Politics

House Passes Bill To Repeal Antitrust Exemption For Health Insurance Companies

By Karina

By a vote of 406-19, the House passed the Health Insurance Industry Fair Competition Act (HR 4626), introduced by Reps. Tom Perriello (D-VA) and Betsy Markey (D-CO). This bill is designed to restore competition and transparency to the health insurance market ? by repealing the blanket antitrust exemption afforded to health insurance companies by the McCarran-Ferguson Act of 1945. Under this legislation, health insurers will no longer be shielded from legal accountability for price fixing, dividing up territories among themselves, sabotaging their competitors in order to gain monopoly power, and other such anti-competitive practices.

Over the last several years, the health insurance industry has become increasingly concentrated?giving consumers fewer and fewer meaningful choices in shopping for health insurance. According to a recent study by the AMA, there have been more than 400 mergers among health insurers in the past 14 years and as this map shows, many areas of our country are dominated by just one or two private insurers today:

This bill is also necessary because, over the years, health insurers have been able to use this antitrust exemption to block court actions regarding anti-competitive behavior. In Ocean State Physicians Health Plan, Inc. v Blue Cross & Blue Shield of Rhode Island, the First Circuit Court ? citing the McCarran-Ferguson antitrust exemption ? overturned a jury verdict against the dominant health insurer for using its monopoly power to put financial pressure on area employers to refuse to do business with a competing HMO.

There is also evidence that removing this antitrust exemption will result in lower prices and other benefits for consumers. Time and time again, increased competition results in lower prices, increased choice, and greater innovation. A healthy and competitive health insurance market will drive prices down in the health insurance industry, just as we have seen it do in so many other industries where competition is allowed to take hold. Since California passed a law in 1988 that eliminated the state antitrust exemption for the auto insurance industry, for instance, auto premiums for consumers in California have risen by 9.8% while the rest of the country has seen auto premiums rise by over 48%.

Yesterday, the President announced his strong support for the legislation, issuing a statement of administration policy saying:

The repeal of the antitrust exemption in the McCarran-Ferguson Act as it applies to the health insurance industry would give American families and businesses, big and small, more control over their own health care choices by promoting greater insurance competition. The repeal also will outlaw existing, anti-competitive health insurance practices like price fixing, bid rigging, and market allocation that drive up costs for all Americans. Health insurance reform should be built on a strong commitment to competition in all health care markets, including health insurance. This bill will benefit the American health care consumer by ensuring that competition has a prominent role in reforming health insurance markets throughout the Nation.

Learn more about the bill»
Read the bill»

Rules Committee Chair Louise Slaughter (D-NY) opened debate on the bill:

Congressman Tom Perriello (D-VA), co-author of the bill:

Congresswoman Betsy Markey (D-CO), co-author of the bill:

Speaker Pelosi opened her remarks saying, the “House of Representatives, Mr. Chairman, is called the people?s house. Today, we live up to that name. By passing legislation that increases leverage for the people by changing the playing field, a playing field that has been dominated by the insurance industry for over 65 years and now it?s the people?s turn. The insurance companies will now be playing on the people?s field”:

Full post as published by The Gavel on February 24, 2010 (boomark / email).