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New Bill Would Restore Antitrust Protections in the Health Insurance Industry

October 29, 2009 - by Donny Shaw

For the last few weeks, Democrats in both chambers have been talking more and more often about taking away the insurance industry’s long-standing exemption from federal antitrust laws. The release of the new House health care bill reveals that Rep. Nancy Pelosi [D, CA-8] has officially decided to move ahead with these threats. The language she included in the new bill is a little different than the stand-alone version of the bill that has been moving through committees in the House. Here’s the text in the new bill:

SEC. 262. RESTORING APPLICATION OF ANTITRUST LAWS TO HEALTH SECTOR INSURERS.

(a) AMENDMENT TO MCCARRAN-FERGUSON ACT.—

21 Section 3 of the Act of March 9, 1945 (15 U.S.C. 1013), commonly known as the McCarran-Ferguson Act, is amended by adding at the end the following:

‘‘©(1) Except as provided in paragraph (2), nothing contained in this Act shall modify, impair, or supersede the operation of any of the antitrust laws with respect to price fixing, market allocation, or monopolization (or attempting to monopolize) by—

‘‘(A) a person engaged in the business of health insurance, in connection with providing health insurance; or

‘‘(B) a person engaged in the business of medical malpractice insurance, in connection with providing medical malpractice insurance.

‘‘(2) Paragraph (1) shall not apply to—

‘‘(A) collecting, compiling, classifying, or disseminating historical loss data;

‘‘(B) determining a loss development factor applicable to historical loss data;

‘‘© performing actuarial services if doing so does not involve a restraint of trade; or

‘‘(D) information gathering and rate setting activities of a State insurance commission or other State regulatory entity with authority to set insurance rates.

The stand-alone bill is basically one paragraph of text that says that the McCarran-Ferguson Act shall not be construed to allow insurers to engage in “any form of price fixing, bid rigging, or market allocations.” Some people worried that this could be interpreted to mean that insurance companies could no longer share information that helps them set rates for individual plans. OpenCongress user deepbaur explains:

Anti-trust exemption is for information sharing (like claims information), so insurance companies can understand the risks they are assuming. Without this, they will either: 1) assume you have pre-existing conditions and charge MORE – - or 2) they will charge “normal” rates and then challenge you and investigate you if they think you had a condition but lied when you applied.

Today, they can use the MIB (information sharing service among insurance companies) to verify and assess risk. The MIB is part of the exemption.

The language in the new bill adds language to make sure this kind of information sharing remains exempt from the antitrust laws.

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