Free Markets, Free People

Monthly Archives: February 2010


The war on health insurance companies is indicative of the government’s greed for power

The Democrats are bound and determined to demonize the private health insurance industry and use that demonization as a basis for further control by government.  Seizing on one insurance company’s rate increase in California as a reason for government intervention the House has passed a piece of legislation in the House to remove the industry’s anti-trust exemption.  That’ll teach ‘em (and by the way, the vote was 406-19 so a whole heck of a lot of Republicans have bought into this again).

The White House, of course, backs the bill claiming:

The repeal of the antitrust exemption in the McCarran-Ferguson Act as it applies to the health insurance industry would give American families and businesses, big and small, more control over their own health care choices by promoting greater insurance competition.

But will it do what the White House says it will do. Most likely not:

The Congressional Budget Office concludes that repeal “would have no significant effects on either the federal budget or the premiums that private insurers charged for health insurance.” University of Pennsylvania economist Scott Harrington says, “This is just barking up the wrong tree…It might sound good, but I can think of very few things …that would be less consequential for consumers of health insurance.” Professor Austin Frakt of Boston University notes, “Repeal of the exemption is popular, but like a lot of things done in anger, it isn’t particularly wise and won’t be very effective.”

In essence this is a political temper tantrum of the type where bad law is usually made. It’s not clear that this particular law will have negative effect, but it is apparently not going to do what the White House claims.  But it will accomplish one thing – increase the power of the federal government.

To understand that, a little background concerning the exemption might be informative:

In 1944, the Supreme Court overturned prior case law and held that the antitrust laws should apply to insurance.

Congress responded with the McCarran-Ferguson Act, which created a limited exemption from federal antitrust law for the “business of insurance.” To qualify for the exemption, each state had to engage in oversight of its insurance market. States responded by creating insurance commissioners and regulating insurer conduct.

The logic of the exemption was that prior to 1944, insurance had been regulated by the states anyway. No one felt any compelling need for intrusion by the federal government, or to allow private litigants to bring federal antitrust suits against insurers. In addition, insurers — particularly smaller insurers —can more accurately price risk if they can share information on their actuarial experience. The exemption created a safety zone for insurers to share information free from the threat of private antitrust suits.

McCarran-Ferguson still left insurers subject to state regulatory oversight and federal antitrust scrutiny for matters that don’t involve “the business of insurance.” Contrary to Sen. Reid’s claim, the federal government already scrutinizes mergers for anticompetitive consequences, and has brought several challenges.

The point of the exemption was to actually help make the industry more competitive. Sharing “actuarial experience” will now be an anti-trust violation. Additionally, private litigants will now be able to bring federal anti-trust suits against insurers – if this passes the Senate.

So when the White House continues, saying:

The repeal also will outlaw existing, anti-competitive health insurance practices like price fixing, bid rigging, and market allocation that drive up costs for all Americans. Health insurance reform should be built on a strong commitment to competition in all health care markets, including health insurance.

It’s describing what was formerly considered to be “the business of insurance.” Now it is “price fixing” and “bid rigging”. And most disingenuous of all is the claim it will spur competition.

So what will this do?

Insurers fear that losing the exemption would force them to deal with an additional (federal) regulator and expose them to private federal antitrust suits. State insurance commissioners also want to keep the exemption, because they prefer to remain the dominant regulator. On the other hand, federal antitrust authorities want to scrap the exemption because they don’t like exemptions — although they don’t seem to be claiming that repeal would result in greater competition.

Then the point of the bill is to increase what? Federal regulation. More federal control of the private health insurance industry that states have always regulated. This isn’t about competition, “bid rigging” or “price fixing”. This is about gathering more power at the federal level.

The excuse is this “greedy” insurance company in California (btw, the health insurance industry’s profit margin is 35th among all industries at 2.2%) that is raising premiums.

