Rules, But No Cops

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When the federal government passes a law but has no cops to enforce it, the crooks hold a "get out of jail free" card. That’s the unfortunate effect of a sweeping and successful effort by drug and insurance companies to have federal law "preempt" state enforcement. A spate of stories today (LA Times, Wall Street Journal, New York Times) on new federal rules against insurance company abuses of Medicare recipients drives home the point.

From the New York Times:

In the last two years, Medicare beneficiaries and state officials have often complained that high-pressure sales tactics led some people to sign up for unsuitable policies.

After reviewing comments from the public, federal officials intend to issue final rules before the marketing of plans for 2009 begins this October.

The proposed rules respond to pleas by consumers, Congress and state officials, but do not go as far as they wanted. In particular, the proposal affirms the Bush administration’s view that "states do not have the authority to regulate the marketing" of private Medicare plans.

Paul Precht, policy director of the Medicare Rights Center, a group that counsels beneficiaries, said: "We need Congress to give the states a greater role in enforcement. The federal government does not have the manpower."

Medicare’s bureaucracy is set up to efficiently manage traditional Medicare. The government pays doctors and hospitals directly. Overhead costs are low, and there are few middlemen raking in extra profit. But the rise in so-called "Medicare Advantage" programs, run by private, for-profit insurance companies, has raised overhead costs and invited high-pressure sales abuses, such as deceptively switching consumers from one program to another to raise agents’ income. Some people lose access to their regular doctors ias a result, or find that the drugs they take aren’t covered by the new plan.

Rules to curb deceptive sales practices will only be as good as their enforcement, and Medicare can’t do the job.

Medicare is only the tip of the iceberg. A Supreme Court ruling in February puts the makers of medical devices, such as heart pacemakers, out of the reach of state laws and state lawsuits, even when they’re shown to be defective, even deadly. Once they’re federally approved, they’re mostly immune from state court liability.

The court is now considering similar federal preemption "protections" for drug makers, even though the federal Food and Drug Administration is badly understaffed and its appointed leaders are tethered on a short leash to a corporate-friendly White House. 

Two years ago, the Senate nearly passed a bill to eliminate state oversight of "junk" health policies that have left patients with unlimited medical debt. In the states, tough court decisions have curbed deceptive sales of such policies. Without the courts, victims of these policies would have no choice but quiet bankruptcy.

Federal preemption is no more than a gift to corporate lobbies, at the cost of justice for people who are injured by defect or deception

Consumer Watchdog
Consumer Watchdog
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