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Proponents called the move an attempt to fix a decades-old legislative “mistake,” promote competition among health insurers and protect consumers. But insurance industry and other critics said it would do little to promote competition and might even result in higher insurance premiums.
The panel approved the measure in a 20-9 vote, with three Republicans joining all of the Democrats on the committee in favor of it. Proponents have said they will try to wrap the measure into the larger health care reform bill taking shape in the House, although it could also move forward as separate legislation. Senate leaders have said they will offer their version of the measure as an amendment to the Senate’s health care reform legislation.
“No one on this committee believes that price fixing or carving up markets is a good thing, and the wide, bipartisan support for this bill’s passage reflects this,” House Judiciary Committee Chairman John Conyers, D-Mich., said in a statement. “This measure fixes a mistake sitting on the federal statutes for over 60 years.”
But Karen Ignagni, president of the health insurance trade group America’s Health Insurance Plans, called the measure unnecessary.
“We believe that health insurers have not been engaging in anticompetitive conduct and that McCarran-Ferguson does not provide a shield for such conduct,” Ignagni wrote Wednesday in a letter to Conyers, according to the Washington Post. “Thus, the bills attempt to remedy a problem that does not exist.”
The antitrust exemption originated in the 1945 McCarran-Ferguson Act, which gave states the right to regulate the “business of insurance,” and took that regulatory power away from the federal government.
This isn’t the first time the exemption has been challenged — Sen. Patrick Leahy, D-Vt., introduced a bill to repeal it in 2007. However, it didn’t go anywhere until this year, as Congress has moved to curb perceived abuses in the health insurance industry as part of the larger health care reform effort.
Last week, Christine Varney, head of the Justice Department antitrust division, told the Senate Judiciary Committee that ending the exemption would create more competition among insurers.
But some experts say that proponents of ending the exemption have exaggerated the McCarran-Ferguson Act’s power.
“My bottom line is that [ending the exemption] won’t do any harm, but it probably won’t make much difference,” says Tim Greaney, an antitrust law professor at St. Louis University who has testified before Congress on competition in the health insurance industry.
Greaney says that over the years the Supreme Court has interpreted the law so narrowly that it only applies to a small sliver of insurance industry practices. Insurance company mergers, for example, are not considered part of the “business of insurance,” and so are still subject to federal regulation.
“The main problem as I see it has been that Justice hasn’t challenged some of these mergers […] but it’s not a lack of power so much as a lack of will,” he says.
But antitrust attorney David Balto, a fellow at the Center for American Progress, says that repealing the health insurance industry antitrust exemption is a “tremendously important” part of health care reform — and that it will be particularly necessary in a post-reform world.
He argues that right now, many insurance markets are essentially monopolies already, with one or at most two companies controlling the market. But if health insurance exchanges and other reforms meant to create competition succeed, then more regulation will be necessary.
“If there’s only one care on the highway you really don’t need a speed limit,” he says.
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