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About that Health Care Antitrust Bill…

February 4, 2010 - by Donny Shaw

With health care reform stalled, Nancy Pelosi is starting “Plan B” next week by bringing a series of smaller, stand-alone health care-related bills to the floor for votes. She’s hoping that passing these smaller bills will help build back some momentum towards passing the comprehensive health care reform bill in the near future.

The first bill she is planning to bring up in the “Plan B” approach is the Health Insurance Industry Antitrust Enforcement Act. The bill would partially eliminate a 1945 statute, McCarran-Ferguson, that gives the health insurance and medical malpractice industries exemption from federal antitrust laws and allows them to share rate-making data. The bill would specifically ban “price fixing, bid rigging, or market allocations” at the federal level, but it is careful to allow the sharing of rate-making data to continue.

There has been a good amount of chatter in the blogs about the bill — whether it would benefit consumers, or whether it could actually hurt them by weakening insurers’ market power for bargaining down provider rates at powerful hospital conglomerates. The non-biased, non-partisan Congressional Budget Office has evaluated the bill, and their conclusion is just about as reliable as any you could go with:

[The Health Insurance Industry Antitrust Enforcement Act] could affect the costs of and premiums charged by private health insurance companies; whether premiums would increase or decrease as a result is difficult to determine, but in either case the magnitude of the effects is likely to be quite small.

To the extent that insurers would otherwise engage in the prohibited practices and be prevented from doing so by enactment of this bill, premiums might be lower. (That effect is likely to be small because state laws already bar the activities that would be prohibited under federal law if this bill was enacted.) To the extent that insurers would become subject to additional litigation, their costs and thus their premiums might increase. Based on information from the Justice Department, the Federal Trade Commission, the National Association of Insurance Commissioners, consumer groups, and private attorneys, CBO estimates that both of those effects would be very small, and thus that enacting the legislation would have no significant effect on the premiums that private insurers would charge for health insurance.

In other words, the bill isn’t expected to either benefit or harm consumers in any meaningful way. But it still might be a political win for the Democrats.

The other stand-alone bills that Pelosi is looking at bringing to the House floor as part of “Plan B” include one dealing with medical loose ratios — how much of each premium dollar can go towards things other than actual medical care, like profit and advertising — and preventing insurers from dropping patients because they get sick.

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