Government

House bill would end antitrust exemption for health plans

But at least one Republican said the law would unfairly put small health insurance companies at a disadvantage by ending collaboration.

By Doug Trapp — Posted Nov. 3, 2009

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The House Judiciary Committee on Oct. 21 voted 20-9 to adopt a bill increasing federal oversight of health insurance companies. Three Republicans supported the measure, despite criticism of the bill by the panel's top GOP member.

The bill, the Health Insurance Industry Antitrust Enforcement Act of 2009, would repeal insurers' partial exemption from federal regulation as codified by the McCarran-Ferguson Act of 1945. That act allows insurers to collaborate on the "business of insurance," such as conducting risk assessment of health plan subscribers.

The legislation is sponsored by Judiciary Committee Chair John Conyers (D, Mich.). He said his bill would end such abusive health insurance industry practices as price-fixing and carving up markets to maximize profits. "This measure fixes a mistake sitting on the federal statutes for over 60 years, making an important contribution to the health reform efforts under way in both houses of Congress."

House Speaker Nancy Pelosi (D, Calif.) expressed interest in including the Conyers bill in national health system reform legislation for the House floor. Senate Judiciary Committee Chair Patrick Leahy (D, Vt.) is sponsoring a companion bill.

Karen Ignagni, president and CEO of America's Health Insurance Plans, said in an Oct. 21 letter to Conyers that the McCarran-Ferguson Act's antitrust exemption already is very narrow. Federal and state antitrust laws prohibit the type of anticompetitive activities Conyers cited. "Thus, the bills attempt to remedy a problem that does not exist," she stated.

Rep. Lamar Smith (R, Texas), the House panel's top GOP member, said the current antitrust exemption allows smaller insurers to share information, which helps them compete against larger national firms. "In other words, McCarran-Ferguson promotes competition by making small- and medium-sized underwriters viable."

Smith said states have a long history of regulating health plans. "By inviting federal intervention, this bill might create a dual regulatory system that only confuses the health insurance and medical malpractice industry."

But Rep. Anthony Weiner (D, N.Y.) said allowing more federal regulation of health insurers would open the door wider to regional and national competition in the industry. Also, Congress shouldn't be giving one insurance company an advantage over another, he said.

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