09.17.09

Leahy Introduces Bill To Repeal Antitrust Exemption For Health, Medical Malpractice Insurance Companies

WASHINGTON – Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) Thursday introduced legislation to eliminate a federal antitrust exemption for health insurance and medical malpractice insurance companies.
 
As the Senate prepares to consider comprehensive health care reform legislation, Leahy introduced the Health Insurance Industry Antitrust Enforcement Act to repeal the antitrust exemption that was established in the 1945 McCarran-Ferguson Act.   
“A few industries have used their influence to obtain a special, statutory exemption from the antitrust laws, and the insurance industry is one of them,” said Leahy.  “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.”

The two key provisions of the Health Insurance Industry Antitrust Enforcement Act will repeal the federal antitrust exemption for health insurance and medical malpractice insurance companies for flagrant antitrust violations, including price-fixing, bid rigging, and market allocations, and subject health insurers and medical malpractice insurers to the same good-competition laws that apply to virtually every other company doing business in the United States.

Leahy continued, “The healthcare industry is the subject of a great deal of debate.  There are many proposals to bring competition to health insurance providers.  While we are debating these solutions, we should not lose sight of the fact that the health insurance industry currently does not have to play by the same, good-competition rules as other industries.  That is wrong, and the Health Insurance Industry Antitrust Enforcement Act corrects it.”

Leahy has introduced legislation to repeal the McCarran-Ferguson Act in previous Congresses, including the 2007 bipartisan Insurance Industry Competition Act, which provided for a broader repeal of the McCarran-Ferguson Act.  

Leahy’s full statement on the introduction of the Health Insurance Industry Antitrust Enforcement Act follows.

The text of the Health Insurance Industry Antitrust Enforcement Act is available above.

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Health Insurance Industry Antitrust Enforcement Act of 2009

For Background Purposes Only

The McCarran-Ferguson Act, which gives states the authority to regulate the “business of insurance,” also exempts the business of insurance from the federal antitrust laws.  There is no justification to exempt the insurance industry from the antitrust laws and federal government oversight.

The Health Industry Antitrust Enforcement Act of 2009 will repeal the exemption for health insurance and medical malpractice insurance companies.  In the midst of the healthcare debate, where so many proposals contemplate how to bring added competition to the health insurance market, this legislation ensures that health insurers and medical malpractice insurers will at least be subject to normal laws of competition.

The Act only repeals the exemption for the most egregious forms of antitrust violations - price fixing, bid rigging, and market allocations.  For those antitrust concerns that would otherwise fall under a litigation-intensive rule of reason analysis, the McCarran-Ferguson antitrust exemption still applies.

The Act will subject health insurers and medical malpractice insurers to the same good-competition laws that apply to virtually every other company doing business in the United States.  The nation’s competition laws are powerful tools to ensure that consumer welfare is the benchmark for fair and accountable industry practices.  Consumers benefit through lower prices, more choices, and better services.

The Act will not affect the ability of each state to regulate the business of insurance.  The Act ensures that price fixing, bid rigging and market allocation are removed from the federal antitrust exemption.    

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Statement Of Senator Patrick Leahy (D-Vt.),
Chairman, Senate Judiciary Committee,
On Introduction Of
The Health Insurance Industry Antitrust Enforcement Act Of 2009
September 16, 2009

Our Nation’s antitrust laws exist to protect consumers.  These laws promote competition, which ensures that consumers will pay lower prices, and receive more choices of higher quality products.  The vast majority of the companies doing business in the United States are subject to the Federal antitrust laws.

A few industries have used their influence to obtain a special, statutory exemption from the antitrust laws, and the insurance industry is one of them.  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.  As the insurance industry prospers behind its exemption, patients and small businesses suffer.  I am pleased to introduce today the Health Insurance Industry Antitrust Enforcement Act of 2009, which will repeal the antitrust exemption for health insurance and medical malpractice insurance providers.

The healthcare industry is the subject of a great deal of debate.  There are many proposals to bring competition to health insurance providers.  While we are debating these solutions, we should not lose sight of the fact that the health insurance industry currently does not have to play by the same, good-competition rules as other industries.  That is wrong, and this legislation corrects it.

The lack of affordable health insurance plagues families throughout our country, and the rising prices that hospitals and doctors pay for medical malpractice insurance drains resources that could otherwise be used to improve patient care.  Antitrust oversight in these industries will provide consumers with the confidence that insurance companies are operating in a competitive marketplace.

There is simply no justification for health insurance and medical malpractice insurance companies to be exempt from Federal laws prohibiting price fixing.  Subjecting health and medical malpractice insurance providers to the antitrust laws will enable customers to feel confident that the price they are being quoted is the product of a fair marketplace.  This bill will prohibit the most egregious anticompetitive conduct – price fixing, bid rigging and market allocations – conduct that harms consumers and drives up health care costs.

In the 110th Congress, I introduced a much broader repeal of the McCarran-Ferguson Act with Senator Lott.  While Congress did not reach consensus on that legislation, surely in this environment of rising healthcare costs, we can agree on this more narrowly tailored repeal.  Insurers should not object to being subject to the same antitrust laws as everyone else. If they are operating in an appropriate way, they should have nothing to fear.  American families, doctors and hospitals rely on insurance.  It is important to ensure that the prices they pay for this insurance are established in a fair and competitive way.   

I look forward to repealing the antitrust exemption in the health insurance and medical malpractice insurance industries.  

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David Carle: 202-224-3693

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