With the collapse of Wall Street on everyone's mind, John McCain may have made a huge mistake in publishing an article in the current issue of Contingencies magazine calling for the deregulation of the health insurance industry. In the article, McCain proposes reducing regulatory oversight over the health insurance industry "as we have done over the last decade in banking."
By all accounts, reduced regulatory oversight in the banking industry allowed mortgage lenders to use predatory lending practices, provide risky loans to borrowers, sell those mortgages to other banks, create something called a "mortgage backed security," and so on.
There were no federal agencies legally mandated to ease the air out of the bubble before it burst.
Since the housing market collapsed, some of the biggest banks and investment firms in the world have started to fall: Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, AIG. Goldman Sachs and Morgan Stanley are next on the chopping block.
Effective regulatory oversight could have prevented this chain reaction, observers say. Even John McCain now, after a career as an avowed "deregulator," last week, seemed to adopt Barack Obama's position on the need for effective regulation of Wall Street practices. This week, however, McCain is back to defending deregulation of Wall Street.
Unfortunately, McCain's shifting position on regulating Wall Street speculation didn't find its way into the Contingencies article, in which he praises deregulation of banking and holds it up as a model for deregulating health insurance.
The Obama campaign pounced on McCain's praise for deregulation of the banking industry in a new TV ad to be released this week on national cable outlets. The ad opens with the announcer saying, "We’ve seen what Bush-McCain policies have done to our economy. Now John McCain wants to do the same to our health care."
Quoting McCain's article in Contingencies magazine, the announcer says that McCain has proposed reducing regulation in the health insurance industry, "Just 'as we have done over the last decade in banking.'"
The visuals of the TV ad link the recent banking collapses on Wall Street to the potential for harm to an individual's access to health care, to costs of services, and quality. The announcer states, "A prescription for disaster."
"John McCain. A risk we just can’t afford to take," the announcer concludes.
The ad dramatizes what a recent academic study of John McCain's health plan concluded in greater detail.
In an article for the major health policy journal, Health Affairs, a team of researchers and experts from several major universities concluded that McCain's health care plan would impose a new tax on employee health benefits, kick as many as 20 million people out of employment sponsored health insurance plans, cost over $1.3 trillion in just ten years, and would only negligibly reduce the number of uninsured people. In other words, it would cost taxpayers more, but they would get the same or less health care coverage.
McCain's position on deregulating health insurance and putting individuals and family's at the mercy of big insurance companies is likely his honest position on the free market and the issue of regulation. But at the moment, his campaign seems confused and disoriented about the banking collapse on Wall Street. The McCain camp seems to prefer an election cycle in which slinging mud is the main issue, not the real facts on the ground for working families.
