Congress Considers Repealing Anti-Trust Exemption for Insurance Companies

[Sue Copening]

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It's about time.
Congress Considers Revoking Health Insurance
Industry’s Exemption from Antitrust Laws

Democrats say the McCarran-Ferguson Act of 1945 has granted the insurance industry a captive market with no curbs on price fixing and other anti-competitive practices.

Last week the Justice Department’s top antitrust regulator, Christine Varney, voiced support for a repeal. Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi are also backing a repeal, and New York Senator Charles Schumer has called for including it as part of the healthcare reform bill. The House Judiciary Committee plans to vote on the issue on Wednesday.

SHARIF ABDEL KOUDDOUS: We begin with a new battle that’s emerged out of the Democratic-led efforts for healthcare reform. Support is growing on Capitol Hill to repeal a law that exempts the health insurance industry from antitrust laws.

Democrats say the McCarran-Ferguson Act of 1945 has granted the insurance industry a captive market with no curbs on price fixing and other anti-competitive practices. Last week, the Justice Department’s top antitrust regulator, Christine Varney, voiced support for a repeal.

Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi are also backing a repeal, and New York Senator Charles Schumer has called for including it as part of the healthcare reform bill. The House Judiciary Committee plans to vote on the issue on Wednesday.

In his weekly radio address, President Obama backed congressional scrutiny of the law.

PRESIDENT BARACK OBAMA: The fact is, the insurance industry is making this last-ditch effort to stop reform even as costs continue to rise and our healthcare dollars continue to be poured into their profits, bonuses and administrative costs that do nothing to make us healthy—that often actually go toward figuring out how to avoid covering people. And they’re earning these profits and bonuses while enjoying a privileged exception from our antitrust laws, a matter that Congress is rightfully reviewing.

AMY GOODMAN: For more on this story, we’re joined from Washington, DC by Ryan Grim. He’s the senior congressional correspondent for the Huffington Post.

Welcome, Ryan, to Democracy Now! Can you just lay out what is being proposed here?

RYAN GRIM: Sure. Right now, the insurance industry is one of the only businesses that gets antitrust protection from the federal government. It’s basically them, Major League Baseball and National Football. It’s kind of an accident of history. In 1944, the Supreme Court ruled that the federal government could regulate insurance industries, and immediately Congress stepped in and said, “Well, we’re not going to do it.” So, what they’ve been able to do is set up these near monopolies throughout the United States.

The Department of Justice estimates that I think in 94 percent of the country, there is a—what they call a highly concentrated market, which means that it’s in danger of becoming a monopoly or it has already tipped over into a monopoly, and that allows insurers to collude legally with hospitals and with doctors and other providers to set prices. They set high prices that they pay to the hospitals, then they can raise premiums. And without any competition, there’s nothing that anybody can do about it, and it’s perfectly legal. (CLICK HERE for more)




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