Regulatory capture by the health insurance industry

[eridani]

http://www.harpers.org/archive/2009/12/0082740

The story of capture is repeated again and again, in industry after industry, whether it is the agricultural combinations creating an impenetrable system of subsidies, or television and radio broadcasters monopolizing public airwaves for private profit, or the entire financial sector conjuring perilous fortunes from the legislative void. The real battle in Washington is seldom between conservatives and liberals or the right and the left or “red America” and “blue America.” It is nearly always a more local contest, over which politicians will enjoy the privilege of representing the interests of the rich.

And so it is with health-care reform. The debate in Washington this fall ought to have been about why the United States has the worst health-care system in the developed world, why Americans pay twice the Western average to maintain that system, and what fundamental changes are needed to make the system better serve us. But Democrats rendered those questions academic when they decided the first principle of reform would be, as Barack Obama has so often explained, that “nothing in our plan requires you to change what you have.”

This claim reassured not just the people who like their current employment benefits but also the companies that receive some part of the more than $2 trillion Americans spend every year on health care and that can expect to continue receiving their share when the current round of legislation has come to an end. The health-care industry has captured the regulatory process, and it has used that capture to eliminate any real competition, whether from the government, in the form of a single-payer system, or from new and more efficient competitors in the private sector who might have the audacity to offer a better product at a better price.

The polite word for regulatory capture in Washington is “moderation.” Normally we understand moderation to be a process whereby we balance the conservative-right-red preference for “free markets” with the liberal-left-blue preference for “big government.” Determining the correct level of market intervention means splitting the difference. Some people (David Broder, members of the Concord Coalition) believe such an approach will lead to the wisest policies. Others (James Madison) see it only as the least undemocratic approach to resolving disputes between opposing interest groups. The contemporary form of moderation, however, simply assumes government growth (i.e., intervention), which occurs under both parties, and instead concerns itself with balancing the regulatory interests of various campaign contributors. The interests of the insurance companies are moderated by the interests of the drug manufacturers, which in turn are moderated by the interests of the trial lawyers and perhaps even by the interests of organized labor, and in this way the locus of competition is transported from the marketplace to the legislature. The result is that mediocre trusts secure the blessing of government sanction even as they avoid any obligation to serve the public good. Prices stay high, producers fail to innovate, and social inequities remain in place.

[Double T]

1. American voters continue to reelect incumbent political leaders and representatives.....

that not only support this kind of stuff, but also defend this kind of stuff. So who do we have to blame.