Congress Repeals Anti-Trust Exemptions Over AHIP Objections

Both houses of Congress have voted to repeal an anti-trust exemption in the McCarran-Ferguson Act of 1945 which protects payers from federal competition laws.

The Competitive Health Insurance Reform Act of 2020 amended the McCarran-Ferguson Act to include the following statement:

“Nothing contained in this Act shall modify, impair, or supersede the operation of any of the antitrust laws with respect to the business of health insurance (including the business of dental insurance and limited-scope dental benefits).”

The Competitive Health Insurance Reform Act of 2020 received bipartisan support in both the House and the Senate, with sponsorship from Representatives Paul Gosar (R-AZ) and Peter DeFazio (D-OR) in the House and Senators Steve Daines (R-MT) and Patrick Leahy (D-VT) in the Senate.

No bill to repeal these exemptions has ever passed both houses of Congress. In 2019, Gosar put forward the amendment which passed by a vote of 416 to seven in the House but floundered in the Senate, according to a press release from his office. In 2020, however, the bill will reach the president’s desk.

The senators expressed hope that President Trump would approve the bill.

“While ordinary Americans are suffering through an unprecedented, deadly pandemic, multi-billion dollar health insurance companies are boasting record-high profits,” said Senator Daines, sharing a commonly held frustration.

“It makes little sense that these powerful actors should also benefit from an antiquated exemption allowing them to evade all scrutiny and oversight by our federal antitrust authorities. Our overwhelmingly bipartisan bill would simply subject health insurance providers to our federal antitrust laws – just like every other sector of the American economy. It’s a commonsense bill whose time has come, and I hope President Trump swiftly signs it into law.”

Payers were not receptive of the Competitive Health Insurance Reform Act of 2020.

The McCarran-Ferguson Act permitted a loophole for payers in the anti-trust regulations and competition laws in order to encourage new and upcoming payers.

Whereas in general companies are subject to the commerce clause in the US Constitution and the Sherman Anti-Trust Act of 1890, payers were exempt from these regulations so that new payers could share and compare data—particularly for premiums—with established payers, a previous press release from Gosar explained.

“Every American deserves access to affordable coverage that provides them with access to high-quality health care,” Matt Eyles, president and chief executive officer of America’s Health Insurance Plans (AHIP), said in a statement.

“Sadly, eliminating the McCarran-Ferguson Act’s exemption for the business of health insurance will undermine that goal – adding administrative red tape and reducing market competition while making health coverage less affordable for hardworking Americans.”

Old tensions around the commerce clause sets the scene for the current debate. The commerce clause has been used to limit states’ regulatory authority and strengthen congressional authority, the website for the Legal Information Institute at Cornell University explains.

Thus, by exempting payers from the commerce clause, the McCarran-Ferguson Act could be seen to strengthen the states’ authority over insurance markets. And the amendment repealing that exemption could be seen as diminishing states’ authority over insurance markets.

“The McCarran-Ferguson Act recognized that all health care is local, and that states should be able to govern their own health insurance markets,” Eyles said. “At no time has that been more evident than during the COVID-19 crisis. States have always exercised great authority in ensuring fair and competitive markets that delivered consumer choice.”

However, imposing on states’ authority is not the only trespass in this regulation, the leader of AHIP argued.

“Removal of this exemption adds tremendous administrative costs while delivering absolutely no value for patients and consumers,” explained Eyles. “It will unnecessarily add layers of bureaucracy, destabilize markets, create conflicting federal and state oversight requirements, and lead to costly litigation.”

There certainly is precedent for Eyles’s expectations of costly litigation related to insurers’ anti-trust lawsuits. Only a little over a month prior to this statement, Blue Cross Blue Shield Association finally ended an eight-year-long anti-trust litigation in a $2.67 billion settlement.

Eyles went on to argue—in sync with the National Association of Insurance Commissioners—that the problem which inflates healthcare spending for consumers is not the McCarran-Ferguson exemption which may allow for greater industry consolidation, but rather underlying costs of care.

“Removal of the McCarran-Ferguson exemptions ignores those cost drivers while raising costs and will only result in coverage being less affordable,” Eyles concluded.