The ad in question seizes on a proposal in a just-published article under McCain's byline to "[open] up the health insurance market to more vigorous nationwide competition, as we have done in banking." Factcheck complains that the ad
claims that McCain said he would "reduce oversight of the health insurance industry ... just 'as we have done over the last decade in banking.' " But the ad takes the comments out of context, failing to explain what exactly McCain meant by the comparison to banking. He was talking specifically about allowing the sale and purchase of health insurance plans across state lines.In fact, Factcheck makes its own unwarranted inferences as to "what exactly McCain meant"--not to mention what gutting state insurance mandates might mean. Here's the McCain passage in question:
I would also allow individuals to choose to purchase health insurance across state lines, when they can find more affordable and attractive products elsewhere that they prefer. 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.What phase of bank deregulation was McCain referring to? Factcheck cites competing interpretations from the two campaigns cited in The Wall Street Journal, then delivers a completely unwarranted judgment. Here's the WSJ:
Douglas Holtz-Eakin, Sen. McCain's chief economic adviser, said the banking regulations referenced in that magazine article were common-sense provisions approved in 1995 that allowed people to bank across state lines. Obama adviser Jason Furman said Sen. McCain appeared to be referencing 2004 rules that pre-empted state banking regulations and that, he argues, helped bring on the current financial meltdown.And here's Factcheck:
McCain did not cite specific legislation. But it is clear he was comparing such regulations to his proposal to allow the sale of health insurance across state lines.Now just what are "such regulations" -- and why assume that "allowing the sale of health insurance across state lines" is some kind of neutral, inherently harmless proposal? As the Journal exchange indicates, the weakening of states' control over banking was a multi-stage process, with a relatively benign phase and a malignant phase.
In the Journal passage above, Holtz-Eakin seems to claim that McCain was alluding to the Riegel-Neal Interstate Banking Act passed by a Democratic Congress in 1994 (not in "the last decade," per the McCain passage"), which removed prohibitions against interstate banking. It's true that Riegel-Neal left consumer protections in place. But the Bush Administration took care of that with the Fair and Accurate Credit Transactions Act of 2003 (FACT), which restricted states from enacting future laws to protect consumers in the credit markets. Then, in 2004,
a previously obscure federal banking regulator -- the little noticed Office of the Comptroller of the Currency (OCC)--eliminated application of all state consumer protection and predatory lending laws, as well as state enforcement authority, over national banks, even when no federal law protected consumers at all...The OCC asserted it had authority to take the field over virtually all matters pertaining to national banks, even when no federal law protected consumers from unfair or predatory financial practices (Edmund Meirzwinski, U.S. Pirg) .The states fought back against the Federal power grab. In August 2003, 35 attorneys general, supported by 43 state bank commissioners, filed an amicus brief in support of the Connecticut banking commissioner in defense against a Wachovia lawsuit that challenged the state's right to license and supervise Wachovia Mortgage Corporation, a state-chartered mortgage lender. In a release announcing the amicus filing, Iowa Attorney General Tom Miller warned:
The breadth of preemption through regulation that the OCC is pursuing through court decisions is dangerous for both consumers and financial institutions. The check on abusive practices that state law and state law enforcement have provided has created a confidence in our financial system that has allowed that system to thrive.Alaska Attorney General Gregg Renkes added:
As a matter of law as well as of public policy, the Comptroller of the Currency is on shaky ground. We hope that this court turns the tide of excessively deferential decisions in favor of OCC interpretations of federal law. Otherwise, we fear that a void is being created that could provide a breeding ground for consumer abuses.Chief among those preempted state checks on abusive practices: curbs on predatory lending.
Why should we assume that McCain, or rather whoever ghosted the article, was referring with clarity and purity of purpose to the unnamed Riegel-Neal? Everything we know about John McCain indicates otherwise -- that a) he didn't mean anything precise, and b) he's "always for less regulation"--in 1994, 1997, 2003, 2004 and today.
McCain is indeed itching to do "the same" to health insurance as the Bush Administration did to banking regulation (hard though it is to believe that our current system could open the door to even more discriminatory pricing, restricted and often illusory coverage, or minefields of coverage exclusions). McCain wants to enable the purchase of insurance across state lines because many state insurance schemes prohibit a wide range of coverage restrictions and provide rating protections that make small group insurance more affordable to older and sicker workers. By giving individuals the "freedom" to buy health insurance in any state, McCain would trigger a regulatory race to the bottom in which health insurers charter in states with the weakest regulation. As it is, almost as many Americans are underinsured as uninsured, stuck in plans with low benefit caps, high co-pays, and a maze of coverage exclusions. If you think that health insurance is melting down now, just wait till John McCain gets through with it.
Factcheck rightly points out that McCain's article "was not 'an article praising Wall Street deregulation,' as the ad says. Wall Street itself is never mentioned..." Foot fault -- the banking industry does not equal Wall Street. On the main point, though, the ad is dead-on. McCain would shred consumer protections in health insurance - what little we have - as thoroughly as the Bush Administration destroyed consumer protection in banking.