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Insurers’ antitrust exemption threatened by congressional action

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As a U.S. House of Representatives committee was voting to pass a bill that strips the antitrust exemption from health and medical liability insurers yesterday, Senate Democratic leaders held a press conference to announce they would push an amendment into the health-care reform bill to do the same, A.M. Best Co. reported.

Industry representatives say there is no evidence that any anticompetitive activity is occurring, however.

The Oct. 21 House Judiciary Committee vote and the announcement from the senators mark a significant stiffening of the effort to remove the long-standing antitrust exemption for insurers specifically within those two sectors of the industry. After his committee voted 20-9 to pass the Health Insurance Industry Antitrust Enforcement Act of 2009, Chairman John Conyers, D-Mich., said in a statement that the bill “fixes a mistake sitting on the federal statutes for over 60 years, making an important contribution to the health reform efforts under way in both houses of Congress.”

Senate Majority Leader Harry Reid, D-Nev., has been among the idea’s most prominent supporters, having testified in favor of this partial repeal of the McCarran-Ferguson Act at a hearing of the Senate Judiciary Committee chaired by Sen. Patrick Leahy, D-Vt. “When companies are forced to compete with each other, that’s what the free-enterprise system is all about,” Reid said in announcing that the Senate version would be turned into an amendment to the health-care reform legislation.

The lawmakers didn’t offer specific instances of industry bid-rigging and price-fixing practices, which has been what’s missing in the debate, said Lawrence Smarr, president and CEO of the Physician Insurers Association of America. Critics of the exemption, he said, put forward “no evidence of this happening.”

“We’re just concerned with what will be defined as price fixing and bid rigging,” Smarr said. “The bill is so vague, and that’s the major problem we have with it.”

America’s Health Insurance Plans sent a letter to Conyers, calling the effort “a misperception of the scope and impact of the McCarran-Ferguson Act on health insurers.” The letter from Karen Ignagni, the group’s president and CEO, said, “the types of anticompetitive activity contemplated by the bills already are subject to federal and state antitrust laws.”

“The bills attempt to remedy a problem that does not exist,” the letter said.