Legislation to Repeal Health Insurers’ Antitrust Exemption Won’t Increase Competition or Lower Premiums

This week, in addition to voting on the American Health Care Act, the House of Representatives will also be voting to repeal the insurance industry’s antitrust exemption. The Competitive Health Insurance Reform Act of 2017 seems to have bipartisan support, probably because eliminating collusion between insurance companies sounds like a good thing; or at least it does if you don’t understand the history and purpose of the anti-trust exemption.

What The Antitrust Exemption For Health Insurers Means from NPR and Kaiser Health News (dating back to 2010 when Congress tried to pass similar legislation) provides a primer on the anti-trust exemption and explains why repealing is unlikely to increase insurer competition or lower prices.

But many antitrust experts say that ending the exemption — by repealing the 1945 McCarran-Ferguson Act — wouldn’t significantly increase competition or reduce premiums.

“This is just barking up the wrong tree for health insurance,” said Scott Harrington, a professor of health care management at the Wharton School at the University of Pennsylvania. While many lawmakers are eager to pass some kind of health care bill, they “don’t have a clue how the antitrust exemption works. It might sound good, but I can think of very few things in the bill that would be less consequential for consumers of health insurance.”

Here is a short primer on the issue:

What is the antitrust exemption?

Insurers are among a handful of industries, including Major League Baseball, that have a special exemption from federal antitrust laws.

The McCarran-Ferguson Act gives states the power to regulate the “business of insurance,” granting insurers a limited exemption from federal antitrust scrutiny. Insurers, for example, under the federal antitrust exemption may be able to meet, share information and agree on pricing for premiums, but experts say that most states prohibit that practice.

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