On October 21, the House Judiciary Committee voted 20-9 to report out a health insurance bill which eliminates the anti-trust exemption for health and malpractice insurance carriers; however they would be permitted to work together compiling historical loss data. At the same time, Senate Democratic leaders announced they would push an amendment into the health reform bill to do the same.

Senate Majority Leader Harry Reid has been among the idea’s most prominent supporters, having testified in favor of this partial repeal of the McCarran-Ferguson Act at a hearing of the Senate Judiciary Committee that Sen. Patrick Leahy (D-Vt.), chairs. Christine Varney, who as assistant U.S. attorney general for the Department of Justice’s antitrust division is the administration's highest antitrust official, testified at a recent congressional hearing that the original reasons for the exemption don’t hold up. “There are strong indications that possible justifications for the broad insurance antitrust exemption in the McCarran-Ferguson Act when it was enacted in 1945 are no longer valid today,” she said.

What It Means to Agents:  The insurance industry’s limited antitrust exemption under the McCarran-Ferguson Act of 1945 is now under direct attack in Congress. The Health Insurance Industry Antitrust Enforcement Act of 2009 (H.R. 3596/S. 1681) would apply federal law expressly outlawing price fixing, bid rigging and market allocations to health and medical malpractice insurers. This, despite the fact that the limited antitrust exemptions afforded under McCarran-Ferguson do not permit these activities, which are already illegal.

Unfortunately, the repeal of McCarran-Ferguson – either limited or complete – could endanger other important antitrust exemptions which are critical to the proper functioning of the insurance industry; and there is no guarantee that the ability to share of information about losses so that small insurance companies can develop actuarially sound rates will survive the bill drafting process. This would make it difficult or impossible for small to mid-size carriers to do business. Although confined to health now, leading Democrats are pressing for full repeal of McCarran-Ferguson, including p/c.

This bill would endanger Main Street carriers and the agencies that represent them. PIA National had joined together with eight other insurance industry organizations to strongly oppose this bill.

PIA Joins Trades In Urging Congress Against Ending Antitrust Immunity for Health

October 27, 2009