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GOP Health Plan Is Modeled on Banking Deregulation

By Ian Millhiser  

"GOP Health Plan Is Modeled on Banking Deregulation"

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foreclosureApparently incapable of coming up with a single new idea, House Republicans plan to release a health plan today which is plagiarized almost entirely from the McCain-Palin health plan that voters soundly rejected last November.  Amazingly, the “new” GOP plan even lifts McCain’s widely-panned proposal to deregulate the health insurance industry in exactly the same way the banking industry was deregulated over the last several decades.  As McCain promised during the 2008 campaign:

I would also allow individuals to choose to purchase health insurance across state lines. . . .  Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.

Here’s how this “new” plan works:  Once upon a time, banks were governed by something known as “usury laws,” state laws which prohibited lenders from charging excessive interest to homeowners and other borrowers.  In 1978, however, the Supreme Court held that banks are only required to follow the usury laws of the state where they are “located,” effectively immunizing banks from the interest rate caps in each of the other 49 states.

The result was a race to the bottom where states competed to enact the least protective usury laws in order to coax the banking industry into relocating within their borders.  Eventually, South Dakota “won” this race by repealing its usury laws altogether, and Citibank rewarded South Dakota by moving its lending offices to that state.  The rest of the industry soon followed suit, immunizing itself from interest rate caps altogether by locating in places like South Dakota.

At a time when Americans are terrified of being denied care because of a preexisting condition, or even having their health insurance provider pull coverage the minute they get sick, the McCain-Palin/House GOP health plan calls for health insurers to have even greater latitude to deny coverage; and it does so by fully adopting the banking model’s approach to state regulation.  If the House Republicans are successful in enacting their plan, a short list of laws that would effectively cease to exist includes:

  • Women’s Health: 49 states and the District of Columbia require health plans to cover reconstructive surgery after breast cancer, mammograms, and maternity stays;
  • Fair Appeals: 44 states and the District of Columbia allow patients to appeal denials of coverage to an external review board;
  • Preexisting Conditions: 38 states and the District of Columbia restrict how far into the past a insurance company can “look-back” to determine whether a patient is disqualified because of a preexisting condition;
  • Healthy Children: 31 states require health plans to cover well child care.

The choice is clear.  President Obama has promised to cut health care costs, expand coverage and eliminate discrimination against Americans with preexisting conditions.  Conservatives have a very different vision.  They think that insurers “don’t need to be ‘kept honest’ by the government,” and they plan to dismantle many of the existing laws which Americans rely on to ensure that their medical conditions are covered.  We have already seen the cost of bank deregulation on the nation’s economy; it is truly mind boggling that conservatives want to do the same thing to health care.

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