Drop Health Insurer (McCarran Ferguson) Antitrust Exemption, Top Democrats Urge

National Underwriter
October 14, 2009

WASHINGTON---The Senate majority leader and the chairman of the Senate Judiciary Committee today urged support for legislation that would repeal the antitrust exemption provided health insurers through the McCarran-Ferguson Act.

The comments by Sen. Harry Reid, D-Nev., Senate majority leader, and Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee, were made at a hearing today on the Health Insurance Industry Antitrust Enforcement Act.

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

Specifically, the hearing was titled "Prohibiting Price Fixing And Other Anticompetitive Conduct In The Health Insurance Industry."

The legislation in both chambers would repeal the antitrust exemption accorded health insurers and medical malpractice insurers through McCarran-Ferguson. It was recently introduced by Sen. Leahy and Rep. John Conyers, D-Mich., chairman of the House Judiciary Committee.

The bills are S. 1681 and H.R. 3596.

They were made against the background of the decision of the Senate Finance Committee yesterday to report out legislation reforming the health care delivery system despite calls for major changes in the legislation by the health insurance industry.

A spokesman for America's Health Insurance Plans, which submitted testimony at a House Judiciary Committee last week opposing McCarran-Ferguson's repeal, said she would seek AHIP comment on the testimony.

Christine Varney, assistant U.S. attorney general in charge of the agency's antitrust division, also voiced support for repeal of the McCarran-Ferguson Act, but not any particular legislation.

Specifically, Ms. Varney said, "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, "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 that 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. Reid began work this morning to merge 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 next week.

In his opening statement, Sen. Leahy said that 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."

The bill is a scaled-back version of a measure he co-sponsored in the previous Congress to eliminate McCarran-Ferguson application for all insurance sectors.

"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 the letter submitted to the House last week, Karen Ignagni, president and chief executive officer of Americas Health Insurance Plans, sought to reassure the House panel 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."

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