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Health Insurance Trust Busters

January 13, 2010 - by Donny Shaw

Senate Democrats are pushing negotiators to include House language in the final bill that would take away the health insurance industry’s long-standing exemption from federal anti-trust laws. The Hill reports:

The campaign to end health insurers’ federal anti-trust exemption reemerged on Wednesday, as 18 Senate Democrats urged their party’s leaders to preserve the repeal in their final healthcare bill.

The House’s legislation would end the anti-trust provision, but the Senate’s proposal would not. The repeal’s 18 sponsors consequently asked party leaders to adopt the lower chamber’s approach, stressing a repeal was the only way to drive down costs and foster competition among insurance companies.

Repealing the exemption may be a good idea in case there are (ever) any egregious anti-competitive behaviors like bid-rigging and price fixing going on in the industry. And it’s definitely good politics. But it probably won’t actually do much to “drive down costs” like the proponents of the anti-trust language are arguing. In October, the CBO took a look at the anti-trust language in the form of a stand-alone bill (H.R. 3596) and decided it wouldn’t have much of an 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.
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