Question regarding anti-trust laws

[Donnachaidh]

There is rumbling about applying anti-trust laws to the health insurance industry from the WH. But I have a question about that --

IF the laws are applied to these companies - what is the next step? Many of these companies already HAVE monopolies in states - does removal of these protections automatically trigger Government authorities to go after them?

Or is this just adding another potential *threat* to the companies - basically if they don't play ball with what the government is trying to do, they stand the chance of being yanked into court?

Could I get some clarification on this?

[Statistical]

1. Common misconception is that a monopoly is illegal.

Monopolies are 100% legal.

You could own 100% of a market and that in itself isn't a violation of antitrust laws (which a better name would be "competitiveness laws".

A monopoly however is subject to restrictions that smaller companies don't have. For example take a monopoly everyone loves to hate: Microsoft. They were sued by the govt for being "anti-competitive". Microsoft made deals with companies like Dell that they could buy Windows for cheaper IF they didn't sell other OS.

That is LEGAL but not for a monopoly. If Microsoft was 30% of the market they could 100% legally make a deal with Dell to sell them windows at half cost as long as Dell was Microsoft exclusive. Once a company becomes a monopoly the "rules change". What is legal for a small company is no longer legal for a monopoly. The flip is also reverse. RedHat (Linux distributor) could offer deals to Dell to discount RedHat distros in return for being "RedHat exclusive". This would be legal for RedHat while illegal for Microsoft due to market share. RedHat is not a monopoly, Microsoft is so different rules apply.

So the Health Care companies being subject to anti-trust laws doesn't automatically make them illegal, or even guarantee a lawsuit. It simply means they are subject to Monopoly oversight and if the govt determines that certain behavior is anti-competitive they can force them to stop. Failure to stop will result in a lawsuit by the govt (like they did to Microsoft) for anti-competitive practices.

Hope that helps.

1) Monopolies aren't illegal
2) Being "anti-competitive" isn't illegal

1 + 2 is illegal

[Donnachaidh]

2. okay - so basically this *threat* to apply anti-trust laws is more window-dressing to appease

the voters.

Because if the government has no intention of going after them, the only reason for *announcing* this is yet another *carrot on the stick* to put lipstick on this pig of a give-away to insurance companies.

[Statistical]

3. The law would only ALLOW govt to regulate them. You are right.

If the govt chooses to not regulate them then nothing will change at federal level.

I do believe though that State Attorney Generals would also be able to sue under anti-trust provisions.
Also individual citizens would be able to sue (including class action lawsuits) for 3x the damages suffered.

Depending on the state that could be a major change.

I am not a lawyer but I did stay at a Holiday In..

[Captain Hilts]

4. Right now, some insurance companies have nearly ALL the insurance in some states.

You have no choice in some states.

Revoking the anti-trust exemption will make this more difficult.

[Donnachaidh]

5. but unless the government decides to actually go after those companies

they can still keep the monopolies, even if the anti-trust protections are revoked, yes?

In other words - it's not enough to revoke those protections. We need to get a SOLID promise from our government officials to break up those monopolies. Anything less is window-dressing.

[Statistical]

6. See above - a monopoly is not illegal.

Companies don't get broken up, fined, or punished simply because there is no competitor.

[Captain Hilts]

7. No, it's not. But this will make it more difficult. nt

[Statistical]

8. Subjecting insurance companies to A-T provisions won't make competition appear.

Take a state right now with say only 2 or 3 providers. Why not more? Dozens of states could compete there is they want but they don't. The insurance companies have realized they make more money by staying out of each others way.

You remove A-T restrictions? What changes? Nothing. The insurance companies will still stay out of each others ways. The AT change can't make competition magically appear.

Now something like Public option would create competition and then A-T regulations would make it possible to punish insurance companies if they attempt to penalize individuals or companies for using it (preventing competition).

Passing A-T regulations without something to cause competition is like putting up a stop light in an empty field "to be ready" when traffic gets bad. Generally speaking it is a good idea to build the road first. :)