House Passes Bill That Would Create More Uncertainty for Insurance Industry

By Susan Jones | February 25, 2010 | 11:25 AM EST

( - By an overwhelming vote of 406-19, the House of Representatives on Wednesday passed a bill that would remove the longstanding federal anti-trust exemption for health insurance companies.
House Speaker Nancy Pelosi said the bill will provide more competition for the insurance industry -- and "much more freedom for the American people, by expanding their choices."
Pelosi also said H. R. 4626, "The Health Insurance Industry Fair Competition Act," will change the playing field for the insurance industry by making the companies play "on the people's field."
But one insurance industry trade group warned that the bill will have no practical effect, except to increase uncertainty for the insurance industry. And where uncertainty exists, increased litigation is sure to follow -- raising costs at a time when cost-containment tops the agenda of all Americans, said America's Health Insurance Plans.
The insurance industry's federal antitrust protection dates back to 1945, when Congress passed the McCarran–Ferguson Act, exempting the insurance business from most federal regulation and allowing the states to regulate insurance companies. One benefit for insurance companies was the ability for them to pool information about risks.
Democrats argue that under H.R. 4626, health insurers will no longer be protected from liability for price fixing or dividing up market territories.
But Karen Ignagni, president and CEO of America's Health Insurance Plans (AHIP), noted that health insurance is one of the most regulated industries in America at both the federal and the state levels.
"The claim that McCarran-Ferguson allows insurers to engage in practices such as price-fixing, market allocation and big-rigging is incorrect, and the types of activities the legislation proposes to address already are subject to federal and state anti-trust laws," Ignagni said in a Feb. 18 letter to the bill's sponsors.
Ignagni has warned that the bill passed on Wednesday will simply undermine activities that are designed to improve the quality and efficiency of health care for the American people.
The bill an attempt to solve a problem that doesn’t exist, she said.
Moreover, passing the bill will do nothing to reduce health care costs, AHIP noted. AHIP points to a Congressional Budget Office analysis dated Oct. 29, 2009, that says applying federal antitrust laws to health insurers "would have no significant effects on either the federal budget or the premiums that private insurers charged for health insurance.”
"The real focus should be on addressing the rising cost of medical care, which is putting an unsustainable burden on families, employers, and the federal budget," Ignagni said.