On the Impunity of Modern Monopolists
Posted on August 18, 2016
Aetna health insurance is using its monopoly power in a brazen attempt to leverage an even higher level of monopoly. In particular, they threatened Obama they’d pull out of most of Obamacare (leaving a big hole, since they are powerful oligopolists) unless the Administration allowed them to merge with Humana. But Obama didn’t, and so they did. Which means a lot of Obamacare clients are going to have fewer choices and higher prices in 2017.
In the old days when antitrust enforcement meant something, the administration would have responded with a successful lawsuit to break Aetna up into little pieces for malicious restraint of trade. However movement conservative courts and Presidential administrations have effectively gutted anti-trust, based on Chicago-school libertarian ideas showing that (in certain extreme alternate reality cases) monopolies aren’t necessarily quite as bad as economists and progressives and do-gooders and other sensible folk had always said they were. Therefore the burden of proof in antitrust cases now rests on the government to prove that breaking up a given monopoly makes the world a better place, in the face of paid testimony to the contrary from an entire new industry of wholly-owned right-wing economists—a parasitical rent-seeking industry invented for the purpose of preventing anti-trust enforcement.
Nevertheless Obama ought to sue Aetna’s butt, if only to demonstrate clearly to everyone exactly what is going on.
Meanwhile, of course, Aetna’s CEO gets paid $28M for one year’s worth of these vicious shenanigans, funds awarded by grateful board members who mostly were personally appointed by the CEO. That amounts to at least $7,000 per hour, provided he works very long hours.
All of this is deeply ironic, because it reveals the fatal flaw in the grand settlement Obama made with the insurance companies in 2009 to get Obamacare passed. He agreed not to seek single payer, and they agreed not to oppose Obamacare, and hence Obamacare was designed to maintain or increase their profits (by expanding the market) while reining in some of their abuses.
But now they are unhappy with the limits on profit this structure imposes, so they are fighting back. Concerted Republican opposition to Obamacare made Obamacare vulnerable to sandbagging by the insurance industry, and now they are trying to exploit it by convincing people that Obamacare is failing. (It remains to be seen how much damage Aetna can really do.)
Key background information: insurance companies are utterly unnecessary middlepeople who waste roughly 5% of GDP. Medicare for all could replace them all at a cost that would not even show up in 2 digit GDP accounting. Which why those of us who supported single payer were right, and those establishment figures who wanted to allow the insurance companies to share in the drafting of the legislation were wrong.
However, with lots of luck the Clinton administration (if they have the will) will fight back by proposing and passing a public option (meaning the states could choose to offer their own plan). Not as good as single payer, but it would tend to trim insurance company sails while providing a bridge towards single payer.