Repealing Medical Liability Antitrust Exemption Could Raise Premiums, Say Actuaries

Language in the House healthcare reform bill that would strip an antitrust exemption for medical professional liability insurers could increase premiums, the American Academy of Actuaries (AAA) said.

In a letter to House Democratic and Republican leaders, AAA said that H.R. 3962—The Affordable Healthcare for America Act—contains language that "precludes data collection and aggregation across companies, limiting competition." The actuaries are urging House leaders to drop the repeal provision.

"The end result of the enactment of H.R. 3962, relative to medical professional liability insurance, is likely to be reduced availability with fewer willing insurers, less vigorous competition among those that do write the coverage, and higher costs to the consumer," Kevin Bingham, chairperson of AAA's Medical Professional Liability Subcommittee, told congressional leaders in his Jan. 21 letter.

If Congress repeals the exemption, AAA wants lawmakers to restore language from an earlier version of the bill that would permit information gathering and rate setting activities, which are currently allowed under the McCarran-Ferguson Act. He said aggregated data "provides credible information, supports competition, and guides companies, self-insurers and regulators in reducing the likelihood of insolvencies."

Bingham said that a single company's data is often not sufficiently credible to determine basic loss costs and determine reasonable premiums. He attributed this to the "low-frequency, high-severity, long-tailed" nature of medical professional liability claims, which makes the estimation of losses and premiums more uncertain than in other insurance lines.

"The bill does not specify what loss data may be collected. Additionally, it is unclear about what actuarial activities are allowable," Bingham wrote. "If such limitations on data-gathering apply, it will result in a reduced level of reliability of determinations, with less data available to state regulators charged with evaluating rates."