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Bill Introduced to Repeal McCarran-Ferguson Act

Source: Congressman Tom Perriello Website & PCI

Posted on 08 Feb 2010

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Congressman Tom Perriello (VA-D) and Congresswoman Betsy Markey (CO-D) introduces legislation last week that will repeal the special anti-trust exemption for health insurance companies and medical malpractice insurance companies. The measure would end special treatment for the insurance industry that allows them to fix prices, collude with each other, and set their own markets without fear of being investigated. Removing this exemption has been a common priority of these two freshmen lawmakers, though they voted differently on the initial House health care reform bill.

“It’s time for Washington to decide whether we stand with patients or profiteering, whether we believe in market competition or a collusion between politicians and insurance monopolies. It’s time to end the monopoly protections that Washington has protected for decades as prices skyrocketed. It’s time for a simple, clean bill - no carve-outs or special deals - that forces insurance companies to compete. It’s time to put patients and cost relief first,” said Rep. Perriello. “Americans deserve to know who stands with them against the price gouging of middle-class and working-class folks. Today, we do.”

“I’ve heard from tens of thousands of Coloradans across my district, and though people’s opinions may vary, the common message is clear: the current health care system is crushing our families and businesses,” said Rep. Markey. “Support for removing this unfair exemption cuts across party lines, and is a major piece of common ground that I’ve been working toward in our country’s health care debate. This is about bringing sorely-needed competition back into an industry that has for too long wielded monopoly control over hard-working American families.”

Under the Perriello-Markey bill, health insurers will no longer be protected from liability for price fixing, dividing up market territories, or bid rigging. In the last 14 years, there have been 400 mergers among health care insurers so that 95% of health insurance markets are “highly concentrated,” which means consumers have little or no choice between insurers. This non-competitive market has played a role in health insurance premiums having more than doubled in the past decade.

PCI Says Proposed Bill is Misguided

This attack on McCarran-Ferguson misses the mark,” said Ben McKay, senior vice-president of PCI. “Enforcement of insurance is conducted at the state level because insurance is regulated at the state level. This bill will add another layer of duplicative oversight that in the end will cost consumers.”

“Targeting McCarran-Ferguson will not provide benefits to consumers or the marketplace,” said McKay. “This bill will not lower health care costs; on the contrary, it may well increase them, according to a recent Congressional Research Service report. It will not expand insurance coverage either. Instead, it threatens to cause enormous marketplace disruption that would have the perverse effect of discouraging new market entrants, making it harder for smaller companies to stay in business, and driving more costly litigation into the system.”

Without the data-sharing ability of McCarran-Ferguson, some medical liability insurers might be forced to leave the market, said PCI. This will not only affect doctors and hospitals, but also many other types of health care providers that rely on access to a competitive medical liability insurance market, including dentists, nurses, optometrists, paramedics, x-ray technicians, and nursing homes.

At a time when the US government is attempting to curtail health care costs, PCI believes this legislation could increase those costs. “This bill could prove flammable,” said McKay. “Revisiting McCarran-Ferguson could reignite a medical malpractice crisis. To amend McCarran’s antitrust provisions without evidence of the need, but with plenty of evidence of the potential harm, would be irresponsible and would drive up health care costs,” said McKay.