Antitrust Tussle Heats Up

The same week the passage of Baucus Bill exposed a rift between proponents of health care reform and health insurers, the Senate Judiciary Committee held hearings on the repeal of antitrust exemptions for insurers.

Among the witnesses testifying in favor of repeal of the McCarran Ferguson Act was Senate Majority leader Harry Reid (D-Nev.).

“Free competition is fundamental to our economy and essential to the American character,” Reid testified. “It is of the utmost importance that we make sure the insurance industry is playing by the same rules as everyone else, and that they are subject to competition.”

Robert Hunter, director of insurance, Consumer Federation of America, agreed that the exemption for insurers should be rescinded.
 
“Congress should end the long history of insurance industry collusion and anticompetitive behavior, and the Health Insurance Industry Antitrust Enforcement Act of 2009 (S. 1681) is an important first step in doing so,” Hunter said. “Anti-competitive behavior in the insurance market routinely costs consumers more money than a competitive market would because insurers can cooperate in price setting.”

Representing the Physician Insurers Association of America, Lars Powell denied that the exemption caused anticompetitive conduct and said information sharing is a necessity for insurers to calculate future claims losses.

“Because McCarran currently enhances competition in insurance markets, repealing McCarran would naturally reduce competition,” said Powell, who is also Whitbeck-Beyer Chair of Insurance and Financial Services at the University of Arkansas–Little Rock. “It could also increase uncertainty in insurance pricing, which leads to price increases.”