Either the analogy is messed up or this article is missing something. The author compares proposed federal health deregulation to similar credit card deregulation. I was fairly convinced by the middle of the article that the positives of the latter generally outweigh the negatives.

The positives? More people have access to legal credit when they need it. People have more freedom to make financial decisions. People with the best credit get better rates to make more investments and more purchases. Nobody gets killed by the mob. That's pretty good.

The negatives in the article? Some people make bad decisions or good decisions that turn out unlucky. Every credit card company will settle with you for a portion of the debt if you can't or simply don't want to pay. Debt consolidation will get you lower rates. As a last resort, bankruptcy is very possible to recover from. All of the above beat starving or negotiating with a loan shark.

So, based on the arguments in the article, I'd say letting South Dakota regulate the credit card industry has worked out pretty well.

Wow, that's pretty cold-hearted pyro. I think the gist of the argument is that deregulation has rendered states powerless to regulate the credit card industry with rules that protect the consumer (to which you are probably screaming "this is capitalism, protection shmotection!"). Consumers sometimes need protective laws. 35% interest rates are not just a "minor" negative as you seem to imply. They are grossly excessive and unreasonable.

"MasterCard never put a gun to anybody's head."

What happens to the people that are most ill-used by the credit industry? They end up with bad credit and ultimately can't get loans.

What happens to the people that are most ill-used by the health insurance industry? They end up unable to get health insurance. But unlike credit, health care is a physical need. So those people now either go on public assistance or simply default on their health care costs, and all of those costs are passed on to people who can pay.

So clearly the solution, as a poster below pointed out, is simply to remove the burden imposed on the healthy by people who cannot afford health insurance by denying them health care entirely. In which case, they will simply die.

Rules that protect the consumer are one thing. Laws against fraudulent or misleading advertisement or business practices exist, although they should be more strictly enforced. Caps on fully disclosed interest rates are another issue altogether. I, and other people I know, have had situations where 35% annual rates (and the worst that can happen is bankruptcy) were a very good decision. People out of cash to eat on until their next paycheck, college seniors, people needing money for a car or even gas they need to reach work all have very high discount rates. By capping rates, you're may be forcing some of these people to go to loan sharks, who, because of the risk inherent in their business, have to charge even higher costs and have a more strenuous debt collection process. Those that don't choose this alternative will simply have to do without. That's less cold-hearted?

What happens to the people that are most ill-used by the credit industry? They end up with bad credit and ultimately can't get loans.

By capping rates, you're not allowing credit cards companies to give high-risk individuals credit. So, as I understand it, your proposal is not give such people loans in the first place?

Fair enough. But I guess the idea is that the stakes are much higher when you're talking about someone's life as opposed to someone's credit. When it comes to bankruptcy -- hey that's life, it's tough. But to say the same for people who get sick and die because they can't afford coverage, then that's cold hearted.

The current credit crunch happened because the federal override of state mortgage rules and regulations. If they had been stiffer or better thought out, that might have been an improvement. But with the GOP & GWB the odds were,, well it is what it is.

Interesting points abound. First, I think the true take away from the article is this: its a poor analogy. Health care and unsecured debt are discrete enough products that saying one is like the other doesn't make it so. And, I know of no one, who has looked at the issue closely, that thinks credit card deregulation was a mistake. Costs are signifcantly LOWER today than they were prior. Google it. Check out the facts.

Second, your point on state deregulation of mortgages is way off. In a perverse way, federal incentives that encourage marginally risky customers to purchase vs. rent drove some of the real estate mess we are in. Remember, the only true way we would not have the current mortgage mess is if the run-up in prices never took place. For this to have happened, many, many home buyers would have been turned away.