Antitrust Exemption of Health Insurers Imperiled?

The Subcommittee on Courts and Competition Policy of the House Judiciary Committee held a hearing on legislation that would limit the anti-trust exemptions enjoyed by health and medical malpractice insurers.

Witnesses before the panel testified regarding H.R. 3596, “The Health Insurance Industry Antitrust Enforcement Act of 2009.”

Ilene Gotts, a partner at the law firm of Wachtell, Lipton, Rosen & Katz, testified on behalf of the American Bar Association that industry-specific exemptions from the antitrust laws are rarely justified, and questioned the benefits of such exemptions to consumers.

Accordingly, Gotts said that McCarran-Ferguson should be repealed and replaced by a series of safe harbor protections for certain insurance industry conduct. Yet, ABA’s support of H.R. 3596 was not unconditional. Gotts said among the safe harbor provisions the ABA would like to see are ones that allow insurers to share loss-experience data, cooperate to develop standardized policy forms, and to participate in voluntary joint-underwriting agreements. “The safe harbors are not intended to alter existing antitrust policy; rather, they are intended to serve the important objective of deterring private litigation that might, post-exemption, challenge conduct that, in the unique circumstances of the insurance industry, may actually promote competition,” she said.

Speaking on behalf of the American Academy of Actuaries, James Hurley, a consultant with New York-based Towers Perrin, also expressed concern about the implications of H.R. 3596, charging the vague language in the bill could potentially squelch long-standing data sharing initiatives among medical liability providers.

“There are a number of possible consequences of not having credible information to assist in making loss cost determinations,” Hurley said. “Such entities, in the interest of preserving their viability, would be more cautious, if not unwilling, to assume exposure given the risk of the coverage. Thus, the end result relating to medical professional liability insurance companies is likely to be reduced availability with fewer willing insurers, less vigorous competition among those that do write the coverage, and higher costs to the consumer.”