But what most don’t seem to understand is there are different types of greed. And one of them is a greed for power. That greed has been on display for years, and intensely so for the last year, within the federal government. This bill is nothing more than another manifestation of that greed.

~McQ


Is Senate Health Care Reform bill dead? And does Obama have a fallback plan? (Update)

It is looking more and more like the support for passing the pending Senate Democratic version of the health care bill just isn’t there – among Democrats. Deaths and recent resignations in the House, as well as pro-life Democrats, make getting the required number of votes to pass that legislation – unchanged as necessary – virtually impossible. Unless the House passes that legislation Democratic members of the Senate are saying the process is dead. Even Sen. Robert Byrd has gotten into the act addressing Democratic Senate colleagues by letter and warning against changing filibuster rules in order to advance their legislative priorities

That leaves us with today’s scheduled televised health care summit.  What’s its purpose?  My contention has been it’s a bit of political theater to convince the public that the Republicans are the problem (both generally and specifically).  But it also appears a bit of political reality is beginning to settle on the White House. The Wall Street Journal reports that Obama may introduce the idea of a vastly scaled back plan if he determines that the present plan isn’t going to make it. Given the difficulty outlined above of passing what is presently pending in Congress, this may be the result of the summit – a new and much smaller approach to passing something called “health care reform”. Says the WSJ:

It would do that by requiring insurance companies to allow people up to 26 years old to stay on their parents’ health plans, and by modestly expanding two federal-state health programs, Medicaid and the Children’s Health Insurance Program, one person said. The cost to the federal government would be about one-fourth the price tag for the broader effort, which the White House has said would cost about $950 billion over 10 years.

If, in fact, that’s the plan, then it is hardly what anyone would call “reform”. SCHIP (the Children’s Health Insurance Program) has already been expanded – it was one of the first bills Obama signed. Additionally, the expansion of Medicaid won’t please state who mostly pay for the program. Lastly, such a bill would do nothing to address the 800 pound gorilla in the room – what is necessary to bring costs in the federal programs (Medicare, Medicaid and SCHIP) under control. That is where the problem is to be found – not in private insurance. It also leaves those things the GOP and the right want where they our now – left out.

If that’s the result of today’s summit, it will be considered by all sides to be a failure. It will obviously be spun by the usual suspects in the administration as a rousing success. However, what has to be kept in mind is even this would have to pass through Congress and that’s not at all a sure thing anymore with the election of Scott Brown, breaking the filibuster proof majority formerly enjoyed by the Democrats.

It’ll be interesting to see how this summit turns out today. Reviewing the list of those invited, I don’t expect much in the way of compromise or bi-partisanship. And that’s fine with me.

UPDATE: Gallup weighs in with a poll about the health care summit and the mood of the public:

Americans are skeptical that lawmakers will agree on a new healthcare bill at Thursday’s bipartisan health care summit in Washington, D.C. If an agreement is not reached, Americans by a 49% to 42% margin oppose rather than favor Congress passing a health care bill similar to the one proposed by President Obama and Democrats in the House and Senate. By a larger 52% to 39% margin, Americans also oppose the Democrats in the Senate using a reconciliation procedure to avoid a possible Republican filibuster and pass a bill by a simple majority vote.

I agree the skepticism is warranted. 49% of independents oppose passage with 24% strongly opposing it in that poll (only 8% strongly favor it). Also note the overwhelming margin concerning the use of reconciliation. Again, looking at independents, 53% oppose it with 25% strongly opposing it (only 9% strongly favor it). I believe that could be deemed “fair warning” to Democrats.

~McQ


Reading the polls

A couple of interesting polls to note today.  The first concerns labor union popularity.  They aren’t.  Popular that is.  Or at least not at all as popular as they once were.  Pew reports:

Favorable views of labor unions have plummeted since 2007, amid growing public skepticism about unions’ purpose and power. Currently, 41% say they have a favorable opinion of labor unions while about as many (42%) express an unfavorable opinion. In January 2007, a clear majority (58%) had a favorable view of unions while just 31% had an unfavorable impression.

