Fineman: On Health Care, Obama Should Read His Teddy Roosevelt

In America, we invented a way to tap the energy of the free market without letting it run wild. It's called federal regulation. When an industry becomes too big and powerful for our own good─railroads and oil in the late 19th century, radio networks and electric power companies in the 1930s, for example─We the People step in via Congress, not to "socialize" commerce in a Marxist sense, but in the name of the American tradition of the Common Good.

In America we cannot abide unaccountable power, or at least we say we can't.

The health-care industry has become the railroad oligopoly of our day─as essential to commerce and the literal health of our education-and-brainwork-based society as cheap and fair rail transportation was when the continent was raw and indispensably connected by ribbons of steel. United Heath, Wellpoint, Cigna, Aetna─you name it─are the Union Pacific, Southern Pacific, and Santa Fe of our day. They are too big and too powerful to be left to their own devices.

Industry officials will tell you that they already are regulated to death, by state and federal agencies and laws and rules. They direct you to a hair-raising flow chart that shows a poor, beleaguered set of companies surrounded by a swarm of regulatory bodies. Each state has its own rules, and the U.S. Department of Labor monitors some health-care plans of large employers.

But the truth is this: there is no single federal entity with authority to oversee and approve the language and conditions of the policies that health-insurance companies offer, especially for individuals, for small companies and for folks who lose their job and try to get hired by another employer.

I'm no fan of regulation. I hate bureaucracy. But we need national, clear standards about what language can or cannot be in a health-insurance policy, and we need an agency to enforce those rules, with tough penalties for noncompliance.

The irony is that the insurance industry wants this, too, as long as they also get the federal government to require everyone in America to carry insurance. That means more business for them, but it also means they can spread the risk (and the cost) of provisions they don't currently want to write, such as a ban on denying people coverage for pre-existing conditions.

If President Barack Obama had made the passage of such a law and the establishment of such an agency the centerpiece of "health-care reform," he would be in a lot better shape politically than he is. But for whatever reason─perhaps he doesn't want to come off as a "Big Government" man─he hasn't really done so. At least he hasn't explained his proposals in this way, or explained it clearly and compellingly. Which is puzzling, since this is a stirring theme, and one in the American grain, stretching at least as far back as Teddy Roosevelt and the Trust Busters of a century ago.

Most people have private insurance. They don't want to abandon it. They don't want to lose it. They want it properly and fairly administered.

The private health-insurance industry isn't comprehensively regulated by the feds for at least three reasons, from what I can tell. One is that the industry is in many ways an outgrowth of the life-insurance business, and that industry─rooted deeply in American history, going back to Benjamin Franklin─was born and reached maturity long before the feds had the clout to regulate anything. The industry has spent decades fending off the encroachment of the feds─and still successfully: life insurance still is regulated almost exclusively by the states. The other reason is that the health-care industry has only in recent years become the behemoth that it now is. And as the baby boomers age, it will become even more central to our society.

Perhaps Obama hasn't stressed this theme for another reason: he wants to satisfy or at least appease the left wing of his party by arguing that only a "public option" plan will─to use his words─"keep the insurance companies honest" by forcing them to compete with the government." But think about it. If he were championing a comprehensive regulatory scheme, wouldn't that "keep the insurance companies honest?" And he isn't championing it, why not?

Maybe he wants a "public option" because he believes that the Medicare model─government as "single payer" and controllers of costs and methods by virtue of what it is willing to pay─is the real way to go. If that is the case, he should have said so when this whole debate began. But he didn't. He is semi-advocating two different and, in a sense, contradictory approaches at the same time, and they are in the process of undercutting each other politically at the moment.

Having it both ways is in the American grain, too, I admit. But it's not selling. Until the president chooses one or the other approach, he won't end up with either.