private sector is not some monolithic entity. If it tried to behave as such, its members would be on the antitrust chopping block for engaging in horizontal price fixing. Instead, these large players compete flat out in all market segments. What, then, will one new player do to the overall level of competition?

Let's start with "its members would be on the antitrust chopping block for engaging in horizontal price fixing." If you know anything about how insurance works, as I am sure Professor Epstein does, you know this: It is immune to federal anti-trust laws due to the McCarran Ferguson Act of 1945:

It is fair to say that the McCarran-Ferguson Act antitrust exemption is very expansive with regard to anything that can be said to fall within "the business of insurance," including premium pricing and market allocations. As a result, "the most egregiously anticompetitive claims, such as naked agreements fixing price or reducing coverage, are virtually always found immune."⁽⁶⁾

What then, is Professor Epstein going on about in his article.  Is the professor not aware of the law already in place that keeps the anti-trust regulators away? (highly doubtful)  Or, is he writing to an audience of people who only want to hear one thing?  Who want some affirmation that profiting from the sick and dying is okay.  Those who think they can't get sick and who believe the market knows best.  What's that saying about the Forbes.com readership?

If you are educated about health insurance practices you also know that as a consumer you have little substantive recourse if your health insurance company doesn't want to pay your claim or denies your disability or causes suffering or kills you.  And that's because of ERISA or the Employee Retirement Income and Security Act of 1974.

In the case of employee health benefits, you are covered by the federal courts because employee health benefits plans fall under ERISA.  However, ERISA is written in favor of the plan and not you, the disabled person with say, Progressive Multiple Sclerosis.  A good attorney-written blog on all things ERISA here.

Professor Epstein goes on to say this:

Worst of all, no government entity ever operates on a level playing field. A government's dual capacity as regulating and regulated party creates a nonstop risk of bias, either by inadvertence or design. What private firm will sue a government corporation for unfair trade practices if they know that the Justice Department, Congress, the Federal Trade Commission or the Securities and Exchange Commission can investigate them? Who wants to litigate an unfair competition case, no matter how solid, and go head to head with a government firm that always has home court advantage? And who wants to compete economically against a firm whose thousand disguised government subsidies allow it to undercut competition?

As it is now, there is no level playing field the way private insurance works.  As a premium paying consumer, you cannot go to the Federal Trade Commission for help.  Period.  So that point is well, pointless.  McCarrran Ferguson again is why you cannot seek reprieve from the FTC.

As far as litigation, I urge Professor Epstein to click on the link above in the upper left hand corner of this blog and tell me what's fair when it comes to ERISA litigation when 21 Federal Judges go booze it up at the Helmsley Park Lane Hotel with insurance companies, big pharma and benefits plans general counsels to discuss defending against ERISA claims.  I urge the professor to explain the fairness of ERISA, in general, to claimants.

And Professor Epstein asks "who does want to compete against a firm whose thousand disguised government subsidies allow it to undercut competition?"

I'll tell you who, the people of this country, people like my family who are sick to death of the parasitic practices of the private health insurance monopoly we are chained to for life and blood.  Literally.

Health care cannot be about the market and competition because of the importance of life, of trying to meet death with dignity and compassion and all the subtleties in between; of the mother of two small children who is dying of breast cancer yet denied her pain medications, of a 5-year old boy trying to see yet another day of his new world yet denied the one treatment that may allow him to see his 6th year, of the woman with lung cancer who had it hidden from her--and why? Profits, the market, the bottom line.

I'll leave you with Professor Epstein's parting words in the article.  Don't know what to make of it.  I say we are already at disastrous.

The critics who treat the public health care plan as a Trojan horse for a single-payer health care plan have a real point. All libertarians know that private monopolies are problematic--and that state-run monopolies always prove disastrous.