House set to vote on insurance anti-trust exemption

The U.S. Capitol
A view of the Capitol building in Washington, where the House is expected to vote on a repeal of a law exempting health insurance companies from anti-trust restrictions.
Evan Vucci/Associated Press

The U.S. House of Representatives is expected to vote later this week on whether to repeal a decades-long anti-trust exemption for health insurance companies.

It's a small piece of what was included in the original House health care reform bill. It would be the first major legislative action on overhauling health care since Democrats lost their supermajority in the Senate last month. Insurers say Congress should leave the exemption alone, but others say repealing it would lead to lower premiums.

While many have pronounced the health care legislation dead, others like Minnesota 4th district DFL Congresswoman Betty McCollum say talks are ongoing to get a bill passed even though she wouldn't give a time frame. In the meantime, she said the House will vote on whether to repeal a law that exempts health insurance companies from federal anti-trust laws.

These laws ban companies from monopolizing markets and stifling free competition. But some industries are exempt -- Major League Baseball is one; insurance is another.

McCollum said repealing the exemption for insurance companies would allow consumers to buy policies across state lines and compare individual companies.

"It will save every family in America who purchases health insurance at least 10 percent on their policy if not more," McCollum said. "My focus is on making sure that families have access to policies that are transparent and insurance policies that are not written in collusion with other companies."

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The insurance exemption goes back 65 years and was meant to ensure that states, not the federal government, were the industry's main regulators. The exemption primarily applies to health insurance markets where individuals are trying to buy insurance on their own or in small groups. Employer-sponsored insurance is largely regulated by the federal government.

"Health plans are not engaging in anti-competitive practices."

Robert Zirkelbach of America's Health Insurance Plans, the national trade group for the health insurance industry said there's no need to repeal the exemption. He disagrees with McCollum that premiums would go down and that companies are doing anything wrong.

"Health plans are not engaging in anti-competitive practices such as price-fixing and bid-rigging as some have alleged," Zirkelbach said. "Health insurance is probably one of the most regulated industries in America at the federal level and all 50 states."

The Minnesota Department of Commerce, which regulates insurance here also has some concerns about repealing the exemption. It's conceivable that some of the state's regulation power would shift to the federal government. Deputy Commerce Commissioner Manny Munson-Regala said a shift could mean a loss of money for Minnesota's treasury.

"We, like other states, collect a tax on the premium that companies write," Munson-Regala said. "If suddenly the federal government has a role in the regulation of those companies it's not clear to us that they'd allow us to continue collecting that revenue. They might insist on sharing that revenue."

Regala said the state collects about $350 million from that tax each year.

Daniel Schwarcz, a University of Minnesota law professor and insurance expert, said because the exemption has been around for so long it's unclear how its repeal would change the way insurers currently do business. He said anti-trust laws can be very broad:

"A lot of how they actually come into play depends on how they're enforced," he said. "Large parts of the anti-trust laws essentially say you can't compete unfairly and then it's for the Justice Department to enforce that and for the courts to explain what that means."

Schwarcz said he doesn't see repealing the exemption as having a major effect on health insurers compared to other talked-about reforms. He said ideas such as as mandating that everyone obtain insurance, the public option, and taxing higher-premium plans would have had much more concrete effects on the health insurance industry.