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Senate Panel Examines Repealing Insurers' Antitrust Exemption

Janice Simmons, for HealthLeaders Media, October 15, 2009

Senate Majority Leader Harry Reid (D-NV) is pushing to repeal health insurance and medical malpractice insurance companies' antitrust exemption, which is part of the McCarran-Ferguson Act.

As a co-sponsor of a bill (S. 1681) to repeal the 1945 law, Reid appeared as a witness at a hearing on the legislation before the Senate Judiciary Committee Wednesday.

"There is no reason why insurance companies should be allowed to form monopolies and dictate health choices," Reid told the panel chaired by Sen. Patrick Leahy (D-VT), who is the author of the bill. "[Insurers] should be subject to the same federal oversight as every other industry. Their price setting and information sharing practices should not be permitted to take place out of public view, but should be brought out into the light of day." he added.

Reid angrily veered from his prepared testimony at times to sharply criticize recent health insurance industry activities. In particular, he cited the "barrage of advertisements" being run by insurers this week in half a dozen states criticizing cuts in Medicare Advantage plans that is proposed in the Senate Finance Committee healthcare reform bill.

The ads were an attempt by the industry to "prevent a healthcare bill from passing," he said. "They really are desirous of continuing their monopoly in America today. There isn't anything we could do to satisfy them in the reform bill. Nothing. They are so anti-competitive . . . they make more money than any other business in America."

Reid took no questions from his fellow senators. However, his response to the issue revealed how he was reacting to recent actions this week--such as an America's Health Insurance Plans (AHIP) study that said health reform legislation would raise healthcare costs far higher than predicted.

Sen. Charles Schumer (D-NY), a member of both the Senate Finance and Judiciary committees, followed the tone of Reid in a statement--calling the health insurance's antitrust exemption "one of the worst accidents of American history." Schumer implied that he might include an amendment to the Senate reform bill that would call for revoking the industry's antitrust exemption as well.

Christine Varney, the assistant attorney general in the Justice Department's Antitrust Division, said at the hearing that Justice "generally supports the idea of repealing antitrust exemptions."

"However, we take no position as to how and when Congress should address this issue," she said. In conjunction with the Obama Administration's efforts "to strengthen insurance regulation and states' role in setting and enforcing policies," the Department supports efforts "to bring more competition to the health insurance marketplace that lower costs, expand choice, and improve quality for families, businesses, and government."

Varney said that years ago, a view existed that "you had to share risk and loss data over time to come up with future projections." However, "I don't think the reasons that were in existence in 1945 are still very viable to justify this existence [today]."

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