The Senate on Tuesday voted to amend the McCarran-Ferguson Act, a move that, if signed into law by President Trump as expected, would restore antitrust laws to the business of health insurance.
The House passed the Competitive Health Insurance Reform Act on September 21.
The McCarran–Ferguson Act currently exempts the business of health insurance from federal antitrust and competition laws and leaves regulation under state control.
The reform of the McCarran-Ferguson Act of 1945 would ensure that health insurers are subject to the same federal antitrust laws as other industries, according to proponents.
The bipartisan bill allows for greater transparency and oversight into the health insurance industry and will help make coverage more affordable, according to cosponsor Senator Steven Daines of Montana.
However insurers claim it would have the opposite effect.
If the bill is signed into law, the Federal Trade Commission and the Department of Justice Department would enforce federal antitrust laws against health insurance companies engaged in anticompetitive conduct, but would not interfere with states in the enforcement of their own regulations, antitrust statutes and consumer protection laws.
WHY THIS MATTERS
Eliminating the exemption undermines the goal of affordable coverage by adding administrative red tape and reducing market competition, according to Matt Eyles, president and CEO of America's Health Insurance Plans.
"The McCarran-Ferguson Act recognized that all healthcare is local, and that states should be able to govern their own health insurance markets," Eyles said. "At no time has that been more evident than during the COVID-19 crisis. States have always exercised great authority in ensuring fair and competitive markets that deliver consumer choice.
"Removal of this exemption adds tremendous administrative costs while delivering absolutely no value for patients and consumers. It will unnecessarily add layers of bureaucracy, destabilize markets, create conflicting federal and state oversight requirements, and lead to costly litigation," he said.
The National Association of Insurance Commissioners sent a letter to Senate leaders on December 2 voicing its concern for the bill's passage.
"The premise of the Competitive Health Insurance Reform Act is that collusion among health insurance companies is permitted under state law and that the McCarran-Ferguson Act somehow currently protects these practices. This is not true. The McCarran-Ferguson antitrust exemption for health insurance does not allow or encourage conspiratorial behavior but simply leaves oversight of insurance, including health insurance, to the states - and state laws do not allow collusion," commissioners said.
"The potential for bid rigging, price-fixing and market allocation is of great concern to state insurance regulators and we share your view that such practices would be harmful to consumers and should not be tolerated. However, we want to assure you that these activities are not permitted under state law," commissioners wrote.
THE LARGER TREND
Consumer Reports, which has long advocated for the reform, hailed passage of the Competitive Health Insurance Reform Act as being good for providers who have felt pressured into contract terms that benefit insurers.
"The antitrust exemption has essentially allowed health insurers to act as a monopoly, making demands in lockstep on the terms they will offer consumers and healthcare providers. The resulting squeeze puts pressure on providers to cut corners on service in order to increase the profits the health insurers can extract," Consumer Reports wrote on December 22.
ON THE RECORD
"We agree with the National Association of Insurance Commissioners on the harms of repealing McCarran-Ferguson, and with countless experts that the best way to make insurance premiums more affordable is to address the underlying cost of care. Removal of the McCarran-Ferguson exemptions ignores those cost drivers while raising costs and will only result in coverage being less affordable," Eyles said.
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