Filed Under:Carrier Innovations, Regulation/Legislation

House Moves Again on Limited McCarran-Ferguson Repeal, Passing Bill

NU Online News Service, March 22, 2:22 p.m. EST

The House took action again today on repealing the McCarran-Ferguson antitrust exemption for health insurers by passing the larger bill to which the repeal amendment was attached.

The bill, H.R. 5 passed the House by a vote 223 to 181, mostly along party lines.

The McCarran-Ferguson repeal amendment passed by voice vote.

Late Tuesday, the House Rules Committee cleared the McCarran-Ferguson repeal amendment for floor debate. But the amendment was significantly narrowed during that process to explicitly exempt property and casualty and life products from the repeal, as well as products allied with them, including workers’ compensation insurance.

Still, property and casualty and life-insurance companies, which mobilized starting last week to try to either kill or modify the bill, noted their concerns in reacting to the vote.

Melissa Shelk, vice president for federal affairs at the American Insurance Association, says, “Any attempts to broadly repeal McCarran-Ferguson are misguided and could have unintended consequences that, ironically, could stifle market competition while promoting regulatory uncertainty and increased litigation.”

She adds, “While we would prefer to see McCarran left intact, the amendment’s author recognized that property and casualty insurance products, along with other non-health-insurance lines, should be exempted from the amendment’s scope.”

Shelk says, “In the decades since McCarran’s adoption, insurers have been able, through state oversight of advisory organizations, to share loss-cost data to predict future losses and to develop common policy forms, which has fostered competition in a manner that greatly benefits consumers.”

The amendment’s sponsor, Rep. Paul Gosar, R-Ariz., highlighted in a House floor speech a provision of the amendment that would bar class-action lawsuits in federal court against health-insurance companies. 

“The Federal Trade Commission should have the power to investigate bad actors in the health-insurance industry, but it helps no one if these companies, or for that matter any American business, gets mired in lawsuits that will cost millions,” Gosar said.

“Class-action lawsuits often result in big bucks in attorney’s fees for greedy trial lawyers while leaving only pennies in the hands of the plaintiffs who were allegedly wronged in the first place,” he said.

Robert Zirkelbach, a spokesman forAmerica’s Health Insurance Plans, said after the vote that, "Health insurance is one of the most regulated industries inAmericaat both the federal and the state levels.  The McCarran-Ferguson Act is extremely limited in scope and has nothing to do with competition within the health insurance industry.”

He adds, “The focus should be on addressing the underlying cost of medical care, which is the real driver of rising premiums.”

The broader legislation, H.R. 5, Protecting Access to Healthcare (PATH) Act, imposes federal standards designed to further limit medical-malpractice lawsuits. It would do so by capping a medical-malpractice victim’s recovery.

In comments on the House floor, Rep. Linda Sanchez, D-Calif., said H.R. 5 is a deplorable bill.

She said, “It is the most simplistic and useless method for addressing very real problems with our medical community. It is a ridiculous piece of legislation that is akin to trying to put out a forest fire with a squirt gun.”

The bill would also repeal a provision of the healthcare reform law that created an Independent Payment Advisory Board. The purpose of the board is to reduce the growth in Medicare spending.

But the legislation is unlikely to become law. Washington Analysis, which advises hedge funds and other institutional advisors, said earlier this week that the bill “should sail through the House, but it won’t go any further than that.”

Washington Analysis said, “At one point, there were almost 20 Democratic co-sponsors, but Republican efforts to offset the bill’s costs via the malpractice-liability provisions eroded much of that support.

“In any case, the opposition of Senate Democrats and President Obama ensures that it would not be signed into law regardless of the level of support in the House.”

Gosar’s McCarran-Ferguson amendment was revised earlier in the week to cite the definition of health insurance in the Patient Protection and Affordable Care Act and the I.R.S. Code to limit its scope specifically to health insurers.

To further insulate other forms of insurance, other provisions were added to specifically exempt life and P&C insurance.

In other industry reactions, Ben McKay, PCI senior vice president of federal government relations, says, “We appreciate Gosar recognizing that repealing McCarran-Ferguson for property and casualty insurers would not provide any benefits to the consumer or the insurance marketplace.”

Jimi Grande, NAMIC senior vice president, federal and political affairs, adds, “The main legislation is a great step forward for medical malpractice reform.”

But, he says, “NAMIC will strongly oppose any effort to repeal the very limited anti-trust exemption provided for the property and casualty insurance industry under McCarran-Ferguson, and we appreciate Rep. Gosar’s willingness to listen to our concerns and provide additional clarity that ensured that his amendment was not targeting property/casualty insurance.”

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