Washington

House Democrats are planning a vote this week on legislation that would repeal exemption from federal antitrust laws under the McCarran-Ferguson Act for health and medical malpractice insurers. The bill would also give the Federal Trade Commission the authority to prepare studies and reports on the entire insurance industry.

However, given the united opposition of the insurance industry to the legislation, there is some thought that supporters of the bill will find it unlikely to win House passage and withdraw it in its present form, some industry officials caution.

The legislation will not include language protecting joint industry activities–for example, compilation of historic loss data, according to industry officials and congressional staffers. This provision was added in committee to a previous bill passed by the House last year in connection with health care reform legislation.

The latest bill has the support of the House leadership, including Speaker Nancy Pelosi, D-Calif., according to industry and congressional officials. It is part of the effort by House Democrats to enact pieces of the health reform legislation in the face of flagging political support for a more comprehensive measure.

While important sectors of the industry will accept modifications to the McCarran-Ferguson Act if allowed at least some form of federal regulation, the entire industry is united in opposition to the current bill.

The chief supporters of the latest bill are Rep. Pete DeFazio, D-Ore., and Rep. Louise Slaughter, D-N.Y. Another supporter is Rep. John Garamendi, D-Calif., a new member of Congress and former state insurance commissioner.

Blain Rethmeier, a representative for the American Insurance Association, confirmed the House plans. "This continues to be a solution in search of a problem," he said.

He noted that insurers are subject to comprehensive regulation across the country, including rates. "Simply put, this would disrupt the industry's business environment and create substantial litigation and uncertainty," he added.

Nicole Allen, vice president of communications for the Council of Insurance Agents and Brokers, said that if a vote on the bill is forced on the House floor, "it is reminiscent of the cap-and-trade vote last year."

Ms. Allen said rank-and-file House Democrats "may be asked to walk the plank on a measure that won't be signed into law, and wouldn't accomplish its stated aims even if it was accepted by the Senate."

"For those of us who philosophically support the optional federal charter, we're long on record as saying we would commensurately accept changes in the McCarran-Ferguson Act," Ms. Allen said.

"But this is all of the downside with none of the regulatory upside," she explained. "Thus, we would expect to see a very united insurance industry, and any such potential vote would be a major, not minor, interest to all of us."

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, said that "repealing the limited exemption would be a misguided decision, and would ultimately do more harm than good."

He explained that "many members of Congress have a false perception of the exemption, which was enacted to foster competition in the marketplace. We would simply ask those members with concerns about the McCarran-Ferguson provision to look carefully at what it does and what it doesn't do."

Special Reports /

House Plans Vote To Repeal McCarran Antitrust Exemption

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