Those are the worst favorables for labor unions since 1985 (and lower than even that year).  A majority of Democrats still have a favorable view of unions (56%) while Republicans (29%) and the all important independents (38%) don’t.  My guess is the dramatic and highly visible political role played by unions in the 2008 presidential election (especially the SEIU which is also linked with the ever popular ACORN) as well as their role in trying to pack town halls to freeze out protesters this last summer have contributed to the unfavorable view labor unions now enjoy.  And, of course, government handing over majority ownership to unions in the GM and Chrysler bailouts also had a hand in driving their favorables down as that was seen as a pretty blatant political payoff.  This poll is another indication that Americans are indeed watching what has been going on, are aware of what has happened and don’t like it at all.

Speaking of government, or at least one branch of it, Rasmussen has its poll on Congressional approval out.  Unsurprisingly Congress has achieved new record lows.

Voter unhappiness with Congress has reached the highest level ever recorded by Rasmussen Reports as 71% now say the legislature is doing a poor job.

That’s up ten points from the previous high of 61% reached a month ago.

10 points?  In a month? That’s not a decline.  That’s freefall.  And it couldn’t happen to a more deserving bunch.  But the message is found in some of the responses within the poll.  For instance:

Nearly half of Democratic voters (48%) now give Congress a poor rating, up 17 points since January.

That 48% is probably upset that the Democratic Congress hasn’t delivered on it’s promised agenda. While that certainly adds to the overall unfavorable rating, it’s one that could flip in an instant should that agenda be muscled through (something that seems less and less likely now).

Seventy percent (70%) of voters say Congress has not passed any legislation that would significantly improve life for Americans, up 10 points over the past month and the highest level of dissatisfaction measured in regular tracking in over three years.

Again, part of that is probably that 48% Democrats not happy that the agenda is stalled. And that could include a portion of liberal leaning indies as well. But:

Forty percent (40%) of voters nationwide now say it is at least somewhat likely Congress will seriously address the most important issues facing the nation. That’s down from 59% last March. Only 9% say it is Very Likely Congress will address these issues.

Any guess what the “most important issues facing the nation” are?

Well it’s not health care:

As Congress continues to hash out the health care reform plan proposed by the president and Congressional Democrats, just 41% of voters favor the plan while 56% are opposed. Sixty-three percent (63%) of all voters say a better strategy to reform the health care system would be to pass smaller bills that address problems individually.

In fact, as Joe Biden has said, “it’s three letters. J.O.B.S.”. It is the economy and jobs. What is becoming increasingly clear is the administration and Congress have no idea how to get that done – well, except creating government jobs.

But before Congressional Democrats get all giddy thinking they can turn these numbers by pushing their agenda through come hell or high water, they need to again try to understand the present mood of the electorate – the mood they – the presently serving members of Congress on both sides – have helped create:

Other recent polling also reflects voter disappointment in Congress. Earlier this month, 63% of voters said it would be better for the country if most incumbents in Congress were defeated this November. Just 27% of voters say their representative in Congress is the best possible person for the job.

Three out of four voters (75%) report being at least somewhat angry at the policies of the federal government. Part of the frustration is likely due to the belief of 60% of voters that neither Republican political leaders nor Democratic political leaders have a good understanding of what is needed today.

Still, voters believe Democrats are more likely than Republicans to have a plan for the future.

Regardless of which political side voters are on, just 21% believe that the federal government enjoys the consent of the governed.

Read all of that carefully – that’s the rest of the Tea Party iceberg uncovered for you. As I’ve been saying for a year, the economic and financial meltdown and the government’s reaction was more than enough to jar the population from it’s complacency. Politicians still haven’t figured that out even though protesters and polls have been loudly announcing it for months. Congress and government in general is considered to out-of-touch and out of control. The dissatisfaction is focused on the Democrats at the moment because they represent the government establishment now, but it is clearly a dissatisfaction that crosses party lines. And I’m not sure the GOP has figured it out anymore than have the Democrats.

