Health insurance companies hang onto their antitrust exemption
Tuesday, December 22, 2009
Health insurance companies would retain their exemption from federal antitrust laws under the health care reform bill that will be voted on in the U.S. Senate Thursday. But most of the exemption, which was granted under the 1945 McCarran-Ferguson Act, was removed in the House version of the bill, and it would be one of the items to be negotiated in a conference committee.
The McCarran-Ferguson Act puts regulation of the “business of insurance” under state jurisdiction. According to a report by Robert Iafolla in the Daily Journal, the House version of the health care reform bill “contains a provision taking away insurance companies’ freedom from federal laws that prohibit bid-rigging, price-fixing and dividing markets up among competitors. It would impact both health and medical-malpractice insurance companies.”
The exemption from federal antitrust laws “has served the financial interests of the insurance industry at the expense of consumers for far too long,” according to Senators Patrick Leahy (D-Vt.) and Sheldon Whitehouse (D-R.I.). Leahy is the author and Whitehouse a co-sponsor of the Health Insurance Industry Antitrust Enforcement Act.
In a recent op-ed in the Washington Post, Leahy and Whitehouse wrote:
It is only the health insurance industry’s enormous influence that has maintained this statutory exemption from federal antitrust laws since the McCarran-Ferguson Act was passed. Meanwhile, patients and doctors have continued paying artificially inflated prices, and costs continue to rise at an alarming rate…ironically, health insurers have at times sued doctors and hospitals under the very rules from which they are exempt.
David Balto, a senior fellow at the Center for American Progress, has written in The Huffington Post that repealing McCarran-Ferguson would be a “crucial step in ensuring that health insurance markets are competitive.” He explained why he thinks it’s important to eliminate the exemption, even though it hasn’t played a role in many cases in the past:
First, eliminating the exemption is important to protect competition after health care reform is enacted. If the exemption is left untouched, after health care reform restores some level of competition to the health insurance market, the McCarran-Ferguson Act could be used to allow insurers to collude. Second, eliminating the exemption and clarifying FTC [Federal Trade Commission] jurisdiction is important to enable the FTC to bring consumer protection actions against insurers.
The elimination of the federal antitrust exemption was removed from the Senate bill in part because of the objection of Senator Ben Nelson (D-Neb.), whose support is needed to avoid a filibuster that could kill the entire bill.
The insurance industry remains prepared to fight any further effort to repeal the exemption, according to a report by Arthur D. Postal on the industry news web site National Underwriter Property & Casualty:
Blain Rethmeier, a spokesman for the American Insurance Association, said, “We’re glad our arguments against modifying McCarran have appeared to carry the day in the Senate, but the battle’s not over.”
He added, “We expect this issue will heat up again next year, and it’s going to take the entire industry being united to oppose this in the final bill.”
Tags: antitrust, health care reform, health insurance;
Category: Page One;