After this interesting and collegial discussion between David Giacalone, George Wallace and myself regarding the McCarran-Ferguson Act and the effects of its repeal on insurance providers, I found that my MT web site running on my desktop was not up to the task (most likely from my unstudied ignorance of how the whole setup actually works.) I have spent the last day moving to typepad and getting things working properly (that is -- when I wasn't teaching, going to meetings, advising students, and meeting my kids' teachers at back to school night.)
In sum I think this is where we stand:
- Everyone agrees that antitrust law properly applied would not prohibit certain types of information sharing activities that would promote competition. David has a nice post which describes the enlighten thinking on this point in the comments (buried in at the end of the post here). In fact, some 19 (?) states already have state antitrust provisions that apply to insurance. (I can't find a link to support that number--It is just something I recall)
- My trackback links and pings don't work. But so far they work at my new digs.
- a tort et a travers sounds like some dessert taken at a racetrack (ha!). I could be wrong, but it thought it meant something like "white noise". I liked the term because it had the word tort in it. I just looked it up on the Academie Francaise dictionary at the University of Chicago and it appears to mean "Without consideration or care." It makes sense!
However, the to me the debate should now center on the existence of evidence of collusion. George Wallace believes (and I agree) that there is no evidence of collusion and David argues that collusion happened in the past and, thus, could again. Therefore it is still a concern.
The academic research on the conduct, structure, and performance of the insurance industry concludes (after looking at market share, profitability, efficiency, and other aspects of the insurance market's organization) that insurance services should be classified as competitive markets. No peer reviewed paper (that I am aware of) suggests evidence that insurers collude. Thus, while I conclude that there is no collusion, I should say we haven't found evidence that collusion is a problem.
George Wallace also is concerned about the federalism aspects of this debate. Is this a state problem or what? Neither the Democrats or the Republicans are consistent with respect to insurance. The proposed SMART Act gets the states out of the regulation of the prices for most of the insurance industry, but not medical malpractice. I think this is "funny" federalism. Similarly, the Democrats proposed medical malpractice law antitrust exemption removal appears to only apply to med mal. This, too, is "funny" federalism.
As an economist I'd like efficiency to be paramount, but as a person who respects federalism (a federalist?) I 'd like reject preemption merely because the feds might do a better job. There are costs and benefits of having certain levels of government undertake the regulatory activity and it seem like these arguments do not seem to get into this debate. (Shameless plug-- see my paper with Bob Klein on this topic that was published by the AEI in 2000.)
It's very interesting to see the translation of "a tort et a travers." I just checked my "Dictionary of Foreign Phrases," and it says: "Fr. At random; without rhyme or reason." It certainly is fair warning for your readers!
Tomorrow is the 135th running of The Travers up the road in Saratoga Springs. I don't know about tortes being served in the Clubhouse, but a horse named Purge is in the 7-horse field.
You've said nothing today with which I can disagree, for which I am most grateful. I don't know any political party (nor any pundit or academic) who is consistent in applying the federalism principle. It's either a trump card or an excuse of last resort. I'm still waiting for a good reason to continue the special antitrust exemption. Inertia is not totally persuasive.
p.s. I tried to include a link in this Comment and was disappointed to get the following error message: "This blog does not allow HTML comments."
Posted by: david giacalone | August 27, 2004 at 07:13 PM