And while the GOP leads in the generic poll, the perception of Congress and the politicians therein is not a pretty one:

Just 9% of voters believe most members of Congress are genuinely interested in helping people, which ties the recent low in December. Eighty-one percent (81%) say most members of Congress are more interested in their own careers, a new multi-year high.

The plurality of voters (42%) continues to believe most members of Congress are corrupt, a result that has remained fairly consistent over the past several months. One in three U.S. voters (32%) does not see most congressmen as corrupt. Another 26% are undecided.

It’s why I continue to think that the first Tuesday night in November will be “must see TV”. Will this dissatisfaction manifest itself in the voting booth? And if it does, what will be the outcome for the next Congress?

More importantly what if it doesn’t? Is there enough anger and discontent out there to drive people to the voting booth?  And if it doesn’t, won’t we then get precisely what we deserve? And finally, if we get what we deserve, won’t politicians rightly surmise they can ignore the public for the most part since there’s really no penalty for doing so?

~McQ


Russia: How’s that “reset button” working?

The push for international support for tougher sanctions against Iran seem to be going well with our good friends in Russia:

Russia will not support “crippling” sanctions against Iran, including any that may be slapped on the Islamic Republic’s banking or energy sectors, a senior Russian diplomat said Wednesday.

[...]

“We are not got going to work on sanctions or measures which could lead to the political or economic or financial isolation of this country,” Oleg Rozhkov, deputy director of the security affairs and disarmament department at Russia’s Foreign Ministry, told reporters.

“What relation to non-proliferation is there in forbidding banking activities with Iran? This is a financial blockade. And oil and gas. These sanctions are aimed only at paralyzing the country and paralyzing the regime.”

Well, yeah – that’s sort of the point of sanctions. Short of that, there are few options left to force Iran to comply with the will of the international community – such that it is. And this is one of the failings of the Obama administration’s approach.

You have to sort of root around to find that approach spelled out, but the clearest indication of how the administration approaches foreign policy is actually found in the DoD’s recently released Quarterly Defense Review. One sentence tells it all:

“America’s interests are inextricably linked to the integrity and resilience of the international system.”

In the past, US presidents have realized that, “the integrity of the international system depends upon the resilience of American power.”

The Obama administration (and this explains much of his world apology tour) has flipped that now putting “American power” second to the will and “integrity” of the “international system”.  As the article cited notes, Obama wants a “quiet world” so he can concentrate on his domestic agenda.  One way to do that is cede the US’s leadership role.

You can see how well that approach is working. Russia has just demonstrated the “integrity” of the “international system” by saying “no”. I wonder if Obama will call them obstructionists and “the country of ‘no’.”

Seriously though, this is quite a step back from the American leadership of the past, and it will have consequences. That statement in the QDR cedes our former position as the supposed leader of the free world to organizations like the UN. That has been a dream of the liberal left for decades. And as you read through the article I’ve cited for the QDR quote, look at the analysis that says that the plan reduces the American role in world by “disarming” us and structuring our military for a lesser role.

Russia is just the first of many nations which are going to defy the US’s attempts at pushing its foreign policy throughout the world because, essentially, there is no down side to doing so. We’re a weakened debtor nation (Putin recently consoled EU economic basket case Greece by pointing out the US is in the same boat) that has made it pretty clear that it won’t act without clear consensus from the “international system” this administration seems to love. Russia is obviously a part of that system and doesn’t mind at all stepping up and saying no. And China? Well, if Russia is this blatant and blunt about denying what the US wants, you can imagine China’s position.

Like I said, 2009 was the year of taking this administration’s measure on the foreign policy front. 2010 is the year that those sensing a power/leadership vacuum inherent in this US pullback attempt to fill it. Russia’s just the first to step up to the plate. We’ll hear from China soon.

