The Senate bill has some good regulations, but it lacks teeth for real enforcement. Passing a law against something does not magically make it go away; we need look no farther than the amount of illegal drugs used in this country for proof.
The Senate bill does not create a national exchange, a national insurance commissioner; nor does it even repeal health insurance companies’ exemption from anti-trust laws, which would give the Federal Trade Commission some more oversight over health insurers. In effect it hands the states a piece of paper with a bunch of new regulations written on it and says, “Hey you, make sure these get enforced.” Given the very poor track record of state enforcement of insurance regulations this is a regulatory structure which is very bad for middle class American families but great for insurance companies.
State insurance commissioners are often political appointees who tend to have very close relationships with the insurance companies. Many after a relatively short time in the position go on to find very lucrative jobs in the industry they were supposed to police. Whether it is regulation of insurance companies or banks, we have seen firsthand the awful results of having a revolving door between regulator and industry. (There is also the related issue: can our country after years of Republican attacks on the idea of regulation and civil service even properly regulated extremely powerful corporations anymore? I strongly have my doubts and that is why I think a public insurance option is the only check against the private insurance industry that I think can work in this country.)
In many states like Texas, the governor has the power to appoint the state insurance commissioner. So Gov. Rick Perry, who strongly opposes the bill, has the power to appoint the guy whose job it will be to implement health care reform in Texas. This is not the implementation and regulatory structure you want if your goal is to make health care reform a national success. This is a recipe for a disaster. The patchwork quality of enforcement differing from state to state will ruin the entire insurance reform effort.
It is critical to focus on the long term implications of any reform effort. After a new reform structure is created it is almost impossible to scrap it and start over. Building reform on a foundation of failed state-based insurance regulators and wasteful private insurance companies is a terrible idea. Giving the broken private health insurance industry hundreds of billions in government money and millions of mandatory customers without serious checks on their behavior (public competition and a tough national regulation) will only make future efforts to get an actually functioning health care system even harder.
It doesn't take a magician's trick to figure out that the Senate bill fails to lay the ground work for future progressive change. It dooms health care activists to 40 years of fighting to undo the bad structure this Senate bill would put in place.