Varney Talks Tough On Antitrust Enforcement In Health Insurance

Since her confirmation as the new Assistant Attorney General of the Antitrust Division in April 2009, Christine Varney has delivered a series of speeches that has made clear that the Department of Justice intends to step up antitrust enforcement.

One of the areas under increased scrutiny is industry-specific exemptions from the antitrust laws, including the health care insurance industry.  With the heated debate over health care reform legislation now underway, any enforcement efforts related to health care would draw considerable attention.

Before enforcement could occur, however, the insurance industry’s long-standing exemption from the antitrust laws under the McCarran-Ferguson Act would have to be repealed.  Health insurers’ antitrust exemption would be repealed under the health care reform bill that passed the U.S. House of Representatives on November 7, 2009.

Ms. Varney supports repeal of the exemption, and testified before a Senate Judiciary Committee hearing in October in favor of ending the insurance industry’s exemption from price fixing, bid rigging and market allocation claims.

In her testimony, Ms. Varney stated that the Department of Justice is “generally opposed to exemptions from the antitrust laws, whether they be industry-specific or general,” and that the McCarran-Ferguson exemption has been criticized heavily for decades.  Indeed, she noted that some legal and economic analyses of the exemption, including that of the bipartisan Antitrust Modernization Commission, have concluded that a repeal of the exemption would not harm the insurers and likely benefit consumers.  Ms. Varney also outlined alternatives to a statutory exemption, including the state action doctrine and rule of reason analysis.

The fate of the current legislation remains unclear, but the Antitrust Division under Ms. Varney has clearly staked out a new approach to industry-specific exemptions.

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