Are Health Insurers the Enemy?


DC Examiner columnist Tim Carney thinks so, but not for the reasons you might expect:

Health insurance companies are not your friends. Keep opposing a new government-run insurer, a single-payer plan, and new regulations on the HMOs. But grant that Speaker of the House Nancy Pelosi is correct on this: Insurance companies are villains.

Insurance companies lobby for big-government regulations, subsidies, mandates, and tax-code distortions that funnel them money, keep out competition, and stultify innovation. These policies preserve the employer-based health-care system that mocks the idea of free-market competition. Then they cry "unfair competition" when government threatens to encroach on their government-protected monopolies.

But they're not just lobbying against a government option. Today, health insurers are lobbying to force you and me to buy their product or face a tax hike (the individual mandate).

They are lobbying to force entrepreneurs to buy insurance for employees (the employer mandate). They are lobbying for more subsidies paid for by us taxpayers. In short, they are lobbying against regular people and against the free market.

I'm a fan of Carney's work—his 2006 book on rent-seeking remains a strong influence—and I'm no supporter of rent seeking, but I think he takes this a little too far. Describing insurers as "against the free market" might be technically true, but I'm not sure it tells us much. The fact is, very few individuals are in favor of free markets in a serious, principled way, even amongst allegedly free-market Republicans. This 2007 Fabrizio survey of the Republican Party, for example, found that, at just 8 percent of the GOP, "free-marketeers" were tied for the honor of being the party's smallest faction. This is all pretty obvious: People like free markets—except, of course, when interventions might benefit them. 
And that's true of companies too, probably even more so. It's even more true when the White House woos wealthy industries with secret deals, and when legislators all but ask for companies to start begging for handouts and favoritism supporting their initiatives by offering to let them help negotiate legislation in exchange for not running opposition ads. Congress is baiting the health-care industry into supporting reform, and the industries think they're going to get more from having a seat at the legislative bargaining table than from running an opposition strategy. 
So while I don't like what the insurers and other industry groups have done, I don't think they deserve the bulk of the blame. They're just playing the game; the White House and Congress are 
the ones making the rules.