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New Bill Would Break Up Health Insurance Monopolies

September 24, 2009 - by Donny Shaw

Sen. Patrick Leahy [D, VT] and Rep. John Conyers [D, MI-14] have thrown a new concept into the health care reform debate. They’re pushing legislation to take away insurance companies’ exemption from federal anti-trust laws.

“In the midst of the healthcare debate, where so many proposals contemplate how to bring added competition to the health insurance market, this legislation ensures that health insurers and medical malpractice insurers will at least be subject to normal laws of competition,” Sen. Leahy said upon introducing the bill last week.

Since 1945, the McCarran-Ferguson Act has given individual states the authority to regulate insurance companies instead of the federal government. It also stipulated that if the companies are regulated by the states, they won’t be susceptible to federal anti-trust laws that ban anti-competitive, monopolistic practices like price fixing, bid rigging and dividing up markets amongst themselves.

A 2007 study (pdf) by the American Medical Association found that some states have become almost entirely dominated by a single insurer. In Alabama, for example, Blue Cross, Blue Shield controls 83 percent of the market. In Maine, Wellpoint controls 78 percent of the market. And in some metropolitan areas, concentration of insurance by a single company is as high as 96 percent.

The legislation introduced by Sen. Leahy and Rep. Conyers is called the Health Industry Antitrust Enforcement Act of 2009. The Senate version can be seen here, and the House version is here.

Even though breaking up these big insurance monopolies would increase competition and cause insurance premiums to go down, just like the public option would, Majority Leader Sen. Harry Reid [D, NV] says he won’t include the Conyers-Leahy legislation in the final health care reform bill. Why? Alexander Bolton at The Hill offers this explanation:

So far the powerful insurance industry has held back waging a full-out battle against Democratic health reform proposals because companies stand to gain tens of millions of new customers. But adding language that would open health insurance companies to prosecution by the Justice Department would provoke a strong counterattack from the industry.
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  • oderintdummetuant 09/24/2009 11:27am

    The cowards that represent you and I.

  • kimmi22 09/24/2009 12:12pm

    What a joke. Republican or democrat, neither is willing to delve further into what may be a logical option to control healthcare costs. It might hurt their chances for re-election, I suppose. Because its not about doing what is right for their constituents, its about doing what is right for themselves. Man, it makes me feel so jaded and powerless.

  • oderintdummetuant 09/24/2009 7:50pm

    Any people anywhere, being inclined and having the power, have the right to rise up, and shake off the existing government, and form a new one that suits them better. This is a most valuable – a most sacred right – a right, which we hope and believe, is to liberate the world.
    Abraham Lincoln
    ….I’m just sayin….

  • Anonymous 09/25/2009 5:33am
    Link Reply
    + -1

    Let’s hope this antitrust stipulation applies to the government health insurance plan too.

  • Anonymous 09/29/2009 3:09pm
    Link Reply
    + -1

    maybe it’s time to act for the people or be branded as corporate shill.

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