Ted Kaufman - United States Senator for Delaware

Senate may repeal health insurers' antitrust exemption

Source: The News Journal

By NICOLE GAUDIANO

December 9, 2009

WASHINGTON -- For more than 60 years, health and medical malpractice insurers have been exempt from federal antitrust laws designed to protect consumers and encourage competition. A group of senators, including Sen. Ted KAUFMAN, D-Del., wants to change that.

KAUFMAN hopes to amend the Senate's health care reform bill to largely repeal the antitrust exemption. The proposal by Sen. Patrick Leahy, D-Vt., which KAUFMAN co-sponsored, would change federal law to ban insurers from fixing prices and dividing up, or "allocating," the market to avoid competition.

The health care bill passed by the House last month contains a similar provision.

Insurers say they don't engage in such practices and they're already heavily regulated. But KAUFMAN said the measure is necessary to "empower" federal prosecutors to police such practices.

"Too many patients see their premiums go up every year because the insurance market they live in is dominated by one or two insurers," he said in a statement.

The 1945 McCarran-Ferguson Act exempted insurers from federal antitrust laws, leaving it up to states to regulate.

States have regulated health insurers in every area, according to Karen Ignagni, president and CEO of America's Health Insurance Plans, an industry trade association.

Attorneys general from 10 states think otherwise. They signed a letter last month supporting Leahy's measure, saying it would give state and federal enforcers "additional tools."

"The McCarran-Ferguson exemption is a historical anomaly and accident -- serving no purpose except to exempt insurers from anti-competitive conduct prohibitions that apply to almost every other industry," they wrote.

Leahy's amendment, which has 18 co-sponsors, is endorsed by health groups. But the bill could still face challenges.

Sen. Ben Nelson of Nebraska, a Democrat whose vote is key to passing health care reform, says lifting the exemption would leave small insurers at a disadvantage.

It's not clear how Sen. Tom Carper, D-Del., would vote. Spokeswoman Bette Phelan said his staff is reviewing the measure along with other amendments.

Leahy said there's no reason the amendment can't pass the Senate.

"If there was ever a time that the antitrust exemption made sense for the insurance industry, that time has gone by decades ago," he said. "It has no relevance today, other than its ability to stifle competition."

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