~McQ


Vanity Fair Discovers Opposition Sells

Way back during the Bush years, we saw the rise of the netroots premised on the idea that Bush was the worst thing that had ever happened to America. Also boosted by the Bush years was the circulation of liberal magazines. The passion of the opposition was readily apparent to anyone who took the time to read either the liberal blogs or pubs.

That was then, this is now. Suddenly the opposition came to power and instead of spending their days throwing bombs and spit wads, they’ve had to defend what they helped bring about – a seemingly inept and drifting administration focused on the wrong things (they’re having a “health care reform” summit today, instead of talking about jobs) in a time of economic downturn and joblessness.

Vanity Fair has “discovered” that “hate sells”. It sold throughout the Bush years and now it is selling in the Obama years. Liberal magazine circulation is down from their Bush hating highs and conservative magazine circulation is up. I don’t know if it is true, but I’d guess that liberal blogs are suffering a bit of a downturn too. It is much easier to criticize (and I’ll be the first to admit that as I do it daily and find plenty of fodder for such criticism) than to defend. And criticism is usually much more passionate and seems to draw more passionate responses than does a defense.

What has happened to the liberals is they’ve gone from being the opposition – their usual position – to the establishment. They’re not comfortable (or particularly good) with being the establishment. They’re also not comfortable with having to defend their positions as they try to put them into effect via law. What they’re finding is it’s no fun being the establishment, and it is many times hard to summon the passion to defend their actions and ideas when they’re under assault from all sides.

One of the things these circulation numbers tell us as they swing from one side to the other is the measure of the “enthusiasm gap” (that all important gap that usually indicates which party’s GOTV effort will turn out the most voters in any upcoming election). As has been the case depending on which party holds the White House or Congress, there is usually more enthusiasm on the opposition’s side than on the establishment’s side. That seems to be the case now.  Welcome to American politics. In fact, it is nothing new and should the GOP capture Congress or Obama be a one-term president, the left will rise again.

In the meantime, they learn what it is like to be on the receiving end of what they dealt for 8 years. But they should also understand that the passion has deserted the left and now resides more on the right (although the Tea Parties indicate a bit of a wild card). And they know full well what that tends to mean in terms of politics and elections. The circulation numbers cited by Vanity Fair are only an indicator of that.

~McQ


2010 Midterm Elections

According to Chris Cilliza of The Fix, Charlie Cook, one of the best of the Democratic Party election handicappers, isn’t high at all on the chances of House Democrats of retaining the majority.  Watch the video – he immediately says the same thing I’ve been saying – there is no “communication problem” with President Obama.  Instead he’s sees what has happened to Obama and the Democrats as being “fundamental and total miscalculations” on their part.

Cook also finds it hard, after discussions with what he calls the brightest of House Dems, he finds it very hard to “come up with a scenario in which the Democrats don’t loose the House”.

Interesting comparision: Bush/Iraq = Obama/Health Care. Now, I don’t know if I’m as pessimistic as Cook seems to be (and trust me Cook knows this infinitly better than I do as he’s proven election after election), but it is certainly true that I think House Democrats will loose a significant number of seats and their easy majority will become a difficult one next January where they’ll actually have to take Blue Dogs seriously since it might be that bloc that provides the swing votes necessary for either side to have their way.

Cilliza finds another respected election handicapper who disagrees slightly with Cook – not with Democratic losses, just with the amount:

Stu Rothenberg, another noted political handicapper in Washington, has pegged Democratic House losses as between 24 and 28 seats. He writes: “We currently expect Republicans to fall short of the 40 seats they would need.”

In a polarized House, the loss of between 24 and 28 (I think it could actually be a little higher than that) is significant. The health care bill passed the House by 3 votes if my memory serves me correctly. As I point out above, controversial bills would have to be toned down and take a much more conservative tone to pass the House if those gains above are realized.

