Monday, March 11, 2013

Over the course of the last two months, four separate bills have been introduced in the House of Representatives (H.R. 99, H.R. 344, H.R. 743 and H.R. 911) that would modify the McCarran Ferguson Act (15 USC 1011 et seq.) to eliminate the limited antitrust exemption currently provided in the Act as it relates to health insurers. Three of the bills, H.R. 99, H.R. 743 and H.R. 911, were introduced by long-time proponents of McCarran repeal -- Representative John Conyers (D-Michigan), Representative Peter DeFazio (D-Oregon) and Representative Paul Gosar (R- Arizona) – while the fourth bill, H.R. 344, was introduced by a relative “newcomer” to the issue, Representative Steven Lynch (D-Massachusetts).

The first bill, H.R. 99 (“The Health Insurance Industry Antitrust Enforcement Act of 2013”), was introduced by Representative John Conyers on January 3. In introducing the legislation, Rep. Conyers, a long-time proponent of the repeal of McCarran’s antitrust exemption, stated that H.R. 99 would “end the mistake Congress made in 1945 when it added an antitrust exemption for insurance companies into the McCarran Ferguson Act” and that passage of the bill would “make health insurance more affordable to more Americans.” Specifically, H.R. 99 provides that “nothing in the McCarran Ferguson Act shall be construed to permit health insurers to engage in any form of price fixing, bid rigging or market allocations in connection with the conduct of the business of providing health insurance.” Unlike the other recently introduced bills (but consistent with prior McCarran repeal bills introduced by Representative Conyers in prior years), the bill would also repeal McCarran’s antitrust exemption for medical malpractice insurers. Finally, H.R. 99 would also make Section 5 of the Federal Trade Commission, which prohibits “unfair methods of competition,” applicable to health insurers (McCarran currently exempts them from Section 5) and provides that Section 5 would apply to health insurers even if they are non-profit entities, eliminating the exemption for non-profit entities currently contained in Section 4 of the Federal Trade Commission Act.

The texts of H.R. 344, the “Competitive Health Insurance Act,” introduced by Representative Lynch on January 22, and H.R. 743, the “Health Insurance Industry Fair Competition Act,” which was introduced by Representative DeFazio (on behalf of himself and Representative Louise Slaughter of New York) on February 15, are identical. Each of these bills would modify the McCarran FergusonAct as to health insurers in the same ways as Representative Conyers’s bill, but neither bill contains any proposed changes to McCarran with respect to medical malpractice insurance. In introducing H.R. 743, Representative DeFazio stated that “No matter what political ideology, most can agree that insurance companies should play by the same rules as virtually every other industry in America” and, seeking to rally support for his bill, asserted that “Right now, it is legal under federal law for insurance companies to collude to drive up prices, limit competition, conspire to underpay doctors and hospitals and price gouge consumers.” Representative DeFazio also noted that he introduced similar legislation during the Affordable Care Act debate in 2010, and stated that “If 406 members could support [the legislation] during the highly charged, partisan health care reform debate, we can pass [similar legislation] today.”

Finally, the text of H.R. 911, introduced by Rep. Gosar on February 28, has not yet been made available, but is likely to track the McCarran repeal legislation Rep. Gosar introduced last Congress. If that is the case, the legislation will seek to repeal McCarran’s antitrust exemption only as to health insurers, not medical malpractice insurers as well (like H.R. 344 and H.R. 743, but unlike H.R. 99). In addition, if H.R. 911 tracks Rep. Gosar’s prior McCarran repeal bill, it will also contain a provision not found in any of the other recently introduced bills – a prohibition on the filing of antitrust class actions against insurers. Rep. Gosar, who was a practicing dentist for over twenty five years before his election in 2010, has described the McCarran Ferguson Act’s antitrust exemption as an “outdated, nonsensical exemption,” and thus his re-introduction of McCarran repeal legislation this Congress is not particularly surprising.

Each of the four bills has been sent to the House Judiciary Committee for further action and, so far, no action has been taken on any of the bills. Similar legislation has yet to be introduced in the Senate, although Senator Patrick Leahy of Vermont has introduced McCarran repeal legislation several times over the years in prior sessions of Congress. Will this be the year that McCarran repeal advocates finally succeed in their efforts? Only time will tell; stay tuned.