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WASHINGTON BUREAU -- House Democrats are insisting that the final version of the health bill include a provision taking the McCarran Ferguson Act antitrust exemption away from health and medical liability insurers.
In a draft of a letter that antitrust provision supporters plan to circulate to all House Democrats, the supporters say that, in the absence of a government-run, “public option” health plan, repealing the antitrust exemption is one obvious cost-cutting incentive tool.
The letter is addressed to House Speaker Nancy Pelosi, D-Calif.
The letter will urge House leaders to insist that the House language to repeal the health insurance and medical liability insurance exemption from federal antitrust laws be in the final version of the health bill.
The health bill approved by the House, H.R. 3962, includes an antitrust provision.
The antitrust provision in H.R. 3950, the health bill approved by the Senate, was deleted from that bill by drafters who wanted to get the vote of Sen. Ben Nelson, D-Neb., a former state insurance commissioner. Senate Democrats need 60 votes to get legislation to the floor, and Nelson is someone the Democrats must court to get that critical 60th vote.
The antitrust issue also came up Wednesday, in comments by House Democratic leaders during a meeting with President Obama and other administration officials at the White House.
Rep. Louise Slaughter, D-N.Y., raised the subject. She called the exemption “terrible” and asked, "Why should they be exempted? … The exemption should have been lifted 30 years ago, or should never have been put on in the first place.”
Rep. Chris Van Hollen, D-Md., an assistant to Pelosi, earlier made similar comments about the need to eliminate the exemption.
"Especially if you were not to have a public option, that would be important," Van Hollen said. "The whole purpose of getting rid of the exemption would be to make sure you police competition, so you cannot collude.”
The letter also insists that, as part of any compromise, a section in the antitrust provision should give the Federal Trade Commission the authority to collaborate with the U.S. Department of Justice in investigating the insurance industry, by permitting the FTC to investigate health insurers and medical malpractice insurers.
The final language in the House bill dealing with the FTC is a compromise. Earlier versions of the FTC section gave the FTC the authority to investigate and create reports on all components of the insurance industry.
“One tool that stands out for attracting strong bipartisan support is removing the current antitrust exemptions enjoyed by the health insurance industry,” the letter says.
Since the McCarran Ferguson Act was passed in 1954, “regulation of the insurance industry has since been left largely to the states, which suffer from a lack of resources to go after offenders, as well as a patchwork of 50 different state regulatory regimes with inconsistent enforcement,” the letter says.
The letter notes that an October Rasmussen poll found that 65% of Americans favored removing the antitrust exemption for health insurance companies. Democrats supported subjecting insurance companies to antitrust laws by a 7-to-1, the letter says.
The letter also says that 64% of independent voters and 58% of Republicans believe insurers should abide by antitrust laws. “Asking health insurance companies to play by the same rules as every other company in America gets significant support across party lines,” the letter says
The letter is being circulated to the offices of all House Democrats by Rep. Peter DeFazio, D-Oregon, and Rep. Gene Taylor, D-Miss.
Health insurance trade groups have argued that consumer groups and their allies in Congress misunderstand the antitrust exemption issue, and that health insurers already face restrictions of many kinds in connection with matters such as market concentration. “If enacted, a repeal will do more harm than good,” Marliss McManus, a senior federal affairs director at the National Association of Mutual Insurance Companies, Indianapolis, says. “Today, as in 2007, proponents of a repeal demonstrate a lack of understanding about McCarran and the nature of insurance.... Collusion among insurers, as with any other industry, is already illegal."
The limited antitrust exemption in the McCarran-Ferguson Act gives insurers greater access to the data they need to accurately analyze risks and set prices, McManus says. The exemption also allows insurers to use common forms, so that consumers can compare offers from different companies on an ‘apples to apples’ basis, she says.