House to Vote on Health Insurance Antitrust Legislation

Published: Wed 10 Feb 2010

Larry Roth

Critics of a bill that would repeal the insurance industry's exemption from antitrust laws might get a slight reprieve this week - at least, if Mother Nature has anything to do with it.

The House announced last week that it was set to vote this week on the antitrust legislation. However, Congress announced Tuesday morning that the House has canceled all votes for the day because of the extreme weather conditions impacting the East Coast.

Increasing Health Insurance Competition

The bill in question covers a component of the larger health care overall that has hit major roadblocks over the past year and appears to be stalled indefinitely. House Democrats have noted that if they are unable to tackle all of health care reform at this time, then at least, targeting the health insurance industry's exemption from federal antitrust laws would be a good place to start.

If passed, the legislation would change the 1945 McCarran-Ferguson Act, which provides an exemption for health insurance companies from antitrust laws set forth by the Federal Trade Commission.

Supporters of the bill contend that this exemption has prevented competition among health insurers. They argue that this lack of competition has led to the creation of health insurance monopolies, resulting in skyrocketing insurance premiums.

Those who back the legislation point out findings from the American Medical Association showing that more than 400 corporate mergers involving health insurers have occurred in the past 13 years and that 94 percent of insurance markets in the United States are now considered to be highly concentrated.

They also note that during this time, health insurance premiums have mushroomed, increasing 87 per cent over the past six years alone.

"It is becoming clear in the health care debate that health insurance markets are broken," according to the liberal Center for American Progress. "A tsunami of health insurance mergers has led to high levels of concentration in practically every market to the point where there are only one or two dominant insurers in many states. New companies face substantial entry barriers, and so these local monopolies go unchallenged."

Antitrust Legislation Might Not Help, Some Contend

While supporters of the bill believe the legislation would help to increase competition in the marketplace, critics argue that the bill would have little impact and actually might hurt smaller health insurance companies.

The American Academy of Actuaries points out that the exemption was put in place to allow insurers to share data about insurance risk. Without that data, insurance companies could set premiums too low and become insolvent.

The larger insurers would not be affected by the bill, according to its critics, because they collect this data themselves. Instead, the smaller, start-up insurers that rely on this data sharing could be negatively impacted and not enter the market as a result.