Friday, March 21, 2008

Health Care

From Ezra Klein.
"A week or two ago when I listed off my favorite magazines, I forgot to include The Columbia Journalism Review, which I read religiously. This month, they've got a great piece on how the media missed the credit industry's transformation "from a lending and underwriting paradigm to a sales paradigm [in which] penalties, fees, and default interest at rates that were illegal a generation ago are no longer regrettable outcomes to be avoided but central to the business model." Of course, the current crisis is in part a consequence of that shift -- people can't pay back their debt because they weren't signed up under conditions where they were supposed to be able to pay back their debt. Charming. The piece also contains this nugget:"
As always, irresponsible and unethical business practices were preceded by a regulatory rollback. In the case of credit cards, the U.S. Supreme Court started it with a 1978 ruling that allowed banks to override state usury laws and offer whatever rate was allowed in the bank’s home state. (This is why so many banks’ credit-card operations are now in South Dakota.)
To be clear: Before 1978, credit practices were regulated by state. After 1978, they were tied to whichever state the bank was based in. This, of course, kicked off a search for the state with the laxest usury regulations, and a race to be that state and get all the new banking jobs. South Dakota won, and a few of the more devious tricks of the credit industry are a direct result.

"This is exactly what Republicans -- ranging from Congressional types like Enzi or Shadegg all the way up to John McCain -- want to do with health insurance. Currently, insurance is largely regulated at the state level, and different states demand different levels of comprehensiveness and transparency. Republicans argue that that's too much regulation -- but rather than simply create a single national regulatory body that could standardize the rules, they want you to be able to buy from whichever state you want. Which means if Mississippi wants to attract insurance business by refusing to regulate at all, insurers can sell their plans from there, disallowing all preexisting conditions, refusing to cover all manner of common ailments, and generally creating insurance policies that trick folks into believing they have care when they don't, and believing they'll get their treatments paid for when they won't. It would be, literally, a national race to the bottom, and the baton being passed would be your health coverage".



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