House May Offer Safe Harbor In Bill To Strip Med. Mal. Antitrust Exemption

"The gist of the amendment is that if insurers can pool their information, the resulting rates can more accurately reflect risk and thus be lower for consumers," according to an aide to Rep. Lungren. "Small insurers particularly benefit from information-sharing, as they do not have a large volume of information of their own to analyze."

Under the amendment, "the conduct referred to…shall not include making a contract, or engaging in a combination or conspiracy…to collect, compile, or disseminate historical loss data…to determine a loss development factor applicable to historical loss data; or…to perform actuarial services if such contract, combination, or conspiracy does not involve a restraint of trade."

Yet even if this safe harbor survives in a final health care reform bill, Joel Kopperud, a director in the department of legislative affairs at the Council of Insurance Agents and Brokers, cautioned that "repealing any part" of the McCarran-Ferguson Act–which offers insurers limited immunity from federal antitrust laws and provides for state regulation of the industry–"does nothing to lower the cost of malpractice insurance. In fact, it would likely have the opposite effect of undermining competition."

"This fight is just a proxy for the argument that health insurers are maliciously greedy and the villains in the health care reform debate," according to Mr. Kopperud. "It's an excuse to undermine a liability line of insurance that is unrelated to health reform."

He explained that "to the extent that medical liability has now been raised, it is a source of regret to us that it is not raised in terms of reducing the costs of defensive medicine through medical liability reform."

Sen. Pat Leahy, D-Vt., said he would offer his own Health Insurance Industry Antitrust Enforcement Act–S. 1681–as an amendment to the Senate's health reform measure to eliminate the antitrust exemption for health and medical malpractice insurers and to ensure "health insurers compete, rather than collude."

"The American people deserve reform that serves their needs, not the special interests of insurance companies," said Sen. Leahy. "Ending this cozy exemption is another way to strengthen consumer choice through a competitive marketplace."

Lawrence E. Smarr, president of the Physician Insurers Association of America, based in Rockville, Md., said that "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."

"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, who noted that physician-owned medical malpractice insurers cover about 60 percent of America's doctors.

Mr. Smarr said the Senate Judiciary Committee at a recent hearing appeared to be trying to "deflect attention from much-needed federal medical liability reform by blaming health industry insurers for rising prices due to market conduct abuses."

"This simply does not happen in the medical liability industry, which is highly regulated and subject to continuous state-based oversight," he added.

Reacting earlier to developments in the Senate, lobbyists at the American Insurance Association, the Property Casualty Insurers of American and the National Association of Mutual Insurance Companies voiced concern about losing the antitrust provision.

"We believe that Sens. Reid, Leahy and Schumer's efforts to repeal health insurers' limited antitrust exemption under the McCarran-Ferguson Act will have unintended consequences not only for the health insurance industry, but will have a negative impact on the medical malpractice insurance sector as well," said AIA.

"If adopted, this amendment could create ambiguity over the ability of medical professional liability insurers to engage in certain activities that are subject to state insurance regulation," they added.

"The [Senate] proposal would eliminate McCarran's federal deference to state antitrust oversight and drive up health care and insurance costs by creating barriers for insurers seeking to enter the health and medical liability markets," according to PCI.

Jimi Grande, senior vice president of federal and political affairs for NAMIC, said repealing the very limited exemption provided by McCarran-Ferguson "would actually reduce competition and harm consumers while solving none of the problems they are trying to fix."

MED MAL REFORM

Meanwhile, in related news, reforming the civil litigation process would reduce health care costs and save the federal government $54 billion over 10 years, the Congressional Budget Office reported.

That news prompted Sen. Charles Grassley, R-Iowa, ranking minority member of the Senate Finance Committee, to argue it is a "no brainer" that tort reform should be included in any health care reform legislation enacted by Congress.

"Doctors often order tests just to protect themselves from lawsuits, not to treat patients," he said, adding that "the more federal health care programs spend on unnecessary tests, the less money is available for necessary patient care. Cutting medical liability costs would help preserve patients' access to care."

A unit of the U.S. Chamber of Commerce that is a leading advocate for tort reform called the finding "momentous."

Lisa Rickard, president of the U.S. Chamber's Institute for Legal Reform, said that "neglecting to include medical liability reform benefits only the plaintiffs' lawyers. Including it benefits every American participating in our health care system."

However, the American Association for Justice, which represents plaintiffs' lawyers, argued that the real problem is with medical malpractice insurers, which the group charged with underestimating profits and overestimating losses, while creating overblown insurance "crises" to garner support for limiting patients' legal rights.