Depending upon who is talking, legislation to strip health insurance companies of antitrust exemptions will spur competition and lower costs; have no impact; or actually make things worse.
The US House passed Wednesday by 406-19 vote The Health Insurance Industry Fair Competition Act (HR 4626) , which removes the health insurance industry's antitrust protections under the McCarran-Ferguson Act of 1945.
Rep. Tom Perriello, D-VA, a cosponsor of the House bill, said its passage shows that "Washington finally took a stand for patients, for the free market, and for common-sense, bipartisan principles of fairness. Today, we sent a simple message: health insurance companies must compete for business like everyone else."
"Working and middle-class families are sick and tired of getting nickel and dimed by these companies, while they rack up billions in profit and enjoy their monopoly protection," Perriello said in a post-vote media release.
President Obama applauded the bipartisan vote.
"This bill will help ensure that insurers abide by common-sense rules that prevent bid-rigging, price-fixing, and other practices that drive up healthcare costs for the American people," Obama said. "Repealing the antitrust exemption for health insurers is an important step toward achieving reform that gives families and business owners greater control over their healthcare."
Supporters of the bill note that in the last 14 years, there have been 400 mergers among healthcare insurers so that 95% of health insurance markets are "highly concentrated." During the past decade while this concentrated market has enjoyed its exemption from antitrust regulation, health insurance premiums have doubled, Democrats said.
The House's vote came on the same day that the American Medical Association issued a report that found competition in the health insurance industry is disappearing.
Other supporters of the bill include the American Hospital Association, the American Dental Association, the American Academy of Pediatrics, the National Association of Attorneys General, and the National Farmers Union.
Not surprisingly, America's Health Insurance Plans takes a different view. "In attempting to solve a problem that doesn't exist, this legislation is the triumph of sound bites over substance," said Karen Ignani, president and CEO of America's Health Insurance Plans.
Ignani said the House action has nothing to do with healthcare reform. "Real reform means containing costs to ensure that healthcare is affordable for working families and small businesses," she said. "It's time to clear the political hurdles that stand in the way of real cost containment."
Blue Cross Blue Shield Association spokesman Brett Lieberman said the legislation is "not going to do anything about the underlying factors that are driving costs—medical expenses and people losing jobs."
Neutral sources also appear less than impressed with the legislation. In a Jan. 6 letter to Congress, the National Association of Insurance Commissioners opposed repealing health insurers' antitrust exemptions, and said the move would not create more competition and lower premiums.
"The business of insurance, while exempted from federal antitrust law, is still subject to state antitrust enforcement actions," wrote NAIC President Jane Cline, insurance commissioner for West Virginia. "In fact, even if the McCarran-Ferguson antitrust exemption were repealed, the state action doctrine exemption would continue to apply. The most likely result of this repeal would therefore not be increased competition, but a series of lawsuits testing the limits of the state action doctrine, with associated litigation costs being passed along to consumers in the form of higher premiums."
The NAIC criticism is consistent with a Congressional Budget Office review last fall of a similar bill , which found that state insurance regulators and state laws "already prohibit issuers of health insurance and medical malpractice insurance from engaging in practices, such as price fixing, bid rigging, and market allocations." HR 4626 does not strip medical malpractice insurers of their antitrust exemption.
In addition, the Congressional Research Service said in a report last month that removing antitrust exemptions from health insurers might actually exacerbate the very problem it hopes to resolve because it prohibits smaller health insurers from setting their rates based on shared data collected by larger competitors. "Should additional data be unavailable to small insurers in some way, further consolidation in the insurance industry as small insurers merge in order to gain the competitive advantage of additional information is a likely, albeit, ironic, possibility," the CRS report said.
Related legislation in the Senate, S 1681, sponsored by Judiciary Committee Chairman Patrick Leahy, D-VT, remains in his committee. Leahy's bill would also strip medical malpractice insurers of antitrust protections. An aide to the Vermont senator, speaking on background, says some senators had expressed concerns that Leahy's bill would adversely impact medical malpractice insurers, which would make the House bill more appealing. "There is a very real possibility the Senate could pass the House bill and we wouldn't have to go to conference on that, or we wouldn't have to reconcile it," the aide says.