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Leading Congressional Dems Open Antitrust Front In Healthcare War

Posted  September 22, 2009

The Chairmen of the House and Senate Judiciary Committees have joined forces to open a new – antitrust – front in the war for healthcare reform.  The two leading Democrats are seeking to boost healthcare reform with a partial repeal of an antitrust exemption that’s about as old as Democrats’ efforts to enact universal healthcare.

On September 17, 2009, Chairman John Conyers (D.-Mich.) of the House Judiciary Committee and Chairman Pat Leahy (D.-Vt.) of the Senate Judiciary Committee introduced legislation to repeal the McCarran-Ferguson Act’s exemption from the federal antitrust laws for health and medical malpractice insurers.  The Act dates back to 1945, the same year that President Harry Truman asked Congress to enact a national health insurance program.

The bills (H.R. 3596 and S. 1681) are identical and their text can be found here and here:

Chairman Conyers’ introductory statement can be found here:

Chairman Leahy’s introductory statement can be found here:

The bills provide that nothing in the McCarran-Ferguson Act shall be construed to permit health insurers and medical malpractice insurers to engage in price-fixing, bid rigging, or market allocation.  Whether the proposed legislation will result in any significant change in antitrust law is unclear.  Since repeal of the antitrust exemption is opposed by the insurance industry, the bills could end up as bargaining chips in the fight over healthcare reform.

Moreover, as the National Association of Insurance Commissioners pointed out in 2007 congressional testimony on McCarran-Ferguson, even under present law an insurance company must meet three tests to qualify for the federal antitrust exemption:  (1) the activity in question must be the “business of insurance”; (2) it must be “regulated by state law”; and (3) it must not constitute a boycott, coercion, or intimidation.  As pointed out in NAIC’s testimony, at least one court has held that bid rigging does not constitute the business of insurance.  See In Re Insurance Brokerage Antitrust Litigation, 2006 WL 2850607 (D.N.J. 2006).  In addition, whatever the status of these practices under McCarran-Ferguson, they remain illegal under most state antitrust statutes.  The NAIC testimony can be found here:

Tagged in: Antitrust Legislation, Price Fixing,