But to this point, all of the above is idle speculation. In terms of an election 9 months is an eternity. What I think will help cement either Rothenberg or Cook’s prognostications, however, is if the Democrats manage, by hook or crook, to pass health care legislation – especially with no Republican votes for it. Then I think Cook has it right. I think the voter’s wrath will be such that any name on the ballot with a “D” after it will be fair game.

~McQ


It’s Bush’s Fault. And Paulson’s. And Bernanke’s. And ….

John McCain, under attack for his part in approving TARP, is now claiming he was “misled”:

In response to criticism from opponents seeking to defeat him in the Aug. 24 Republican primary, the four-term senator says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis
, the housing meltdown.

“Obviously, that didn’t happen,” McCain said in a meeting Thursday with The Republic’s Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. “They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street – I guess it was trickle-down economics – that therefore Main Street would be fine.

Well one reason it wasn’t used only for the “housing meltdown” is because the law apparently didn’t specify it must be. Consequently one has to conclude it was McCain and those who wrote the law and voted for it who are responsible for what happened.  They a wrote bad law.  They fell for the drama.  They threw almost a trillion dollars out there and are now complaining that it wasn’t used as they “thought” it would be used.  Really?

If they were going to pass this travesty anyway, why wasn’t it limited to what the people who brought the problem to them (Paulson and Bernanke) said constituted the problem?  How did it end up bailing out auto companies and AIG?

Bad law.  And the ones responsible for writing th law include this guy trying to pass of the blame to others.

Secondly, there’s this:

McCain said Bush called him in off the campaign trail, saying a worldwide economic catastrophe was imminent and that he needed his help. “I don’t know of any American, when the president of the United States calls you and tells you something like that, who wouldn’t respond,” McCain said. “And I came back and tried to sit down and work with Republicans and say, ‘What can we do?’

Responding is one thing. But when your constituents are dead set against it, to whom should he really be responding? Well, who does he supposedly represent?  What McCain is really saying is “when the president tells you he wants you to pass a bad law, you salute and do what he says”.  Really?  “Response” apparently means saying ok to unconstitutional spending.  Not that Mr. McCain/Feingold has much use for the Constitution.

So, bad law, ignoring his constituents and now blaming others.

Sounds like a pretty typical politician who has spent way too much time inside the beltway to me – a politician well past his “incumbent expiration” date.

~McQ


The Coming “Health Care Summit” Ambush

Maybe I’m just  being a bit paranoid about this upcoming televised “health care summit” that President Obama has decided is suddenly so necessary.  Maybe it’s that I see politics in every move this guy makes.  This summit just isn’t what it seems and, at least to me, that seems apparent.  What it is however is the perfect opportunity for Obama to play at statesman, provide himself an opportunity to keep a campaign promise and finally make – for once and for all – the GOP the bad guys in all of this.

Here’s the scenario I envision:

Fresh off his televised performance at the GOP retreat in Baltimore a few weeks ago, which received rave reviews from the usual media suspects, the administration hit upon an idea. TV is and always has been the prefect medium for Barack Obama. And the format at the retreat was perfect for him – it allowed him to lecture, cajole and demonize without any real opposition. Why not do that again on an even bigger scale and for some big stakes? Why not do it on health care?

What has been a problem for the Democrats? The public doesn’t like their health care bill. And their continued attempts to pass it have only cause the public to like it even less. But Democrats know that this is the only window of opportunity they’re likely to have and it is closing rapidly. So how do they get the public on their side and get this bill passed? The easiest way is a distraction and a bit of blame shifting. Good TV. The fact that Obama has made it clear that he has no intention of seeing the present and pending Senate bill scrapped should be sounding warning bells among the GOP. This isn’t about compromise. This isn’t about “bi-partisanship”. This is about a justification for passing health care via reconcilliation by showing the Republicans as the “party of ‘no’”.

