Partial anti-trust repeal planned
Legislation sponsored by a Nevada senator in 1945 may be headed for repeal in Congress. The McCarran-Ferguson Act (Title 15, section 1011 of the U.S. Code) exempts the “business of insurance” from anti-trust laws unless predatory practices are involved.
The repeal legislation in the U.S. House is H.R. 3596, sponsored by Rep. John Conyers, a Michigan Democrat. In the Senate it’s S. 1681, sponsored by Sen. Patrick Leahy, Vermont Democrat.
The existing law was sponsored by Sen. Patrick McCarran, a right-wing Nevada Democrat, after the U.S. Supreme Court ruled in United States v. South-Eastern Underwriters Association that the Sherman Anti-trust Act applied to insurance and that the U.S. Constitution’s commerce clause allows federal regulation of insurers. This ruling reversed the court’s finding in Paul v. Virginia. The new law codified the court ruling but also shielded insurers from its implications.
Sen. Harry Reid of Nevada, who now holds McCarran’s Senate seat, testified last week in favor of repealing McCarran-Ferguson at a Senate hearing with the elaborate title of “Prohibiting Price Fixing And Other Anticompetitive Conduct In The Health Insurance Industry.”
“Since 1945, the insurance industry has enjoyed exemption from federal antitrust laws because of the McCarran-Ferguson Act,” Reid said. “Pat McCarran, who was the senior senator from Nevada at the time, lent his name to this piece of legislation. Although we’re both Nevadans, I’m not sure what Pat McCarran had in mind when he pushed this bill. And if Pat were around today, he couldn’t be happy with the state of the insurance industry. … There is no reason why the insurance companies should have exemption from antitrust laws. To the extent insurance companies need to share information to provide their services, let them do what other industries have to do—seek prior authorization and guidelines from the Department of Justice for how they can work together.”
However, the current legislation would only remove antitrust exemption from health insurers, not insurers of all kinds. Reid aide Tom Brede said, “We’ve been unable to do the full repeal in the past and the health-care debate presents an opportunity to do at least part of what we need to do. Last Congress, Sen. Leahy introduced S618, which would have been a full repeal of McCarran-Ferguson.”
McCarran-Ferguson is seen by Democrats and health insurance industry critics as a major factor driving up health care costs.
However, McCarran-Ferguson also empowers state governments to regulate insurance companies. A press aide to Leahy said his planned repeal will not change that—“State oversight will continue”—and his legal counsel, Erica Chabot told the RN&R, “1681 as it was introduced would repeal the federal antitrust for health insurance companies and medical malpractice insurance companies. It’s not a full repeal of McCarran-Ferguson.”