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CBO Says Health Care Antitrust Bill Would Have Little Impact

October 26, 2009 - by Donny Shaw

In the past couple weeks, as the insurance industry has begun accelerating their effort to derail health care legislation, Congress has been fighting back with a new line of attack. Since 1945, the health insurance industry has had a special exemption from federal antitrust laws; Congressional Democrats are threatening to put an end to their special treatment and make them susceptible to the antitrust laws, which are designed to prevent anti-competitive, collusive practices.

Repealing the insurance companies’ anti-trust exemption is “something that should have been done a long time ago” Senate Majority Leader Sen. Harry Reid [D, NV] said last week at a hearing to discuss the bill. Sen. Chuck Schumer [D, NY], the third ranking Democrat in the Senate, said in a statement posted to his website that the antitrust exemption “deserves a lot of the blame for the huge rise in premiums that has made health insurance so unaffordable.”

The House Judiciary Committee even approved legislation to take away the exemption. Last Wednesday, the committee voted 20-9 in favor of H.R. 3596, the Health Insurance Industry Antitrust Enforcement Act. Leaders in both the House and the Senate have said they plan to add the antitrust bill to their broader health care reform legislation.

But, as it turns out, the Democrats’ threat is basically empty. The Congressional Budget Office had a chance to look at the bill over the weekend, and they determined that it would have almost no effect …on anything:

H.R. 3596 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.
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