Measure to repeal health insurers' antitrust exemption unveiled

WASHINGTON—As the Senate prepares to debate comprehensive health care reform, Sen. Patrick Leahy, D-Vt., is introducing legislation that would repeal the health insurance industry’s longstanding exemption from federal antitrust law established by the McCarran Ferguson Act of 1945.

The Health Insurance Industry Antitrust Enforcement Act of 2009, which also would apply to medical malpractice insurers, would remove the exemption for the most egregious forms of antitrust violations—including price fixing, bid rigging and market allocations—and subject insurers “to the same fair competition laws that apply to nearly every other company doing business in the United States,” according to a statement released by the senator’s office.

“A few industries have used their influence to obtain a special statutory exemption from antitrust laws, and the insurance industry is one of them,” Sen. Leahy said in the statement. “In the markets for health insurance and medical malpractice insurance, patients and doctors are paying the price, as costs continue to increase at an alarming rate. Insurers should not object to being subject to the same antitrust laws as everyone else.”

Sen. Leahy’s bill, which was introduced in the Senate Judiciary Committee on Thursday, is a narrower version of a bill Reps. Gene Taylor, D-Miss., and Peter DeFazio, D-Ore., unveiled earlier this year that would give the Department of Justice and the Federal Trade Commission the authority to apply antitrust laws to anticompetitive behavior by all insurers.

The insurance industry has traditionally opposed legislation repealing the exemption, which allows insurers to pool historic loss information so that they are better able to project future losses and charge an actuarially based price for their products. It also allows for joint development of policy forms. The act does not, however, exempt insurers from state antitrust laws, which explicitly prohibit insurers and any other businesses from conspiring to fix prices or otherwise restrict competition. Also under the act, insurers remain subject to rate and form regulation in every state.

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