NU Online News Service, Oct. 19, 2:20 p.m. EDT

WASHINGTON–Medical malpractice insurance trade groups said they are gearing up to fight a proposal to cancel the antitrust exemption they are now afforded under the McCarran-Ferguson Act.

The Senate Democratic leader ship has said they will seek the change for medical practice insurers along with a repeal of the exemption for health insurers.

Lawrence E. Smarr, president of the Physician Insurers Association of America, based in Rockville, Md., said comments by President Obama supporting repeal in his weekly address this Saturday are confirmation of the industry's view that the Senate plans to act on the measure.

President Obama said health insurers are "rolling out the big guns" in a "last-ditch effort to stop reform."

"And they're earning these profits and bonuses while enjoying a privileged exception from our antitrust laws–a matter that Congress is rightfully reviewing," he added.

Mr. Smarr noted comments made in testimony last week before the Senate Judiciary Committee by Senate Majority Leader Harry Reid, D-Nev., concerning legislation that would repeal the exemption.

Sen. Reid's remark, "That it is time to pass this legislation and pass it now," is a "pretty strong statement," said Mr. Smarr.

Mr. Smarr and lobbyists for the property and casualty and medical malpractice insurers are now anticipating that the legislation (S. 1681) will not be in the base text of the health care delivery system reform bill that is now being drafted by Senate Democratic leadership.

But, Mr. Smarr said, "we believe that Sen. Reid will declare such an amendment in order for Senate floor action."

Companion legislation limiting repeal of the antitrust exemption just to health insurers has also been introduced in the House as H.R. 3596.

Lobbyists at the American Insurance Association, the Property Casualty Insurers Association of America (PCI) and the National Association of Mutual Insurance Companies have voiced concerns about the proposed legislation and have initiated a two-pronged strategy to oppose it.

According to several lobbyists, they are working first to ensure that it is not expanded to cover property and casualty insurers and, second, to amend the bills to eliminate any application to medical malpractice insurers.

Mr. Smarr agreed. He says his members are writing letters to all members of the Senate in anticipation that an amendment repealing the exemption for health care and medical malpractice insurers will be offered during Senate floor debate on the bill–a debate that could begin as early as next week.

Moreover, he said, "We believe the issue will come up in the House as well, but we are unclear as to how it will be handled in any House legislation and do not believe support for it is as strong as it is in the Senate."

He added, "We believe the language dealing with med-mal should be removed from the bill."

"What I don't think the president and Congress understand is that medical liability insurance is primarily offered by small, physician-owned specialty carriers and that they have no incentive to gouge their owners or customers."

And, he said, "there is a feeling, as voiced by the president, that repealing McCarran-Ferguson is going to reduce health care costs, but in reality the only demonstrated legislative solution is tort reform."

According to Mr. Smarr, physician-owned medical malpractice insurers insure about 60 percent of America's doctors. He said that only 135 insurers sell the coverage. His trade group, he said, has 60 members, and they write the majority of the product.

America's Health Insurance Plans (AHIP) trade group spokesman Robert Zirkelbach said, "Health insurance is one of the most regulated industries in America at both the federal and state level. McCarran-Ferguson has nothing to do with competition in the health insurance market. The focus on this issue is a political ploy designed to distract attention away from the real issue of rising health care costs."

Mr. Smarr's trade group, the Physician Insurers Association of America, said the Senate Judiciary Committee at a recent hearing appeared to be making an attempt to "deflect attention from much needed federal medical liability reform by blaming health industry insurers for rising prices due to market conduct abuses."

The statement added, "This simply does not happen in the medical liability industry, which is highly regulated and subject to continuous state-based oversight." PIAA said while it agrees with "the overall theme of the bill–to prohibit market abuses–the vagueness of the language of the bill make interpretation of its effects impossible."

Mr. Smarr said Sen. Pat Leahy, D-Vermont, the primary author of the bill, should completely rewrite it, "garnering industry input, if he truly wants to avoid unintended consequences, which would undermine competition and harm consumers."

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Med-Mal Insurers Plan A Fight To Keep Antitrust Exemption

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