House Votes to Lift Antitrust Exemption for Health Insurers

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By Alexei Alexis

The House March 22 passed legislation, 416-7, aimed at boosting competition in the health insurance market. Democrats supported it, but they accused Republicans of exaggerating the measure’s potential impact.

The bill would expose health insurers to greater antitrust liability, and it comes as a precursor to a partisan floor fight over the Affordable Care Act, former President Barack Obama’s signature health law. Republicans pushed the bipartisan antitrust measure (H.R. 372) as an essential part of their effort to repeal and replace the ACA. The House is expected on March 23 to take up a broader ACA overhaul package.

Democrats rejected the Republican’s broader attacks on the ACA, but they welcomed the stand-alone antitrust bill as a positive step.

The measure would remove a 70-year-old exemption that has shielded health insurers from prosecution for sharing data. Proponents say the exemption can be used to keep consumer prices elevated, but an independent government analysis projected that the measure would have limited impact.

Supporters say any little bit helps. “Repealing the antitrust exemption for health insurers, as H.R. 372 does, will make the Affordable Care Act even more effective,” Rep. John Conyers Jr. (D-Mich.), the House Judiciary Committee’s top Democrat, said during the debate.

“I disagree, however, with the majority’s attempt to use this legislation as a fig leaf for replacing the Affordable Care Act,” Conyers added.

CBO Analysis

The Congressional Budget Office said the antitrust bill could affect the size and costs of premiums charged by private health and dental insurance companies, although those effects would “probably be quite small.”

Rep. Paul Gosar (R-Ariz.), the bill’s sponsor, countered by saying the CBO is better at estimating long-term federal spending projections. In situations like this one, he said, it falls short in assessing the “micro-level decisions” made by consumers and businesses.

“There’s a lot of theory here, but theory doesn’t necessarily work when the rubber hits the road,” he told Bloomberg BNA. “I’d love to come back and have this discussion five years after this [antitrust exemption] has been repealed.”

The measure is backed by Consumers Union but has prompted objections from industry groups.

America’s Health Insurance Plans, a leading industry association, says the legislation would expose health insurers to increased liability risks while doing little to improve competition in the marketplace.

“This bill has been embraced in the House without a lot of deep thought,” Thomas Miller, resident fellow at the American Enterprise Institute, a Washington think tank, told Bloomberg BNA. “We’ll see whether there will be any reception on the Senate side.”

‘Exaggerated Claims.’

Conyers, who supports the bill, acknowledged its limitations, noting “the majority’s exaggerated claims regarding the bill’s impact on the affordability and availability of health insurance.”

The bill was taken up under a “closed rule” that prevented the possibility of amendments.

There’s currently no companion bill in the Senate. Gosar said there is a possibility that the House-passed legislation could move in the Senate, but he declined to provide details.

“The stated goal of the bill is to help restore competition in the healthcare market,” House Judiciary Committee Chairman Robert Goodlatte (R-Va.) said. “I support this goal and firmly believe this bill must be coupled with larger changes to the existing federal and state health care regulatory schemes.”

Goodlatte used the debate as an opportunity to blast the ACA, saying it had contributed to dwindling competition and skyrocketing premiums.

70-Year-Old Liability Shield

Congress passed the McCarran-Ferguson Act in 1945 in response to concerns from businesses and states over a Supreme Court decision that said antitrust laws applied to the business of insurance. At the time, small companies trying to enter the insurance market needed access to data from existing insurers in order to set proper premiums, so Congress exempted them from antitrust violations for sharing data.

The House bill would only remove liability protections for health insurers. Other parts of the insurance industry would be left alone.

Goodlatte said the legislation would limit uncertainty and unnecessary litigation through the use of safe harbors for activities such as the collection and distribution of historical loss data, the determination of loss development factors, the performance of actuarial services that do not involve restraints of trade, and the use of common forms that are not coercive.

“These narrow safe harbors create a presumption that certain pro-competitive activities can continue, while maintaining regulation and oversight to the extent any activity crosses over into a restraint of trade,” Goodlatte said.

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

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