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Democrats Could Cave On Insurance Industry Antitrust Exemption

February 16, 2010 - by Eric Naing

If Democrats can’t pass a politically popular bill that doesn’t rock the boat, what can they pass?

A couple weeks ago, Donny highlighted a bill (H.R.3596) that would revoke the exemption the health insurance and medical malpractice industries enjoy from federal antitrust laws. This measure is part of House Speaker Nancy Pelosi’s [D, CA-8] “Plan B” strategy of passing smaller, popular health-care-related bills to build momentum for the big health care reform bill (H.R.3590).

The health insurance industry is a useful villain, especially when it receives special treatment from the government. Revoking its antitrust exemption would be good politics and wouldn’t really offend the powerful industry. As the CBO and other health care journalists have explained, the bill isn’t likely to have any major effect on the health insurance industry or consumers.

The bill was seen as such a slam dunk that a newer version of it was given to two vulnerable freshmen Democrats, Rep. Betsy Markey [D, CO-4] and Rep. Tom Perriello [D, VA-5], to introduce.

But Politico today reports that the Democrats are looking to further water-down this already inoffensive bill:

On Monday, Democratic aides in the House said the final bill likely won’t include controversial new restrictions on medical malpractice insurers. Its authors also appear inclined to strip new authority for the Federal Trade Commission because it sparked similar unease.

Why? Pressure from different insurance lobbies:

[T]he speaker’s attack on the insurance industry awakened lobbying giants that had been dormant for much of the health care debate: property and casualty insurers. By repealing the antitrust exemption for insurance companies that provide medical malpractice insurance, Democrats in the House sparked an uproar from the property-casualty industry, which led a lobbying campaign to overhaul — or defeat — the bill.

The effectively-dead House health care bill (H.R.3962) included language repealing the antitrust exemption and granting the Federal Trade Commission enforcement authority over the insurance market. The Senate bill, however, does not.

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