We at the New America health policy program haven't focused all that much of our work on the antitrust exemption, and we aren't convinced eliminating it will have as much impact as some supporters believe. But President Obama has endorsed it, the House is voting on it, so we thought we'd at least share a bit of what we've been reading. A few of these articles are a bit old -- remember the House vote was set for earlier this month, but got delayed by the snowstorms. (Major League Baseball also has an exemption -- maybe what we're seeing at Anthem and other insurers is the health insurance equivalent of price hikes on steroids?).
Let's start at the O'Neill Institute' blog on Legal Issues in Health Reform. Peter Jacobson wrote, when the issue bubbled up last fall, that Democrats began to consider the anti-trust measure after AHIP began attacking reform. (Remember that PriceWaterhouseCooper report?)
Democrats struck back quickly, threatening to enact legislation to remove the industry’s immunity from federal antitrust enforcement, codified in the McCarran-Ferguson Act of 1945. To protect state regulatory authority over insurance markets, McCarran-Ferguson prevents the Federal Trade Commission and Department of Justice from initiating antitrust litigation against health insurers. One result has been the secular trend toward consolidation of health insurance markets, where one or two large insurers dominate local markets.
Right now, states, not the federal government, largely regulate insurers. Some House Democratic backers of the bill noted that federal legislation is needed because few state regulators have the power or resources to take on the health insurance industry.
Jacobson supports making the change, but he wrote that it's "speculative" to expect it would bring about big and rapid change to reduce consolidation and stop abusive practices like rescissions. "At a minumium the threat of federal antitrust activity may act as a sentinel against some of the more abusive insurance practices that states seem unwilling to challenge."
Clark Havighurst of Duke Law School was invited to respond on the O'Neill blog, and he said that the exemption is quite narrow and that he doesn't believe it is the cause of "price fixing, bid rigging or market allocations."
Julie Barnes, the lawyer on our health policy team, wrote about this a few months ago (and if she wasn't traveling today I'd have asked her to weigh in). The Wall Street Journal had a good explanation of why backers of striking the exemption will bring down prices, by decreasing the clout of a handful of insurers. Jenny Gold at Kaiser Health put together a Q-A. But interestingly Maggie Mahar on the HealthBeat blog very helpfully pointed out that if you break up insurers, they may end up having even less power vis-a-vis brand name hospitals and physicians' groups. She writes:
In many parts of the country, health care providers have consolidated, and these giants are able to extort exorbitant fees from insurers. Patients and employers want these popular providers in the insurers’ network -- if insurers resist demands for higher reimbursements, customers will switch plans.... So insurers succumb and then pass these higher costs on to you and me in the form of higher premiums.
So it brings us back to our raison d'etre. Small fixes won't fix health care. The pieces are too interconnected. We need -- you guessed it -- comprehensive reform.