Think about it. Who controls the format and tone of the the “summit”? Certainly not the GOP (and when they did they still came off looking pretty lame). So let’s say Obama says to the Democrats “what is it you want?” And they claim the “public option” (or whatever). Obama says it’s probably not going to happen. They act disappointed (but don’t forget they have 2200 pages of health care legislation already to be passed). Obama then asks the Republicans, “what do you want”. And they lay it all out – tort reform, drop the mandates, insurance across state lines, etc. And he say, “OK, we will put all that in the bill. Now will you support it?”

Heh … it’s the perfect question, because like any good lawyer, he already knows the answer. The answer is “no”. They’ve already made it clear they can’t support the Senate version of the bill – that’s the bill to be passed. And if they say yes, they may as well resign from office because the backlash will be such that they’d wish they had.

Obama gets his moment recorded by the TV cameras no less. And mournfully he pronounces the Republicans as obstructionists who refused to negotiate in good faith as the great and wonderful Democrats have offered to do. And because of that, it is with a heavy heart and reluctantly he is forced to agree with the Senate Majority Leader Harry Reid that reconciliation is the only route left open to them to do “what is right” for the American people.

Just hide and watch – I’m giving 3 to 1 odds I’m right. Don’t believe it? Read this and tell me it doesn’t indicate the scenario I’ve suggested.

~McQ


The Dangers Of Reactive Populism

Not necessarily the danger to the politician – they’re seizing upon something which stirs up the public and trying to cash in on it politically.  But such “cashing in” usually leads to bad law.  And bad law leads to unintended consequences and usually more government intrusion.

President Obama will propose on Monday giving the federal government new power to block excessive rate increases by health insurance companies, as he rolls out comprehensive legislation to revamp the nation’s health care system, White House officials said Sunday.

This “new power” to “block” (i.e control) “excessive” (who gets to define “excessive”?) rate increases is a perfect example of the point.

By focusing on the effort to tighten regulation of insurance costs, a new element not included in either the House or Senate bills, Mr. Obama is seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California and moving to portray the Democrats’ health overhaul as a way to protect Americans from profiteering insurers.

In reaction to a single insurer in a single state raising the premium because of the loss of subscribers and revenue due to the recession, Obama has seized upon that as a populist reason to call for more government control. The subscribers Anthem needs to balance out those they’re paying for are gone. California has been very hard hit by the recession and Anthem is attempting to survive to continue to pay for those subscribers whose treatments it now covers.

Of course that’s seen as “profiteering” by a government which has managed to run up trillions of dollars in future deficits in the medical care program it runs.

Instead of trotting out a suggestion for more control – in this case cost controls (and we all know how well those work – see Venezuela. See Zimbabwe) – the answer should be competition. Clearly if consumers had a choice they’d leave Anthem and hook up with another insurer less likely to raise their fees.  That possibility would limit most insurers from proposing hikes which would run off those they need to support the pool.  And, if Anthem had the opportunity to broaden its base of subscribers by selling across state lines, it most likely wouldn’t have to raise fees or, at least, not 39%.

Consumers don’t have that choice. Insurers are restricted from selling across state lines. Why? Because bad law says so. This is a situation which can pretty easily be remedied and it can be done with less government. Repeal the laws keeping subscribers from buying from whomever they’d like in the US. We do it with every other type of insurance product you can imagine, health insurance should be no different (consider we do it now with Medigap insurance through vendors such as AARP).

Instead we’re likely to see the opposite happen. And, as usual, we’ll suffer the unintended consequences – less coverage, dropping people at the first sign of a disease which carries substantial cost and, of course, insurance companies which aren’t as financially sound as others going out of business.

The bottom line is Obama still doesn’t understand the unrest and dissatisfaction with the direction of this country (as represented by the Tea Parties) has to do with the size, scope and cost of government. The solution here is simple and something which has been proposed by the GOP for quite some time. The administration’s answer, however, is to do precisely the opposite. Obama’s answer to everything is more government, more control, more spending.

And that’s the wrong answer.

~McQ