UPDATE:DOJ Varney Questions Antitrust Exemption For Insur Cos
October 14 2009 - 1:34PM
Dow Jones News
The Justice Department's top antitrust enforcer on Wednesday
questioned the need for a long-standing federal antitrust exemption
for health insurance and medical malpractice insurance companies,
but she stopped short of endorsing legislation to end the
exemption.
"The Department of Justice generally supports the idea of
repealing antitrust exemptions," Assistant Attorney General
Christine Varney said in testimony to the Senate Judiciary
Committee. "However, we take no position as to how and when
Congress should address this issue."
Lawmakers in the House and Senate have introduced identical
bills to strip the antitrust exemption for insurance companies,
which was enacted in the McCarran-Ferguson Act of 1945.
The legislation would strip the exemption for egregious
violations, such as price fixing, bid rigging and market
allocation.
The bill's text indicates that it wouldn't affect the ability of
states to regulate the insurance business.
Varney said repealing the exemption "would allow competition to
have a greater role in reforming health and medical malpractice
insurance markets than would otherwise be the case."
"There are strong indications that possible justifications for
the broad insurance antitrust exemption in the McCarran-Ferguson
Act when it was enacted in 1945 are no longer valid today," she
said.
Sen. Charles Schumer, D-N.Y., called on his colleagues to add
the antitrust legislation as an amendment to the health-care bill
that Sen. Majority Leader Harry Reid, D-Nev., plans to bring to the
floor later this month.
Reid made an appearance at Wednesday's hearing and offered
strong support for stripping the antitrust exemption.
"Let's get this out of committee as quickly as possible and
let's pass it," Reid said.
While Wednesday's committee hearing was well attended by
Democrats, the only Republican to make an appearance was Sen. Orrin
Hatch, R-Utah, who said he saw little evidence to justify a
complete repeal of the antitrust exemption for insurance
companies.
Lawrence Powell, representing the Physician Insurers Association
of America, told lawmakers that eliminating the exemption would
make it harder to price insurance. Powell also said that price
fixing and other anticompetitive actions are already prohibited in
insurance markets by existing state and federal laws.
The hearing comes the same week as America's Health Insurance
Plans, or AHIP, circulated a controversial study projecting that
the average family premium for health insurance would rise to
$25,900 from $12,300 within 10 years if provisions included in
Senate Finance Committee health-care legislation are enacted.
The study received a heated response from the White House and
congressional Democrats, who accused AHIP of intentionally
providing misleading information and not taking into account tax
credits in the bill for low- and middle-income people to buy
insurance.
Schumer on Wednesday called the insurance-industry study a
blunder and said it may give lawmakers a "greater opportunity" to
pass the antitrust bill.
Leading insurers in AHIP include Aetna Inc. (AET), Humana Inc.
(HUM), Cigna Corp. (CI) and UnitedHealth Group Inc. (UNH).
-By Brent Kendall, Dow Jones Newswires; 202-862-9222;
brent.kendall@dowjones.com
(Patrick Yoest contributed to this article.)