Congress Considers Revoking Antitrust Exemption For Health, Med Mal Insurers

The American Insurance Association noted that the bill would modify the McCarran-Ferguson Act for health and medical malpractice insurance "by specifically adding prohibitions on price-fixing, market allocation and bid-rigging."

Sen. Reid and Sen. Leahy are co-sponsors of the Senate bill. There are six other co-sponsors–all Democrats.

S. 1681 was recently introduced by Sen. Leahy, while Rep. John Conyers, D-Mich., chair of the House Judiciary Committee, introduced a companion measure–H.R. 3596–in the U.S. House of Representatives.

Christine Varney, assistant U.S. Attorney General in charge of the agency's antitrust division, also voiced support for repeal of the exemption, but not any particular legislation. Specifically, she said that "repealing the McCarran-Ferguson Act would allow competition to have a greater role in reforming health and medical malpractice insurance markets than would otherwise be the case."

In his comments, Sen. Reid said "there is no reason why the insurance companies should have exemption from antitrust laws." He added that "to the extent insurance companies need to share information to provide their services, let them do what other industries have to do–seek prior authorization and guidelines from the Department of Justice for how they can work together."

Sen. Reid also said health insurers "should be subject to the same federal oversight as every other industry. Their price-setting and information-sharing practices should not be permitted to take place out of public view, but should be brought out into the light of day."

Sen. Leahy said his bill "will ensure that the basic rules of fair competition apply to insurers in the health industry, as part of the reforms that the larger health care bill will enact."

He added that "our nation's antitrust laws exist to protect consumers, and it is vital that the health insurance companies are subject to these laws. These laws promote competition, which ensures that consumers will pay lower prices and receive more choices."

Sen. Leahy noted that he was a co-sponsor in the prior Congress with Sen. Trent Lott, R-Miss., "in introducing a much broader repeal of the insurance industry's antitrust exemption." He added that the bill he re-introduced this year is a "scaled-back version directed at health insurance."

"Surely we can all agree that health insurers should not be permitted to fix prices, allocate markets, or to rig a bid," Sen. Leahy said.

"Insurers should not object to being subject to the same antitrust laws as everyone else," he continued. "If they are operating in an appropriate way, they should have nothing to fear. It is time for Congress to stick up for consumers, rather than roll over for the insurance industry."

In a letter submitted to the House last week, Karen Ignagni, president and chief executive officer of America's Health Insurance Plans, sought to reassure the House Judiciary Committee that McCarran-Ferguson "does not preclude regulation of insurers, but instead recognizes that the states play a central role in conducting oversight of health and other insurers."

"In fact," the AHIP letter said, "health insurance is one of the most significantly regulated areas of the economy."

McCarran-Ferguson was "created to establish a balance between regulation and antitrust enforcement," said Leigh Ann Pusey, AIA's president and CEO. "McCarran-Ferguson was never intended to grant insurers blanket immunity from federal antitrust laws or be a shield from laws that prohibit anti-competitive behaviors."

She added that the bill would "fundamentally alter long-standing provisions of the McCarran-Ferguson Act and undo decades of settled case law, upsetting McCarran's careful balance of regulatory and antitrust policy."

She said it would "also completely disrupt the industry's business environment and create substantial legal uncertainty and unnecessary litigation. Any repeal of McCarran will undercut the primary purpose of antitrust laws, which are designed to promote market competition free from government or private interference."

She urged the Judiciary Committee to "oppose this bill, as it would bring zero benefits or protections to consumers and would cause enormous disruptions and perverse effects on the insurance marketplace."

Sen. Reid began work last week in melding the health care reform bill reported out by the Senate Finance Committee with similar legislation passed in July by the Senate Health, Education, Labor and Pension Committee. He said he hopes to complete the work in order to have Senate floor action on the bill this week.