House panel votes to get tougher on health insurers

McClatchy NewspapersOctober 21, 2009 

WASHINGTON — Efforts to strip the health insurance industry of key antitrust protections got significant boosts Wednesday, when a House of Representatives committee voted to end the 64-year-old exemption and Senate Democratic leaders moved swiftly to act.

The House Judiciary Committee voted 20-9 to approve legislation to repeal the health insurers' exemption. They'd lose current protections if they engaged in price fixing or similar behavior.

"No one on this committee believes that price fixing or carving up markets is a good thing, and the wide, bipartisan support for this bill's passage reflects this," said committee chairman John Conyers, D-Mich.

In the Senate, Judiciary Committee Chairman Patrick Leahy, D-Vt., said he'd offer an antitrust exemption repeal as part of the health care overhaul bill when the Senate begins debate on it, probably in the next few weeks.

Consumer groups are convinced that ending the exemption would prompt insurers to compete with one another more energetically. The current practice, said Jim Guest, the Consumers Union chairman, is "bad for consumers, bad for patients and bad for taxpayers."

The push to end the exemption will have the backing of Senate Majority Leader Harry Reid, D-Nev., who appeared with Leahy at a Capitol news conference.

"The case for action is very simple," Reid said. "When companies are forced to compete with one another, that's what our free enterprise system is all about, and when you have one industry that has no referee . . . you never win the ballgame."

America's Health Insurance Plans, the industry trade group, fought back quickly.

"Health insurance is one of the most significantly regulated areas of the economy," Karen Ignagni, president and chief executive officer, wrote Wednesday in a letter to Leahy and Conyers.

"AHIP and our members stand on the side both of competition and of meaningful reform," she said.

Insurance has been largely under state regulation since an 1868 Supreme Court decision ruling that insurance isn't interstate commerce and therefore not subject to federal regulation.

The high court reversed that finding in 1945, but according to the Congressional Research Service, state regulation was so well established that Congress granted a federal antitrust exemption to those engaged in the "business of insurance," leaving most authority with the states.

Several factors have combined to make this year's push for change significant, including broader scrutiny of the financial services industry and efforts to revamp regulatory law.

The push to end the antitrust exemption has been building for some time. In his weekly radio address Saturday, President Barack Obama noted that insurers are "earning these profits and bonuses while enjoying a privileged exception from our antitrust laws, a matter that Congress is rightfully reviewing."

In addition, House Speaker Nancy Pelosi, D-Calif., said, "It is clear where the problem has been. It is absolutely clear that it is an unsustainable situation as we go forward, and it is well known to the public that the health insurance companies are the problem."

ON THE WEB

Congressional Research Service report on antitrust exemption

Rep. Conyers on antitrust exemption

Text of Finance Committee measure

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For more McClatchy politics coverage visit Planet Washington

McClatchy Newspapers 2009

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